Wesley Rahn at DW Asia interviewed former World Bank economist Yukon Huang about the trade dispute between the United States and China, and there are some interesting takeaways.
When people talk about a US-China "trade war," the irony is that the issue is not about trade. You can't fight a trade war based on reducing US trade deficits. The US has had a trade deficit for over 40 years.
-- Yukon Huang
We see evidence pointing to the core issues that the West (not just the U.S.) has with China, in the Huawei arrests, in Canada and Poland. Unlike their counterparts in the West, Chinese companies are responsible to the interests of the government, not just shareholders.
80 percent of the transfer of production that has occurred over the last year because of the threat of trade war, has not gone to Southeast Asia and low-income countries; it's actually gone to the US, Japan, South Korea and Taiwan.
-- Yukon Huang
That’s a fairly stunning statistic! Obviously these things take some time to affect change, but I would have thought that Vietnam, Malaysia, Indonesia and India to be net-winners in the US-China trade war. I still think they may be, even if the dispute gets resolved by March (when the next round of tariffs are supposed to hit), simply as a risk-reduction move by major companies.
I don’t currently invest in emerging markets, but it’s an interesting sector since it had such a lousy 2018. Note that many “emerging market” funds are really just China funds. It’s important to check a fund’s top ten holdings, in order to see what they’re really all about. Trust but verify?