Logo of Phnom Penh Post newspaper Phnom Penh Post - US-China trade war’s bark turns to bite Asian nations

US-China trade war’s bark turns to bite Asian nations

Content image - Phnom Penh Post
The US-China trade war weakened in October manufacturing gauges in several export-reliant Asian countries, including China. FRED DUFOUR/afp

US-China trade war’s bark turns to bite Asian nations

The US-China tariff slugfest has for months triggered warnings that it could impact global economic growth, and recent data indicates the trade tension is indeed beginning to bite.

Manufacturing gauges in several export-reliant Asian countries, as well as China, weakened in October as gloom deepens over the trade outlook.

China’s official Purchasing Managers’ Index (PMI), which measures factory activity, came in at 50.2 in October, down from 50.8 the previous month, the latest sign of weakness in the world’s second-largest economy amid the trade war and a domestic debt problem.

But China’s troubles are bad for the rest of the region, and the world, analysts said.

Asian exporting countries from South Korea to Malaysia saw PMI decreases in October, according to indices compiled by Nikkei/IHS Markit.

Taiwan saw its steepest falls in production and new business in just over three years, purchasing activity by companies fell for the first time since May 2016, and firms anticipate lower factory output in the next 12 months, Nikkei/IHS Markit said.

“Taiwan is feeling the effects of this trade war because China is the factory for many companies in Taiwan. When the estuary is blocked, you feel the effects,” said Sun Ming-te of the Taiwan Institute of Economic Research.

Paying the price

South Korea’s PMI slipped to 51.0 in October from 51.3 in September, while a separate Korean business sentiment index for manufacturing sank to its lowest level in two years.

China is South Korea’s largest trading partner, absorbing a quarter of Korean exports.

“The situation may get worse next year due to a prolonged trade war between the US and China, growing default risks at debt-plagued Chinese firms and a slowing global economy that reduces demand for our exports,” said c, an analyst at the Korea Institute of Finance.

Southeast Asian manufacturers were feeling the effects too, with PMI in Malaysia and Thailand slipping below the 50-point level, which indicates contraction in the sector.

It was Malaysia’s lowest PMI since July and Thailand’s lowest in two years.

In an AFP interview last week, Malaysian Prime Minister Mahathir Mohamad complained that US President Donald Trump – who has accused various trading partners of “ripping off” the US – “seems to be withdrawing from all commitments overseas”.

Mahathir, 93, said that hurts everyone, including the US.

“We want to remain friendly with the US, and we want to continue trading with the US,” Mahathir said.

“But the trade war that is going on between the US and China is damaging for us. We have to pay a price for that.”

Vietnam or bust

The International Monetary Fund warned at its annual meeting last month that the trade friction and other threats would hobble the world economy, lowering its growth forecasts for this year and next.

The Eurozone posted disappointing PMI figures in October, though due largely to factors other than trade tension.

But not everyone feels the shock yet, with Japan’s manufacturing looking solid last month.

Trump, meanwhile, faces little pressure to tame his trade rhetoric at home, with a rosy US outlook marked by rising wages and low unemployment.

And even in Asia, there will be some winners as conflict re-aligns trading patterns, economists noted.

Vietnam, in particular, looks to gain as foreign manufacturers relocate out of China to escape the trade war crossfire and what many say is an increasingly unfair playing field for foreign companies in China.

Vietnam PMI climbed from a ten-month low of 51.5 in September to 53.9 last month.

“The hard data on exports and industrial production in recent months haven’t been that great. The latest survey nonetheless shows how Vietnam is weathering the US-China trade war better than its Asean peers,” said Pantheon Macroeconomics senior economist Miguel Chanco.

“If the trade war escalates, Vietnam will be one of the prime destinations for export-oriented firms looking to move out of China.”

MOST VIEWED

  • Cambodia rejects UN rights claim

    Cambodia's Permanent Mission to the UN Office in Geneva on Friday hit back at David Kaye, the UN special rapporteur on the Promotion and Protection of the Right to Freedom of Opinion and Expression after he raised concerns over the repression of free speech and

  • Snaring may spawn diseases

    The World Wildlife Fund (WWF) has warned that snaring of animals has become a crisis that poses a serious risk to wildlife in Southeast Asia and could spawn the transmission of zoonotic diseases to humans. Its July 9 report entitled Silence of the Snares: Southeast Asia’

  • Ex-party leader, gov’t critic named as secretary of state

    A former political party leader known for being critical of the government has been appointed secretary of state at the Ministry of Rural Development, a royal decree dated July 9 said. Sourn Serey Ratha, the former president of the Khmer Power Party (KPP), told The Post

  • Residence cards set for over 80,000 immigrants

    The Ministry of Interior plans to grant residence cards to more than 80,000 immigrants to better keep track of them. The ministry announced the plan on July 10, following the results of an immigration census. “An inter-ministerial committee and many operational working groups have been set up

  • Kingdom produces PPE gear

    Medical supplies from Cambodia have been donated to member countries of the Asian Development Bank (ADB) to assist in the fight against Covid-19, said an ADB report published on July 9. The report stated that the supplies were donated as a response to global efforts to

  • Kingdom, US vow stronger ties

    At an academic forum on Saturday to celebrate 70 years of Cambodia-US diplomatic ties, Cambodian researchers and officials expressed hope of encouraging US investments and for that country to deepen and improve its bilateral relations. Held at the Royal Academy of Cambodia, it reviewed the past 70

  • Fifteen Cambodians from Saudi get Covid-19

    The Ministry of Health on Sunday confirmed 15 more imported cases of Covid. The 15 men ‒ all Cambodian aged 21 to 33 ‒ arrived from Saudi Arabia on Friday via a connecting flight in Malaysia. They were travelling with 79 other passengers, three of them women. The ministry said 80 of the

  • Ministry requests school opening

    The Ministry of Education, Youth and Sport on Thursday said it would request a decision from Prime Minister Hun Sen to allow a small number of schools to reopen next month. Ministry spokesman Ros Soveacha said if the request is granted, higher-standard schools will reopen

  • Kingdom eyes India FTA, China deal set for August

    Cambodia is studying the possibility of establishing a bilateral free trade agreement (FTA) with India to open a new market with the second-largest regional economy. This comes as an FTA with China is scheduled to be signed next month while similar negotiations with South Korea

  • Judge lands in court after crashing into alleged thief

    Sen Sok district police on Thursday sent a Koh Kong Provincial Court judge to the Phnom Penh Municipal Court on manslaughter charges after he crashed his car into a woman riding a motorbike on Wednesday, killing her. District police chief Hour Meng Vang told The