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SHANGHAI • The US-Chinese tariff party has been warning for months that it could have an impact on global economic growth, and recent data indicate that trade tensions are beginning to be felt.
Manufacturing industries in several Asian export-dependent countries, as well as in China, weakened last month as economic conditions darkened.
The official index of Purchasing Managers (PMI) of China, which measures the activity of factories, reached 50.2 last month, against 50.8 the previous month, last sign of weakness of the second world economy, facing the trade war and an internal debt problem.
But China's problems are bad for the rest of the region and for the world, analysts said.
According to Nikkei / IHS Markit indices, South Korea's exporters to Malaysia saw their PMI decline last month.
Taiwan experienced its largest drop in production and new business in just over three years. Business purchases fell for the first time since May 2016 and companies expect a drop in factory output in the next 12 months, said Nikkei / IHS Markit.
"Taiwan feels the effects of this trade war because China is the factory of many companies in Taiwan, and when the estuary is blocked, you feel the effects," said Dr. Sun Ming-te of the Research Institute. of Taiwan.
The unrest in China is bad for the rest of the region and the world, analysts said. According to Nikkei / IHS Markit indices, South Korea's exporters to Malaysia saw their PMI decline last month.
South Korea's PMI rose from 51.3 in September to 51 last month, while a separate Korean business climate index for the manufacturing sector hit its lowest level in two years. China is South Korea's largest trading partner, absorbing a quarter of Korea's exports.
Manufacturers in Southeast Asia also felt the effects, with the PMI in Malaysia and Thailand falling below the 50-point mark, indicating a contraction in the sector. It was the lowest PMI in Malaysia since July and the lowest in Thailand in two years.
In a recent interview, Malaysian Prime Minister Mahathir Mohamad complained that US President Donald Trump – who has accused various trading partners of having "scammed" America – "seems to withdraw from all its commitments abroad ".
Tun Dr. Mahathir said it hurts everyone, including the United States.
"We want to remain friends with the United States and continue to trade with the United States," he said. "But the trade war between the United States and China is hurting us, we must pay the price."
Singapore's manufacturing outlook also continued to darken, as the PMI declined 0.5 percentage point to 51.9 last month, continuing its decline from the previous month.
At its annual meeting last month, the International Monetary Fund warned that trade frictions and other threats would hinder the global economy and reduce its growth forecasts for this year and the following year.
The eurozone posted disappointing figures for the PMI last month, however, due to factors other than trade tensions. But not everyone feels the shock: Japan's manufacturing seems solid last month.
Trump, meanwhile, is under little pressure to tame his trade rhetoric in his country, with an optimistic American outlook characterized by rising wages and a low unemployment rate.
Even in Asia, there will be winners as conflicts will realign business models, economists said.
Vietnam, in particular, is seeking to gain ground when foreign manufacturers leave China to escape the crossfire of the trade war. What many see as an increasingly unfair playground for foreign companies in China.
The Vietnamese PMI rose from 51.5 in September, to its lowest level in 10 months, to 53.9 last month.
"The reliable data on exports and industrial production in recent months have not been as good, but the latest study shows that Vietnam is more resilient than its Asian counterparts to China's trade war with China." said Miguel Chanco, senior economist Macroeconomics of the Pantheon.
"If the trade war intensifies, Vietnam will be one of the main destinations of export-oriented companies looking to leave China."
FRANCE MEDIA AGENCY
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