On South-east Asia Region may have to contend with flood of cheap China goods

While United States President-elect Donald Trump has threatened to impose blanket tariffs on imports, the greater danger for South-east Asian countries is the risk of being flooded by cheap Chinese goods which have been shut out of the American market, say analysts.

- Tan Hui Yee

While this may be good news for consumers, it means that the region's own exports will become far less competitive, affecting economic growth and jobs.

During the election campaign, Trump, who just won a second term as US president, vowed to slap tariffs of up to 60 per cent on Chinese imports and at least 10 per cent on goods from all other countries.

He also threatened to pull the US out of the Indo-Pacific Economic Framework For Prosperity, which is meant to enhance economic cooperation in the region, and raised concerns over the extent of US military commitments to Asia.

If Trump follows through on his tariff threats, South-east Asian economies face being flooded with Chinese goods, which are significantly cheaper than competitors due to Chinese state subsidies and economies of scale.

Countries in the region looking to develop their economies would need to be very strategic if they want to compete against Chinese goods being sold below cost, said Ms Trinh Nguyen, a Hong Kong-based senior economist with Natixis consultancy.

"They are going to face a wall of Chinese goods that have very limited places to go," she said.

"China is not going to stop producing these goods. It will continue its industrial policies because it fundamentally believes that the financialisation of the economy is not the way to develop, and that it will have to be able to develop real goods. So, it will continue to subsidise production," she added.

Such dynamics could spawn greater trade conflict in the region.

Ms Priyanka Kishore, founder and principal economist of Asia Decoded consultancy, said Trump's plans "do not bode well for South-east Asia overall".