At the WEF, threats by US President Donald Trump to slap more punishing tariffs on Chinese goods are set to dominate a meeting of Asian business bigwigs and leaders that opens Wednesday in Hanoi.
The escalating trade spat between Washington and Beijing has caused global ripples — and is being closely watched in Southeast Asia where many export-focused economies are set to gain from the fallout.
Trump has already imposed 25 percent customs duties on $50 billion worth of Chinese goods — triggering a tit-for-tat response from Beijing — and vowed last week to increase tariffs to hit $200 billion in Chinese imports “very soon”.
The mounting dispute looms over a regional World Economic Forum (WEF) kicking off in the Vietnamese capital Wednesday morning where leaders from the Association of Southeast Asian Nations (ASEAN) and business executives are meeting.
“ASEAN countries don’t want to count their chickens before they hatch, but I think they see it on a net basis as a gain for them because it means shifting manufacturing into Southeast Asia that was…(earlier) in China,” Fred Burke, managing partner at Baker McKenzie in Vietnam, told AFP.
Rising labour costs in the world’s second largest economy have already precipitated a push into countries like Vietnam and Cambodia where Adidas shoes, H&M T-shirts and Samsung phones are made on the cheap.
But the trade war has accelerated that process, with several Chinese firms turning to the region to produce items from bike parts to mattresses in a bid to avoid the new US tariffs.
Although the spat is likely to boost foreign investment in Southeast Asia, some analysts warned the long-term impact may be less rosy.
“There are concerns that protectionism is not good for Asia as a region because it’s a very export-driven region, so any shift toward more trade barriers… is not good,” Rajiv Biswas, Asia-Pacific chief economist at IHS Markit, told AFP.
ASEAN trade increased by a value of nearly $1 trillion between 2007 and 2014, according to WEF, as the bloc has enthusiastically embraced trade liberalisation — in contrast to the policies promoted by Trump.
In one of his first post-election moves, the US president pulled out of the sprawling 12-nation Trans-Pacific Partnership (TPP), calling it a job killer.
The current edition of the WEF, which closes Thursday, is officially themed ‘Entrepreneurship and the Fourth Industrial Revolution’, with a focus on how economies should adapt to so-called ‘disruptive technologies’ like automation and artificial intelligence that threaten to replace human jobs.
Several regional leaders are slated to attend the WEF, including Indonesian President Joko Widodo, Cambodia’s newly re-elected strongman Prime Minister Hun Sen and Myanmar’s de facto leader Aung San Suu Kyi, who faces fresh global scrutiny over the Rohingya crisis.
She is scheduled to speak at the WEF Thursday, though organisers have not said whether she will discuss last week’s ruling by the International Criminal Court that allows its chief prosecutor to investigate the forced deportation of 700,000 Rohingya Muslims by Myanmar’s military as a possible crime against humanity.
Myanmar has also faced international censure over the decision to jail two Reuters journalists for seven years for their coverage of a Muslim massacre, under a draconian state secrets law.
South Korean and Japanese foreign ministers will also host a session touching on tensions with North Korea and regional security issues at WEF Thursday.