Profiteers of the trade dispute

At the G20 summit, a further escalation in the US-Chinese trade dispute has been averted for the time being. However, the truce now agreed between Beijing and Washington stipulates that the special tariffs, which have been in place since the summer of last year and have just been significantly raised, will continue to apply for the time being. This means that the burdens particularly on the Chinese export trade will remain relatively high. The Asian neighbours are also affected by the bilateral trade barriers between the US and China as they are strongly integrated into the production chains of the Chinese export industry. Taiwan, Korea and Malaysia are particularly affected, and Vietnam, Thailand and Japan to a slightly lesser extent. Since the introduction of US tariffs, their exports of intermediate goods to China have plummeted as strongly as China’s exports to the US.

Nevertheless, China’s neighbours are also able to derive benefits from the transatlantic trade dispute. In the short term, the countries could benefit from import substitutions, most especially from a redirection of US demand given that many Asian countries have specialized – like China – in the manufacturing of technical products. In the medium to longer term, production facilities could be relocated entirely from China to other (Asian) countries. Vietnam and Taiwan in particular have been able to benefit from this trend in recent months, with exports to the US rising noticeably.

However, it should also be noted that none of the Asian countries is large enough to actually challenge China’s role as the „workbench of the world“. Only India would be in a position to do this because of its demography. However, the country has completely different production structures and focuses to a large extent on the export of certain commodities. It will therefore not be one of the countries to benefit from the import substitution of the US or be traded as a candidate for relocation. Instead, India will be one of the few countries in Asia able to benefit from the diverted demand of the Chinese. This applies, for example, to cotton, which China until now has purchased mainly from the USA, but also to soybeans and other agricultural produce which India is now able to supply on a larger scale to China. Otherwise, only the major agricultural countries in South America look set to benefit from this.


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