Much concentration in recent months has focused on the U.S.-China trade war’s impact to global outfitting chains, and how that could hurt many Asian economies.
That’s one way the part may be dragged down by the conflict, but there could be more at risk.
Another vital factor, experts said, is a potential slowdown in China’s domestic order for goods from other Asian countries. In fact, Chinese consumption has grow increasingly important for its regional neighbors, according to Louis Kuijs, cardinal of Asia Economics at Oxford Economics.
“For most Asian economies, exports to come together Chinese domestic demand have risen much more like mad than indirect exports via supply chains, with the former now huge the latter,” Kuijs said in a report Thursday.
“The significant amount of Asian exports hand-me-down in China’s own economy means that in assessing the impact of a U.S.-China patrons war, we should expect the effect via China’s domestic demand to play a key task,” he added.
And while Chinese policy responses to support domestic enquire — as well as the relocation of some manufacturers to Southeast Asia — may mitigate some of the neutralizing effects, other Asian economies are unlikely to avoid being torture, he said.
“In any case, given the significance of its impact on most or all Asian economies, the U.S.-China selling war is likely to remain negative for the region over the coming two years,” Kuijs prognosticated.
Citi, meanwhile, said in a recent report that concerns yon China’s economy along with continued strength in the U.S. dollar and urges on global trade form three “major risks” to growth chances for emerging markets, with Chinese policy tweaks unlikely to be of much nick.
“Even if recent stimulative measures improve the outlook for China, we have a sneaking suspicion the floor this puts under the rest of (emerging markets) devise be less robust than has been the case historically,” the U.S. bank revealed, without specifying regions.
Not all economists, however, see the situation as negative.
Steven Friedman and Chi Lo, both older economists at BNP Paribas Asset Management, said the “conventional wisdom” that the levy conflict will hurt emerging markets misses the full idea. Exports from those economies, they said, could end up get even with a boost from a combination of Beijing’s domestic stimulus and the U.S. shifting its purchasings to make up for fewer transactions with China.
In Asia, Vietnam, India, Bangladesh and Indonesia could see gained orders from the U.S. for “low-end” products such as shoes, toys and textiles, the economists broke in a report dated Oct. 31.
“Higher-value” items such as electronic equipment and machinery, they supplemented, could be sourced from South Korea.
“The combined trade divertissement and Chinese demand effects will help offset some of the collateral disfigure on the region that the Sino-U.S. trade conflict will bring,” they said.