Beijing should encourage its firms to deepen integration with Southeast Asian economies instead of using the region as a transshipment route to the US, according to a senior regional economist – as Washington threatens the export-reliant region with high tariffs.
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Transshipments drew attention earlier this month after the US announced tariffs on imports from Vietnam and 23 other trading partners. US President Donald Trump warned that imports diverted through Vietnam would face a 40 per cent tariff – double the 20 per cent levy on goods made in the Southeast Asian nation.
“Of course, [Southeast Asian authorities] would check the country of origin for products,” said Dong He, chief economist at the Singapore-based Asean+3 Macroeconomic Research Office (AMRO), on Tuesday, adding that some already have agreements with the US to do so.
Chinese officials should also “encourage their firms to become more deeply ingrained or integrated with local economies” in the Association of Southeast Asian Nations (Asean), He said.
While the Chinese government seeks to protect its exports, businesses should have the autonomy to make long-term decisions about their role in local economies, which would also protect them from unpredictable tariff rates, he added.
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Imports from China face an average tariff rate of 42 per cent, according to Morgan Stanley estimates, while other Asian countries face rates of 25 to 40 per cent starting August 1.
Since the US launched a trade war against China in 2018, Beijing has stepped up trade and investment with Asean countries. The goods trade between China and the bloc reached US$982.34 billion last year, up 7.8 per cent from 2023, customs data showed – consolidating the bloc as China’s top trade partner.