A TRADE war between the United States and China will result in “collateral damage” around Asia, the Bangko Sentral ng Pilipinas (BSP) said, as it recommended a strategy of diversified trade to cushion any impact.
“We will be directly hit in case trade tensions actually escalate,” Diwa C. Guinigundo, deputy governor of the BSP said during a session on trade imbalances at the Asian Development Bank 2018 meetings.
China serves as a “transshipment point” for Southeast Asian semi-finished products which China, in turn, processes further and sells to other markets like the United States.
ADB Manila 2018 logo
“To the extent that Chinese products (with Southeast Asian content) will suffer, we will also suffer… Their propensity to import from us will be affected in the process,” Mr. Guinigundo told reporters after the session.
He added that the impact of a trade war between the two economies may also trickle down to the country’s direct and portfolio investments.
“That is something we need to look out for,” Mr. Guinigundo said.
Malaysia’s RHB Bank Bhd said last month that the Philippines had much to lose in a trade war because 16.9% of its total exports are processed further in China and enter that country’s export value chain. — Janina C. Lim