According to U.S. media analysis, some analysts gave an alternative interpretation of the impact of tariff increases across the Pacific. They believe that trade tensions between the US and China could benefit other Asian economies and markets.
The highly interconnected nature of Asian supply chains has led to a loss-free situation in Asia this year. If China’s exports suffer, many companies supplying related parts will suffer.
But considering that tariffs have led to higher prices for some Chinese goods imported by the United States, some researchers believe that countries exporting similar products may ultimately benefit as American buyers look for alternative suppliers. Meanwhile Economists of Bank of America Merrill Lynch believe that Taiwan, Vietnam and South Korea will be the biggest beneficiaries because their export situation is similar to that of China.
In addition, some Asian economies will benefit from the redeployment of investments by companies operating in China. According to a survey released last week by the American Chamber of Commerce in South China, about 70% of companies are considering moving some or all of their manufacturing operations out of China. Most companies think Southeast Asia is the first choice.
Of course, there are also some problems facing the Southeast Asian market such as the potential impact of interest rate increase in the United States and the slowdown of China’s economy. These effects vary from industries or countries. The Economist Intelligence Unit (EIU) thinks technology companies in Vietnam and Malaysia may win, while Thailand’s status as a car parts producer may benefit the industry.
Steven Friedman and Chi Low, senior economists at BNP Paribas, said low-end imports of footwear, toys and textiles could switch to Vietnam, India, Bangladesh and Indonesia, while electronics and machinery could be imported from Mexico, Turkey and South Korea.
So far, the downturn in Asian stock markets does not seem to reflect the unexpected gains of this restructuring of trade relations. One reason may be that there is no way to tell which companies will ultimately benefit. For example:
The Economist Intelligence Unit (EIU), points out that some multinational companies, such as Sony Co., SNE and Panasonic Co., 6752.TO operating in Malaysia, as well as Samsung Electronics Co., 005930.SE and Intel Co., INTC operating in Vietnam, already operate locally. A firm foothold can help allocate resources freely, but local companies can not do so.