Xi Jinping has warned that US protectionism will “lead nowhere” because the Chinese language chief launched into a tour of Vietnam, Malaysia and Cambodia to strengthen ties with export-reliant south-east Asian economies rattled by Donald Trump’s escalating commerce struggle.
The go to, Xi’s first overseas journey this 12 months, comes days after the US president raised tariffs on Chinese language items to as excessive as 145 per cent, deepening fears of a decoupling between the world’s two largest economies and triggering a sell-off in world markets.
Forward of the go to, Xi known as for better co-operation with Vietnam and different growing economies to advertise an “equal and orderly multi-polar world”.
“Trade war and tariff war will produce no winner, and protectionism will lead nowhere,” Xi wrote in Vietnamese media, including that the international locations ought to “resolutely safeguard the multilateral trading system, stable global industrial and supply chains and an open and co-operative international environment”.
Many south-east Asian international locations — which have excessive commerce surpluses in items with the US due to their low-cost exports — have been additionally hit by levies as excessive as 49 per cent. International provide chains had moved to the area lately, notably to Vietnam, in an effort to diversify from China and keep away from US tariffs.
Trump has since introduced a 90-day reprieve on some tariffs, however the commerce uncertainty has unsettled south-east Asian governments and raised questions on Washington’s commitments to the area, the place China is already the biggest investor and buying and selling associate of many international locations.
Xi’s go to is sending the message that “we are the ones who are trying to defend the current international economic order, we are the ones who are defending the removal of barriers, and that the Chinese market will remain open”, stated Dylan Loh, assistant professor at Singapore’s Nanyang Technological College.
Highlighting the uncertainty, the US on Friday introduced that smartphones and another client tech merchandise in addition to semiconductors and chipmaking tools imported from China can be excluded from the steep “reciprocal” tariffs, earlier than Trump on Sunday reversed course and stated the exemption was non permanent, with a separate tariff regime to be established for the sector.
The Chinese language chief’s tour begins on Monday in Vietnam, one of many world’s fastest-growing economies and an rising manufacturing powerhouse. On Tuesday, he heads to Malaysia, this 12 months’s chair of the Affiliation of Southeast Asian Nations, and Cambodia.
Xi can even attempt to curry favour with south-east Asian leaders below strain to crack down on transshipments of Chinese language items by way of their international locations to bypass US tariffs.
Writing within the Monetary Instances final week, Trump’s commerce adviser Peter Navarro stated: “We will want to hear from countries including Cambodia, Mexico and Vietnam that you will stop allowing China to evade US tariffs by trans-shipping exports through your countries.”
US Treasury secretary Scott Bessent met Vietnam’s deputy prime minister Ho Duc Phoc final week and agreed to start out formal commerce talks.
Yanmei Xie, an unbiased analyst on Chinese language politics, stated as Washington opened commerce negotiations with numerous international locations, “one big ask” can be to decouple farther from China in trade for entry to the US market.
“The game is on to try to get ‘third’ countries” on facet, stated Xie.
Spanish Prime Minister Pedro Sánchez met Xi in Beijing on Friday, and EU leaders are planning to journey to China for a summit in late July. Xi advised Sánchez he was eager to deepen ties with the European nation amid a troublesome commerce struggle and repeated his warning that the world was “undergoing accelerated changes unseen in a century”.
The US tariffs unveiled this month would have a dangerous impact on south-east Asian international locations, economists have warned. Vietnam, which faces a 46 per cent charge, can be among the many hardest hit, with the US accounting for practically a 3rd of its exports.
Singaporean financial institution OCBC lowered its 2025 GDP development forecast for Vietnam from 6.2 per cent to five per cent following the tariff announcement, although Hanoi has maintained its 8 per cent development goal.
Loh stated south-east Asian international locations would attempt to “hedge and walk an increasingly thin line” between the rival superpowers. Whereas Vietnam has been one of many greatest beneficiaries of the manufacturing shift away from China, its bigger neighbour can also be its greatest supply of latest funding tasks.
Singapore’s overseas minister stated in an interview with the FT final week that the shake-up of the worldwide commerce system may show “very hostile for small nations”, which risked being “squeezed out”.
Beijing has spent years constructing sturdy financial and commerce relationships in south-east Asia, investing billions of {dollars} in infrastructure, whilst its territorial disputes within the South China Sea have worsened.
James Char, a China professional on the S Rajaratnam Faculty of Worldwide Research in Singapore, stated the uncertainty brought on by Trump’s commerce insurance policies created a chance for Beijing to “stake its claims to be a reliable partner for countries in the region”.
However whereas many growing economies in south-east Asia are more and more aligned with China, there’s widespread trepidation about Beijing’s affect within the area, he added.
“Deep down, most of the south-east Asian countries do have reservations about China’s potential to be a magnanimous great power hegemon,” stated Char.
