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 yr, 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 higher co-operation with Vietnam and different creating economies to advertise an “equal and orderly multi-polar world”.
“Commerce struggle and tariff struggle will produce no winner, and protectionism will lead nowhere,” Xi wrote in Vietnamese media, including that the nations ought to “resolutely safeguard the multilateral buying and selling system, steady world industrial and provide chains and an open and co-operative worldwide setting”.
Many south-east Asian nations — which have excessive commerce surpluses in items with the US due to their low-cost exports — had been additionally hit by levies as excessive as 49 per cent. World provide chains had moved to the area in recent times, 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 most important investor and buying and selling accomplice of many nations.
Xi’s go to is sending the message that “we’re those who’re making an attempt to defend the present worldwide financial order, we’re those who’re defending the elimination of limitations, and that the Chinese language market will stay open”, stated Dylan Loh, assistant professor at Singapore’s Nanyang Technological College.
Highlighting the uncertainty, the US on Friday introduced that smartphones and another shopper tech merchandise in addition to semiconductors and chipmaking gear imported from China can be excluded from the steep “reciprocal” tariffs, earlier than Trump on Sunday reversed course and stated the exemption was momentary, 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 yr’s chair of the Affiliation of Southeast Asian Nations, and Cambodia.
Xi may even attempt to curry favour with south-east Asian leaders below strain to crack down on transshipments of Chinese language items by their nations to bypass US tariffs.
Writing within the Monetary Instances final week, Trump’s commerce adviser Peter Navarro stated: “We’ll wish to hear from nations together with Cambodia, Mexico and Vietnam that you’ll cease permitting China to evade US tariffs by trans-shipping exports by your nations.”
US Treasury secretary Scott Bessent met Vietnam’s deputy prime minister Ho Duc Phoc final week and agreed to begin formal commerce talks.
Yanmei Xie, an impartial analyst on Chinese language politics, stated as Washington opened commerce negotiations with numerous nations, “one huge ask” can be to decouple farther from China in trade for entry to the US market.
“The sport is on to attempt to get ‘third’ nations” on aspect, 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 instructed Sánchez he was eager to deepen ties with the European nation amid a tricky commerce struggle and repeated his warning that the world was “present process accelerated adjustments unseen in a century”.
The US tariffs unveiled this month would have a dangerous impact on south-east Asian nations, 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 progress forecast for Vietnam from 6.2 per cent to five per cent following the tariff announcement, although Hanoi has maintained its 8 per cent progress goal.
Loh stated south-east Asian nations would attempt to “hedge and stroll an more and more skinny line” between the rival superpowers. Whereas Vietnam has been one of many largest beneficiaries of the manufacturing shift away from China, its bigger neighbour can be its largest supply of recent funding initiatives.
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 robust financial and commerce relationships in south-east Asia, investing billions of {dollars} in infrastructure, at the same time as its territorial disputes within the South China Sea have worsened.
James Char, a China knowledgeable on the S Rajaratnam Faculty of Worldwide Research in Singapore, stated the uncertainty brought on by Trump’s commerce insurance policies created a possibility for Beijing to “stake its claims to be a dependable accomplice for nations within the area”.
However whereas many creating 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, many of the south-east Asian nations do have reservations about China’s potential to be a magnanimous nice energy hegemon,” stated Char.
