South-east Asia emerges as surprise winner in US-China trade spat, report shows
Exports from the Asean to the US surge by 23% in September from a year earlier
[SYDNEY] South-east Asia has emerged as a surprise beneficiary from global trade turmoil, with the region’s exports to the US growing at a faster pace than heavyweight rival China, according to a Lowy Institute analysis.
Exports from the Association of South-east Asian Nations (Asean), which comprises 11 countries, to the US surged by 23 per cent in September from a year earlier, led by Thailand and Vietnam, Lowy said in a report released on Wednesday (Dec 10). By contrast, China’s share has declined.
While the effective US tariff rate on China has jumped to 31 per cent, it’s only around 11 per cent for many Asean countries, Lowy economists led by Roland Rajah wrote, making the latter’s exports more competitive.
Punitive duties from Washington and faltering demand in China had initially threatened to undermine South-east Asia’s export-led model. The combination fuelled warnings of a “second China shock,” with fears that a wave of cut-price goods would swamp the region’s manufacturers. Instead, Lowy said, the impact has been far more nuanced – and for many economies, unexpectedly positive.
“Rather than shrinking, exports to the US have boomed as South-east Asian goods replace Chinese ones in the American market,” Lowy’s economists said. “Exports to other markets are also growing strongly despite fears that these would be crowded out by cheap Chinese goods deflected from entering the US.”
Despite China’s growing role in the global supply chain, South-east Asia remains well diversified and “geopolitically aligned” with the US, the authors said. This, they added, provides the region with an opportunity to pitch itself to Washington as an alternative to its economic reliance on China.
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“The future of global trade remains uncertain. But South-east Asia is much better placed to navigate this than widely assumed,” the economists said, adding that the region’s openness and competitiveness put it at the centre of global efforts to deepen rules-based trade.
“This gives the region more options amid the trade and geo-economic turbulence of the current moment.” BLOOMBERG
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