Former Minister for Foreign Affairs and Cabinet Minister George Yeo believes that Asean countries could be winners in the trade war between China and the United States.
Writing for the Brunswick Group for Today Online, Mr. Yeo says that with the trade war between the two biggest economies in the world, the United States and China, still waging and showing no signs that it will abate anytime soon, the unexpected beneficiary could well be South East Asian countries.
In a few years, China is poised to be the largest market on the globe, for manufactured products, services, food and raw material. Next month will bring the first annual China International Import Expo, which will be held in Shanghai. Industry experts are expecting the expo to not only be big but to have a significant impact on other countries.
Asean, with its free trade agreement wit China, is slated to become an important manufacturing base for export for many countries.
China’s economic partnership with Asean nation was further solidified when President Xi Jinping said that he hoped that China’s trade with Asean would reach US$1 trillion (S$1.38 trillion) by 2020, at the announcement of the Belt and Road Initiative in Jakarta in October 2013.
However, several things must happen first, such as the improvement of infrastructure, hence the BRI, as well as simpler border procedures between China and Asean countries.
Mr. Yeo further shows how each of the 10 Asean countries could benefit from the US-China trade war:
- Vietnam is now the most important trading partner China has in the Asean. It has costs that are significantly lower than China’s, and like China, is fighting hard against corruption. But unlike China, Vietnam’s Communist Party has stayed united. Analysts call Vietnam the next economic powerhouse in the Asean.
- Thailand has bright economic prospects ahead. It has good trade relations with the US and Japan as well as China. In 2021, a high speed rail between Bangkok, Vientiane and Kunming will be completed. It also occupies an important central location in the region.
- Laos has also been making steady steps ahead in terms of its economy. It has great potential for hydropower electricity because of the Mekong River, and exports this to its neighbors.
- Cambodia is currently enjoying political stability and growth in infrastructure, as well as a manufacturing boom. China, along with other countries, has invested heavily in Cambodia, and other nations looking for manufacturing sources are eyeing the country.
- Despite Myanmar’s negative press due to the problems with the Rohingya minority, the country’s economy has been growing. Myanmar is set to benefit greatly from China’s Belt and Road Initiative. Last month China and Myanmar signed a Memorandum of Understanding to set up a China-Myanmar Economic Corridor, and there is potential for millions of manufacturing jobs to be established in the country in the next few years.
- Indonesia’s improved infrastructure is part of the country’s exponential growth in the past 4 years. Indonesia is rich in natural resources, which gives it a leg up when it comes to resource-based industries. And because of its younger and booming population, it is set to eventually becoming one of the biggest economies in the world.
- The Philippines is rich in human resources, with 10 million overseas Filipino workers. Infrastructure is on the rise, thanks to investments from China, which has attracted even more inflows of funds for manufacturing fast-moving consumer goods.
- Malaysia, with its new governance, enjoys the advantages of a well-educated population as well as good infrastructure. The oil-rich country is also reaping the benefits of higher crude prices worldwide. China is enjoying a good relationship with the Mahathir government, despite some Belt and Road projects needing renegotiating.
- Brunei is also enjoying stronger relations with China of late, and like Malaysia, has benefited from higher oil prices. The sultanate is stable and secure, with its deep reserves of natural gas and oil.
- Trade with China will take Singapore far in this century. A melting pot of many nationalities, Singapore brings together many peoples and cultures from all over the world, is a staunch defender of free trade, and has s strong role in international trade and finance. Singapore enjoys bilateral agreements with the US, Japan, Korea, China, Australia, India, the Gulf Cooperation Council and Europe, as well as regional agreements in South East Asia.
Mr Yeo further writes that while China is the biggest trade partner of every single Asean country, Asean countries still fight for free trade agreements. Japan, India, the United States and Europe have also been willing partners in helping build Asean infrastructure. It is unlikely that in the US-China trade war that the Asean will take a side, but continue to keep growing in its own right.