China’s economic slowdown is affecting its neighbours since the mainland is their top trading partners. The list includes Taiwan, Singapore, Malaysia, Thailand, and Cambodia. However, Vietnam, Malaysia, Bangladesh, and Cambodia are replacing China as export hubs with many Chinese companies delocalising to bypass US tariffs. In the first nine months of the year, Cambodia's exports to the United States grew by 27 per cent.
Hong Kong (AsiaNews) – As the trade war between Beijing and Washington continues, other Asian countries are trying to figure out its repercussions on their economies.
Some have been negatively affected by China’s economic slowdown. At the end of October, some PMI indices (which measure economic growth in various sectors) showed a drop in manufacturing activity in Taiwan, Malaysia and Thailand. Even in South Korea, business confidence fell to its lowest level in two years. The reason for this is that China is their main trading partner.
For months the US-China trade war has penalised Chinese exports to the United States and vice versa. Many components of Chinese products come from neighbouring countries. Fewer Made in China exports means less business for suppliers.
Among the most affected countries are Taiwan – which sends 50 per cent of its exports to China – but also Singapore and Malaysia. Copper exports from Laos and Chinese tourism in Cambodia and Thailand could also be affected.
In its latest report on the Asia-Pacific region, the World Bank expects a 1 per cent drop in Chinese growth and 0.5 per cent in the rest of the region. The Asian Development Bank also predicts less growth for the region (6 per cent in 2018 and 5.8 in 2019).
However, some countries could take advantage of the trade war. To offset US tariffs, many Chinese companies are trying to relocate to neighbouring countries, driven also by lower labour costs.
Vietnam, Malaysia and Bangladesh already benefit from delocalisation in electronics and garment industries. Cambodia is another country that could profit from this trend.
In the latter case, the reasons for this are better prices for Cambodian-made products compared to those made in China. Even before the trade spat, many Chinese companies were already moving to Cambodia because of lower labour costs. Now that process is accelerating.
The net result is that Cambodian exports to the United States in the first nine months of the year grew 27 per cent compared to the same period last year.
The vast majority of such exports, once almost monopolised by China, are garments, footwear products and travel goods such as suitcases and handbags.
With respect to the latter, exports from the Kingdom to the US were valued at about US$ 50 million a year before 2016, increasing to US$ 160 million in the first half of this year.