Philippines most at risk in South-east Asia from worsening US-China trade conflict

A labourer works inside an electronicsfactory in Qingdao, Shandong province, China.
A labourer works inside an electronicsfactory in Qingdao, Shandong province, China.PHOTO: REUTERS

MANILA (BLOOMBERG) - The Philippines could be the most at risk in South-east Asia from the worsening trade conflict between China and the US.

About 16.9 per cent of the Philippines' shipments abroad are part of China's value chain; goods that serve as inputs to China's exports, according to RHB Bank Bhd. That compares with 11.4 per cent for Malaysia and just 2.2 per cent for Vietnam.

US President Donald Trump on Thursday (April 5) ordered his administration to consider imposing tariffs on an additional US$100 billion (S$131.69 billion) in Chinese imports, dashing optimism that trade tensions could ease.

Policymakers across South-east Asia are focusing on bolstering domestic markets to cushion the fallout should the situation worsen.

The sectors that are likely to be hit badly are electronics, electrical machinery such as computers and industrial goods, RHB said in a note on Wednesday before the announcement of possible new US tariffs.

China is the biggest trading partner for many South-east Asian economies and an important source of investment and tourism in the region.

While large domestic markets in Indonesia and the Philippines help to shelter those economies from a trade war, others in the region, like Singapore, Malaysia and Thailand, are more reliant on exports.