Thread by @Trinhnomics

Impact of trade war on emerging Asia: No short-term winner but #Vietnam , #India and #Thailand to gain in the medium-term.

•Today, 1 out of 5 manufactured goods in the world come from China – a great leap from 3% in 1996

•1 out of 2 labor-intensive manu exports are from China

1) The US is a massive consumer of Chinese manufactured goods. Look at the chart of exports to the US & China's exports to the rest of the world.

If the US doesn't buy it, then it will go to the rest of the world, which doesn't absorb it since US demand is key, then PRICE falls

2) China has MASSIVE global market share in manufactured goods, & more for specific categories such as machinery, so:

a) HARD to substitute Chinese goods in the short-term;
b) If the US doesn't buy, China will drop prices to unload inventories;
c) No short-term gain for EM Asia

3) Hard for EM Asia to gain from Chinese buying less of American goods b/c large US market share. While the share of cathode valves (semiconductor) looks small, it actually hides the US specialization in the highest end of this sector.

EM Asia doesn't have RCA to substitute US

4) In the medium-term, ASEAN & #India can capture some of China’s labor-intensive and even medium-tech manufacturing. Based on our analysis of four key metrics: demographic trends, input costs, infrastructure and manu FDI as a share of total, #Vietnam and India'll benefit 👏🏼👏🏼👏🏼

5) According to @UNCTAD , #China still absorbs the bulk of FDI but #ASEAN , as a region, has exceeded China as an attractive investment destination. China is still attractive, but increasingly less so for manufacturing - declined from 62% of total FDI in 2006 to only 27% by 2017

6) For labor-intensive manufacturing, we focus on demographics & input costs. #Vietnam is the best and #India and #Indonesia are second and third, respectively.
This reflects both favorable demographic transition and cheap wages. The #Philippines doesn't do well despite good demo

7) For capital-intensive manu, focus on intangibles such as soft & hard infra & less on cost of inputs. The rankings come from the summation of Doing Business and Logistics scores on Table 1. #Thailand this time comes 1st 👏🏼best & #Philippines worst 🤔. #Malaysia & #China good 👏🏼

8) Q: What is labor-intensive manufacturing?

A: See Table, sorted by China global export market share. Didn't exaggerate when I said MASSIVE 😎

9) Q: What is medium-tech manufacturing?

A: See Table, sorted by China export market share.