These countries could be the surprise winners of the US-China trade war
After 20 years of the ubiquitous “Made in China” on all sorts of products, the country’s reputation as the world’s factory may be slowing. And investors are taking notice.
Rising labor and land costs, alongside greater environmental scrutiny, are making Chinese manufacturing less competitive compared with Asian rivals, and the trade war isn’t helping.
China’s global manufacturing exports have been in decline since 2016 and intense competition from around the continent has seen foreign direct investment flow in different directions.
Obvious rivals like Japan, Taiwan and South Korea have all increased in attractiveness in recent years to CFOs, according to UBS. However, it is south Asia’s growing production hubs of the Philippines, India, and Vietnam where the real investment shift is occurring.
After reaching a record high of 8.7% in 2015, China’s share in global FDI stock dropped by almost one full percentage point in 2016 and 2017, while the country’s export growth figures dropped significantly in December. Similarly, Chinese exports to the US have dropped off as a result of the trade war leading investors to look elsewhere.
Almost 60% of companies in the “machinery and equipment” industry indicated that they had moved some of their production out of China in the past 12 months, according to the UBS CFO lab survey.
China still remains one of the world’s strongest economies. Between January and November of 2018, the country still received slightly more foreign direct investment compared with the same period in 2017, despite the trade war.
If China and US can secure a deal to ease the trade war, China could aim to accelerate its economy further as some of the recent uncertainty is removed from the minds of investors.
Source: Business Insider