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The shipping containers are stacked at Long Beach Port, the second largest container port in the country, on September 18, 2018 in Long Beach, California. AFP
SHANGHAI, China – The slowdown in tariffs between the United States and China has triggered warnings for months that it may affect global economic growth, and recent data indicate that trade tensions are indeed beginning to take hold.
Manufacturing industries in several Asian export-dependent countries, as well as China, weakened in October as economic conditions worsen.
The official index of purchasing managers (PMI) of China, which measures the activity of factories, reached 50.2 in October, against 50.8 the previous month, last sign of weakness of the second world economy, facing the trade war and a problem of internal debt. .
But China's problems are hurting the rest of the region and the world, analysts said.
According to indices by Nikkei / IHS Markit, the Asian exporting countries from South Korea to Malaysia recorded a decline in their PMI in October.
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 is feeling the effects of this trade war because China is the factory of many Taiwanese companies. When the estuary is blocked, you feel the effects, "said Sun Ming-te of the Taiwan Institute of Economic Research.
Pay the price
South Korea's PMI rose from 51.3 in September to 51.0 in October, while Korea's separate business climate index for the manufacturing sector reached its lowest level in two years.
China is South Korea's largest trading partner, absorbing a quarter of Korea's exports.
"The situation could worsen next year due to a prolonged trade war between the United States and China, increasing default risks for Chinese debt-laden companies and a slowdown of the global economy that reduces demand for our exports, "said c, analyst at Korea. Institute of Finance.
Manufacturers in Southeast Asia also felt the same, with the PMI in Malaysia and Thailand falling below the 50-point level, indicating a contraction in the sector.
It is the lowest PMI in Malaysia since July and the lowest in Thailand in two years.
In an interview with the AFP last week, Malaysian Prime Minister Mahathir Mohamad complained that US President Donald Trump – who has accused various trade partners of "scammed" the company, said he was in trouble. America – "seems to be withdrawing from all its commitments abroad".
Mahathir, 93, said everyone was injured, including the United States.
"We want to remain friends with the United States and continue to trade with the United States," said Mahathir.
"But the trade war that is going on between the United States and China is hurting us. We have to pay a price for that. "
Vietnam or bust
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 2018 and 2019.
The eurozone released disappointing buying index numbers in October, largely because of factors other than trade tensions.
But not everyone feels the shock, manufacturing in Japan seeming solid last month.
Trump, meanwhile, faces little pressure to tame his commercial rhetoric at home, with an optimistic American outlook characterized by rising wages and a low unemployment rate.
And even in Asia, there will be winners as conflicts redefine 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 Vietnam PMI rose from 51.5 in September to 53.9 last month.
"Reliable data on exports and industrial production in recent months have not been as good. The latest survey nevertheless shows that Vietnam is more resilient to the US-China trade war than its counterparts in ASEAN, "Miguel Chanco, chief economist of the Pantheon Macroeconomy, told AFP.
"If the trade war intensifies, Vietnam will be one of the main destinations of export-oriented companies wishing to leave China." / Ee
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