Some Asian countries stand to gain if US president-elect Donald Trump pushes ahead with his promised massive tariffs on China and triggers a new wave of factory relocations to the rest of the region.But a trade war between the world’s biggest economies would also destabilise markets everywhere, with Asia — which contributes the largest share of global growth — the most affected.Trump, who won a crushing presidential victory this week, vowed during his campaign to slap 60 percent tariffs on all Chinese goods entering the United States in an attempt to balance trade between the two nations. Analysts however question whether the new president will stick to such a high figure, and dispute the blow such tariffs could inflect on the Chinese economy, estimating GDP could be lowered by between 0.7 percent and 1.6 percent.The cooling effect would also make waves throughout Southeast Asia, where production chains are closely linked to China and enjoy significant investment from Beijing.”Lower US demand for Chinese goods due to higher tariffs on China will translate into lower demand for ASEAN exports, even if there aren’t US tariffs levied directly onto those economies,” said Adam Ahmad Samdin, of Oxford Economics.Indonesia is particularly exposed through its strong exports of nickel and minerals, but China is also the top trading partner of Japan, Taiwan and South Korea. In addition to China, Donald Trump has also warned of an increase of 10 to 20 percent on duties for all imports, as part of his protectionist policies and fixation that other countries take advantage of the US.”The extent of these effects likely depends on the direct exposure of each economy to the US,” said Samdin, who added that America accounts for a 39.1 percent share of Cambodian exports, 27.4 percent from Vietnam, 17 percent from Thailand and 15.4 percent from the Philippines.- India to be targeted? -Trump first slapped China with heavy tariffs in 2018 during his first administration, leading to the emergence of “connector countries”, through which Chinese companies passed their products to avoid American taxes.Those countries could be in the line of fire now.”Vietnam’s electronics exports to the US could also be targeted by Trump, in a bid to halt the diversion of Chinese electronic products to the US via Vietnam since 2018,” said Lloyd Chan, a senior analyst at MUFG, Japan’s largest bank.”This is not inconceivable. Trade rewiring has notably gained traction in the region’s electronics value chain.””India could itself become a target of protectionist measures by the US due to the large share of Chinese components in Indian products,” added Alexandra Hermann, an economist with Oxford Economics.Trump could also impose higher tariffs on Indian goods in sectors such as “automobiles, textiles, pharmaceuticals and wines, which could make Indian exports less competitive in the US”, said Ajay Srivastava of the New Delhi-based Global Trade Research Initiative.A trade war would be dangerous for India, said Ajay Sahai, director of the Federation of Indian Export Organisations. “Trump is a transactional person. He may target higher tariffs on certain items of Indian exports so he can negotiate for lower tariffs for US products in India,” he told AFP.- Supply chain rejig -In the medium term, these negative effects could be counterbalanced by establishing factories outside China to escape the fallout. The “China+1″ strategy initiated during Donald Trump’s first term saw production shifts to India, Malaysia, Thailand and Vietnam.With its geographical position and cheap skilled labour, Vietnam has already been one of the main beneficiaries.The country has notably received investments from Taiwanese Apple subcontractors Foxconn and Pegatron and South Korea’s Samsung, becoming the second-largest exporter of smartphones in the world behind China.”The likelihood increases that even more businesses will want to… have a second, or third, production base outside China,” said Bruno Jaspaert, chairman of the European Chamber of Commerce in Vietnam.Chinese firms themselves are investing massively from Vietnam to Indonesia in sectors including solar, batteries, electric vehicles and minerals.”American companies and investors are very interested in opportunities in Vietnam and this will continue under the incoming Trump Administration,” said Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi.But whether it is low-end or high-tech production, China’s competitive advantage in terms of price, scale and quality is difficult to reproduce, warns Nomura bank.A reorganisation of production chains could lead to a “loss of efficiency” and increased prices, “with a negative impact on global growth”, Thomas Helbling, deputy director of the IMF for Asia, recently explained to AFP.Asian countries could therefore gain export market share but ultimately see their situation deteriorate amid weakening global demand.

China has unveiled an ambitious plan to relieve public debt, aiming to turn local governments away from belt-tightening practices that have exacerbated a domestic downturn.Policymakers gathered in Beijing this past week approved a proposal to swap six trillion yuan ($840 billion) of hidden debt belonging to local governments for official loans with more favourable terms.Hidden debts are defined as borrowing for which a government is liable, but not disclosed to its citizens or to other creditors.Here are some of the key points behind China’s massive debt shakeup:- Where is the debt hiding? -Much of local governments’ hidden debt in the past two decades was accumulated through state-owned companies known as local government financing vehicles (LGFVs).While the provincial and regional authorities themselves faced restraints on their own borrowing, LGFVs were less regulated and used for taking out loans and issuing bonds in order to finance infrastructure projects.But local governments today are running out of infrastructure needs to meet, which means that newer projects, like extra bridges and conference centres, tend to make less money back as there is little demand for them.And with the national real estate market crashing and hurting government land-sale revenues, LGFVs risk defaulting.China’s local governments had an estimated 60.4 trillion yuan ($8.4 trillion) of debt hidden in LGFVs as of 2023, according to the International Monetary Fund.- Why does hidden debt matter? -Burdened by debt, local authorities have in recent years turned to cost-saving measures like cutting civil servant salaries and pensions, suspending transport services and aggressively collecting fines and fees from businesses.According to the Chinese financial publication Caixin, local governments in the Guangxi, Shaanxi and Sichuan regions saw a significant increase in fines collected in the first half of 2022.And the central government in Beijing this year warned localities not to raise revenue through fines, after a county in northern Hebei province was found in January to have forged signatures on nearly 2,000 traffic violation tickets.The penny-pinching has hurt business and consumer confidence, while local government creditors and infrastructure contractors remain unpaid.- What is China doing to fix this? -The debt swap plan announced Friday will raise the local government debt ceiling every year from 2024 to 2026, with a total of $558 billion of hidden debt that can be replaced.Meanwhile, $112 billion “will be arranged from new local government special bonds every year for five consecutive years to supplement government financial resources”, Finance Minister Lan Fo’an told reporters on Friday.The scale of the plan exceeded expectations, but analysts at Goldman Sachs warned on Friday that its impact would be small unless “the majority of the proceeds are used to pay corporate arrears and delayed civil servant salaries”.If used correctly, the new measures could “free up fiscal resources and allow local governments to function more normally”, Societe Generale analysts wrote.This is not the first time China’s central government has tried to rein in local debt.In 2015, Beijing rolled out a debt-for-bonds programme that encouraged local governments to exchange loans for lower-interest bonds.This was followed over the years by a slew of debt-tackling measures including specific bonds intended to help refinance existing projects.The new debt plan is part of a raft of policies unveiled by officials since September, all aimed at lifting the country from a prolonged downturn.Beijing has eased home purchasing restrictions and cut interest rates to boost economic activity, but analysts have called for more detailed stimulus measures.

Donald Trump’s first White House term saw a bruising trade war with China that left a lingering impact on farmers — and many are bracing for further fallout as the President-elect threatens higher levies on Beijing.Trump tariffs since 2018 hit some $300 billion of Chinese imports, sparking retaliation that targeted key farm products like soybeans and caused such exports to fall.US farmers relied on subsidies to get by at the time and say China has since reduced its reliance on American agriculture products.Trump has suggested tariffs on all imports this time — with an especially high rate on China — making many farm owners jittery of a return to trade tensions.But this comes even as Trump’s Republican party saw wide support in rural areas during this year’s election, with many farmers supporting him despite the financial hit in the trade war. The hope is for economic conditions to improve.- ‘No money’ -“There was no money to pay the bills, no money to actually have a living out of the operation,” said Ted Winter, whose farm in Minnesota grows corn and soybeans.Retaliatory tariffs on the United States caused more than $27 billion in US agricultural export losses from mid-2018 to late-2019, the Department of Agriculture (USDA) found.China accounted for around 95 percent of value lost.Soybeans in particular made up nearly 71 percent of total trade loss, with Brazil gaining most of the lost trade.Michael Slattery, who grows crops like corn, soybeans and wheat in Wisconsin, added: “I view this second term with tremendous trepidation.”Between 2017 and 2018 for example, his soybean income fell by over $25,000 — and government payouts to alleviate the pain made up for just over half the shortfall.The USDA estimates agriculture and related industries contributed a 5.6 percent share to GDP in 2023, while direct on-farm employment made up 2.6 million jobs as of recent years.- Lasting hit -“What is more frightening is the breakdown in commercial order that has taken decades to establish,” Slattery said.While US farm exports to China rebounded after Washington and Beijing reached a trade war truce in 2020, a year after the deal, American market share remained lower than levels seen before the retaliatory tariffs were enacted.”The tariffs that were imposed upon China drove them to find other sources for their food needs,” said Winter.And without foreign buyers like China to absorb excess farm production, the market becomes oversaturated, in turn driving down prices and farmer incomes, said Slattery.Federal payments may have been helpful to farmers during the trade war, but trade ramifications extended long beyond it, said Scott Gerlt, chief economist at the American Soybean Association (ASA).- ‘Prime targets’ -Soybeans and corn will again be “prime targets for tariffs” in a potential trade dispute, according to a National Corn Growers Association and ASA report last month.Both commodities account for about one-fourth of the country’s agriculture export value.The report cautioned that many tariffs China imposed on US farm products have been given a waiver but could be reinstated — triggering an average drop of 51.8 percent in US soybean exports from expected levels.Similarly, corn exports to China would also slide.Brazil and Argentina, meanwhile, are expected to gain global market share with higher exports.If the United States was not a reliable trade partner, other nations would turn to other countries, said ASA’s Gerlt.”We saw some other buyers step in to some extent, like Egypt did for a while, but there is no replacing the size of the Chinese market,” he told AFP.Among tariff proposals Trump floated on the campaign trail, he warned that the United States should be careful with trade policy, especially when it comes to countries that are major buyers of US agriculture.