ESCALATING trade tensions between China and the United States will hurt Asian exporters of electronic products to China the most, according to Moody’s Investors Service, which estimates the Philippines to be among the most dependent in the region on such exports.
In a May report, “Evolving trade patterns — Asia: Exports still drive growth, as intra-regional links increasingly define how Asia trades,” the credit rating agency said it found that Asia “continues to rely on merchandise exports to generate economic growth.”
Manufacturing economies and the region’s two trans-shipment hubs, Singapore and Hong Kong, rely on exports the most, according to Moody’s, noting that a quarter of Asian countries’ outbound shipments make up more than half of their GDP.
With this reliance on exports, China’s imports from Asian sources are viewed as critical, with China serving as a final assembly for electronic components, according to Moody’s, which noted that the trend is likely to continue.
“China is more and more at the center of Asia’s trade activity, in part shaping the region’s supply chains and increasingly a source of demand for final goods from Asia, especially for consumption goods,” said Joy Rankothge, a Moody’s vice-president and senior analyst, in a May 15 statement.
As such, an escalation in the dispute between the US and China will leave Asia’s electronics sector the “most exposed.”
“Accordingly, the region is vulnerable to a further escalation in tensions between the US and China over trade and technology transfers. Additional US restrictions on Chinese exports, investment and purchases of technology supplies would have an impact on the rest of Asia through supply chains,” added Mr. Rankothge.
The report noted that electronic parts accounted for 41.1% of the Philippines’ exports to China in 2016.
The country trailed Hong Kong, Taiwan, South Korea, Singapore and Malaysia whose outbound shipments of electronic parts to China respectively were at 63.4%, 55.3%, 46.5%, 45.4% and 44.7% of the total that year.
This makes Taiwan, Malaysia, and South Korea as the “most exposed given their economies’ reliance on exports of these products and components to China.”
Meanwhile, major trade hubs like Hong Kong and Singapore “will likely be impacted too.”
Sought for comment, Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) President Danilo C. Lachica said he is “not panicking over the purported trade war.”
“The specifics of the US-China trade war are not very clear for Philippine exports to China. My sense is some reasonable agreement will be reached,” Mr. Lachica said in a text message.
He added that statements over a possible disruption in Asian trade “will be tempered by wiser economic advisers to avoid supply chain disruptions, loss of jobs, expensive commodities and other negative effects.” — Janina C. Lim

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