ASEAN on par with US in terms of Global Exports says French central bank

The Association of Southeast Asian Nations (ASEAN) now accounts for nearly 8% of global exports (4% in 1990), on par with the United States, according to France's central bank's latest bulletin.

China's growth and the extension of value chains have benefited the region. As a result, it is becoming more integrated with China, which has been its leading supplier since 2007 and client since 2009.

The bulletin stated that due to US-China tensions, the restructuring of supply chains and the need to secure supplies is a major challenge for this region, whose development is dependent on its successful integration into international trade.

A more recent phenomenon associated with the US-China trade war is that an increasing share of Chinese products affected by punitive US tariffs are now being exported from ASEAN countries, particularly Vietnam, which appears to be the main beneficiary of these tensions.

According to the bulletin, Chinese producers have relocated a portion of their production to third countries in order to avoid the customs tariffs imposed on their products when they enter the United States.

The increasing share of Chinese value added in Vietnamese exports (now close to 30%) suggests that two phenomena are at work.

On the one hand, production chains are increasingly integrated between China and Vietnam, which has become a trend. This is reflected in the sharp growth in bilateral trade.

On the other, this deeper integration has fostered a partial substitution effect. Manufacturers based in China, both Chinese and foreign, have relocated part of their production, or at least the final assembly stage, to Vietnam to circumvent the new tariffs on Chinese products entering the United States.

Taiwan is the other country in Asia that has benefitted most from the US-China trade war, having gained export flows to the United States that no longer originate in China.