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Local manufacturing sector to benefit from US-China row

The domestic manufacturing sector will benefit from the ongoing trade war between the world’s top economic powerhouse, the United States and China, an Asian Development Bank official said.

Mahinthan Joseph Mariasingham, an ADB statistician who spoke in a recent symposium jointly organized by the Philippine Institute for Development Studies, Philippine APEC Study Center Network, and Chung Hua Institution for Economic Research, said the Philippine manufacturing could see a boost of 0.2 percent to 0.7 percent, mainly in electronics. 

“The assumption is that [the] PH economy is able to attract more trade from tariff-affected economies,” Mariasingham said, adding electronics was one of the manufacturing sub-sectors  highly integrated into the global value chain.

He said from the imposition of tariffs on selected products such as solar panels, washers, steel, and aluminum, globally, the US started imposing duties on a wide range of products imported from China.

Mariasingham said the US imports nearly $600 billion worth of goods and services from China, while the latter only buys about $130 billion worth of goods, making it the more affected between the two countries.

Globally, these trade conflicts “would have a small impact on the world’s gross domestic product,” but could present substantial risks once they escalate. On the other hand, the regional impacts could be offset “by potential redirection of trade and production,” he said.

Mariasingham said countries not affected by the imposition of tariffs could absorb imports and exports both from China and the US, which would have been affected by the ongoing trade war. He added this could be beneficial for developing Asian countries such as Malaysia, Vietnam and Thailand.

“Do you know why these three countries stand out today much higher than the rest of the [other] countries? Simply because they have the infrastructure to absorb the excess demand that would arise as a result of the imposition of tariffs by the US on Chinese products, mainly on electronic goods,” Mariasingham said.

In the Philippines, he said the manufacturing sector would gain more as a result of the trade conflict because of the huge electronics component sector of the country.

However, he urged policymakers in the country to focus on investing more on research and development, as well as on developing the technical capacity of Filipinos to encourage them to engage in higher value-added tasks.

Mariasingham noted that the services sector would feel positive effects albeit small, but warned that the business services would be negatively affected “if conflict escalates”.

He also reminded countries benefitting from the US-China trade wars not to be complacent as they need to compete with others, noting that some of its positive effects “may take a while to play out.”

Topics: Philippine manufacturing sector , United States , China , Asian Development Bank
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