ASEAN exports slide unexpectedly as China-US trade dispute disrupts supply chains

By Ni Hao Source:Global Times Published: 2019/1/24 20:00:02

Gantry cranes stand at the Tanjong Pagar Container Terminal, operated by PSA International Pte, in Singapore. Photo: VCG

Not long ago, many analysts said countries in Southeast Asia would gain from the trade war between China and the US. These observers argued that the dispute would accelerate the trend of Chinese and foreign manufacturers relocating to China's southern neighbors, where costs are cheaper, as they sought to avoid tariffs.

But recent trade figures suggest otherwise. Many members of the Association of Southeast Asian Nations (ASEAN), including Singapore, Indonesia and Vietnam, have reported worrisome export statistics for December.

In Singapore, non-oil exports declined 8.5 percent year-on-year, the worst slide in more than two years. In Indonesia, exports fell for a second month in December, shrinking 4.62 percent year-on-year. Vietnam's exports slid 3.4 percent.

The Philippines also saw a slump in exports and manufacturing output at the end of 2018. There were many reasons for these declines, but the China-US trade dispute played a major role, because trade flows among China, ASEAN and the US are highly interdependent, analysts said.

"There is no way ASEAN can be cut off from trade cooperation between China and the US," said Xu Liping, a senior research fellow at the Chinese Academy of Social Sciences' National Institute of International Strategy in Beijing. "The escalating China-US trade conflict definitely affects ASEAN's global trade."

The trade figures show a complex industrial supply chains linking these economies, said Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation.

For example, some electronic components are made in Southeast Asia but assembled in China before being exported to the US and other markets. "Tariffs between China and the US have inevitably reduced Chinese companies' orders from downstream factories in Southeast Asia," said Bai.

Electronic components were among the worst-performing exports for ASEAN countries in December - for example, Singapore's exports in this category fell 11.2 percent year-on-year.

Despite the intertwined trade and supply chains between China and ASEAN, many still forecast that the latter could benefit from the China-US trade row, because some manufacturers would move to ASEAN to cut costs and avoid tariffs. There were many upbeat projections for exports from these countries. In Singapore's case, some forecast a growth of 1.5 percent, while some predicted a 1.81 percent increase for Indonesian exports.

"There were indeed companies that for various reasons shifted production to ASEAN countries, but the shifts weren't that big and they weren't due entirely to the China-US trade relationship," Xu said.
Newspaper headline: ASEAN exports slide unexpectedly


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