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Robert Carnell
Regional Head of Research, Asia-Pacific, ING
One of the most depressing things about the last four years, has been the way in which radical policy initiatives have sprung out of thin air, requiring some early morning firefighting. I don’t expect these headaches to entirely disappear, but would happily see their frequency diminish. Tension between the US and China looks set at best to moderate, not disappear under a different administration, and could well intensify further if President Trump wins again, which we cannot rule out.
And the tension stems at least as much these days from a resurgent China, not just a bellicose US. China is no longer content to just bide its time quietly on the sidelines. It is increasingly challenging the US as a rival for the model of the next century, and not just in the trade sphere, but technologically, militarily. It would be surprising if there was not more pushback from the US as this happens, whoever is in the White House. And inevitably, this will lead to international political considerations to impinge on the economic /trade arena for countries like the UK.
In reality, though, Trump or no Trump, Asian trade has been undergoing a significant transition in recent years, and the main impact of a potential change in the US administration, is merely that we might see fewer policy surprises – making life for analysts and business leaders alike, a little easier to plan around, though not necessarily a more cooperative trade environment.
China has been gradually losing market share of trade to lower cost rivals, both other cheaper Asian countries, and cheaper local producers to key markets (US and Europe). The shift of production and trade away from China to other sources is not new, it had begun before the trade war, before the tech war, before Covid-19 and was driven by an increasing lack of competitiveness as Chinese wage growth regularly exceeded its productivity growth. The trade and tech war and now the pandemic, have simply accelerated these changes. A recent MAS study suggests that between 2017 and 2019, China lost more than 25% market share in the electronics segment (final and intermediate goods) to Vietnam, Taiwan and Malaysia.
What is also becoming clear to many MNCs operating in Asia is, whilst China is the great prize in terms of market entry, it is also a high risk market. The trade and increasingly tech wars which the US is waging with China are growing reasons not to have all your eggs in one basket. The nature of this conflict may change under a new administration, more WTO, more WHO, more NATO, for example – basically more multilateral, with allies and partners like the UK. But it is not necessarily going to be any less challenging for China.
Philip Steggals
Global Head of Research, Kadence
Could Trump Winning be better for ASEAN in the long run
Much has been written about Trump pulling the US out of the TPP early into his first term. Trump is obviously ‘America First’ and a second term would likely see him double down on this stance. Whilst there is hope in the region that a Biden win will see the US re-enter CTPTP, much suspicion has been raised on dealings with China by Trump within the US, coupled with the ongoing challenge of COVID-19, it is unlikely that ASEAN and Asian policies in general will be a top priority for Biden.
As such, whilst a Biden win should be a benefit for future ASEAN commerce, and all multilateral trade on paper, there will still be uncertainty in terms of what the US will actually commit to. With a Trump win, ASEAN must move forwards together, now. PM Lee stated earlier in the year that a ‘secure and predictable environment’ was a key step that US needed in its ties with China and ASEAN. With Trump, there can be no predictability, so ASEAN nations must look to secure long-term growth regardless of future US foreign policies.
Digital strategy for brands
Building upon the viewpoint, that a Trump victory will cause a predictable increase in the ‘America First’ mentality – there is arguably no single beneficiary more than Singapore. With global uncertainty around US and China policies, but with billions of potential buyers in Asia – companies will be looking to see how they can navigate the best trade deals, whilst gaining access to new markets. Singapore stands with a foot firmly in each part of the World. PM Lee stated on 20th September that "We take no joy in the troubles in the world, but it is a fact that in a troubled world, Singapore is one of the few trusted countries that stands out, and we must guard that reputation zealously”.
A recent study by Visa and STB has shown that local Singaporean brands have been most severely hit by COVID-19. A lack of online presence has seen only $2 out of $100 being spent online on local brands. A rise in digital spending means that consumers can look outside of Singapore for more products and services. US and UK firms looking to reach a new audience will be able to utilise a variety of online platforms for their distribution. Trump victory and a promised 2021 Brexit will likely mean closer economic ties between US and UK – but online retail and the desire for the latest global brands will see many Asian consumers looking online for their products.