The
recent revocation of Hong Kong's special status by the United States on July 15,
2020, serves to reignite its ongoing trade feud with China, ahead of the 2020
United States presidential election. KResearch views that the United States has
persistently exploited China's sensitive issues, utilizing them as a tool to
pressure China in this year's 'Phase 1' trade deal. The time constraint
presented by the imminent election further complicates the situation, as this
trade war is expected to be protracted, with a 'Phase 2' trade deal unlikely to
materialize. Even if a new leader emerges from the upcoming US election, the
geopolitical race between the United States and China is set to continue and is
not likely to quell the raging trade conflict.
Over
the course of the past two years that have been dominated by the US-China trade
war, the US has been unable to reduce its trade deficit with China to the
targeted level. Shifting the focus to Thailand, Thai export businesses incurred
a net loss of USD 1.1 billion in related products. While certain products
benefited as substitutes for products from the opposing camp, both directly and
indirectly – the volume is still not great enough to counterbalance the major
impacts that have caused exports to decline in China's supply chain. This issue
is further compounded by Thailand losing its foothold in the markets of
neighboring countries
KResearch expects that the consequences of the
trade feud will begin to lessen in intensity once the 'Phase 1' US-China trade
deal is clinched. Should the United States forge ahead in making Hong Kong a
new focal point in pressuring China during this commercial conflict, Thai
exports would become exposed to even more risks. The impacts on trade at
present are primarily the result of the COVID-19 outbreak, which has the
potential to resurface in a second wave during winter – putting international
trade in greater jeopardy. For these reasons, Thai exports to the US for 2020
are expected to shrink by 2.7 percent, with an estimated export value of USD
30.5 billion. Although Thai exports to China are expected to make a recovery
before those that target other markets, production would not yet reach full
capacity; thereby limiting the growth of exports to the mainland to 3.2
percent, with an export value of USD 30.1 billion.
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