ASEAN Countries Set to Benefit From US-China Discord

With the friction between the US and China, according to the think tank Oxford Economics, Southeast Asian countries are predicted to benefit the most in terms of manufacturing investments.

With their research titled Shifting Asian supply chains amid ongoing US-China friction, Oxford Economics has said that they predict Southeast Asian countries to be one of the beneficiaries as firms choose to diversify and move production away from China.

Oxford Economics has said that “The region is already well established in global and regional supply chains. And it looks set to remain an attractive destination for export-orientated FDI (foreign direct investment), given its labor dynamics, improving quality of infrastructure, and openness to trade,”

They mention that a few firms are looking at the increasing Chinese labor costs and that environmental pressures continue to rise.

Specifically, Oxford Economics has mentioned that the Southeast Asian economies particularly in Singapore, Vietnam, Indonesia, Thailand, Malaysia, and the Philippines or the Association of Southeast Asian Nations (ASEAN)-6 in global inward FDI which averaged roughly 11% in the past five years.

Oxford Economics has mentioned that ASEAN has gained from trade decoupling between China and the US which began after the US increased its tariffs on Chinese imports back in 2018.

Despite China being the largest supplier of imported goods in the US, their share has decreased to 17% in the first half of the year from a previous 21%.

“The biggest winners have been ASEAN-6,”  said Oxford Economics. They have stated that the region as a whole now makes up 10% of the total US imports.

Source: Philstar