ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Trade war

Southeast Asia exports to the US surge as the trade war smolders on

Production shift out of China provides tailwinds to Malaysia, Vietnam and Thailand

Shipping containers await loading in the Thai port of Laem Chabang. Southeast Asian exports have surged as multinationals move production out of China. (Photo by Kosaku Mimura)

SINGAPORE -- Exports from major Southeast Asian countries to the U.S. are surging as manufacturers scramble to find alternative production bases not subject to Chinese tariffs, with continued growth in these exports likely.

Malaysia's exports to the U.S. increased 11.7% on the year to 7.8 billion ringgit ($1.88 billion) in May, according to Malaysian government figures out Thursday. This more than offset a 2.2% drop in exports to China, contributing to a 2.5% gain in exports overall.

Foreign-owned semiconductor and electronics plants abound in the northern state of Penang and on the outskirts of Kuala Lumpur.

"Multinationals are switching their production sites from China to Southeast Asia to avoid punitive tariffs," said an official at a local branch of a Japanese bank.

This adjustment in production operations by global companies is softening the blow of the flagging Chinese economy in Malaysia, where a third of exports are related to the electronics industry.

The same pattern is found in other countries. Exports from Thailand to the U.S. increased by 7.8% in May to $2.62 billion thanks to strong shipments of computers and their parts. Singapore's nonoil exports to the U.S. grew in value terms for a fourth straight month, while those to China fell by double digits.

Prolonged trade frictions between Washington and Beijing hurt Southeast Asian economies, which are bound to China by tightly linked supply chains. But countries in the region are finding that the pluses that come from serving as alternative export bases to China outweigh the minuses from supply chain disruptions.

Simulations by the Mizuho Research Institute point to Vietnam as the biggest beneficiary from so-called export substitution in the event of a full-scale Sino-American trade war, with a 7.1% net increase in its exports. The net boosts will exceed 1% for Malaysia and Thailand, the institute predicts.

HP and Dell are looking to move up to 30% of their notebook computer production out of China. As such adjustments by global manufacturers continue, Southeast Asian economies stand to reap even greater rewards.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends June 30th

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media