Benefits of US-China trade war : ‘Lanka should explore export opportunities’ | Sunday Observer

Benefits of US-China trade war : ‘Lanka should explore export opportunities’

21 July, 2019

The US-China trade war is not without its benefits for the rest of the world which is trying to capitalise on the fallout of the two economic powerhouses. Both countries are in search of new source markets which exporting nations could exploit.

Exporters said the US China trade war could create opportunities for the export of Sri Lankan products to either country by competing with similar products imported by them in view of the import duties.

A spokesman for the National Chamber of Exporters said the bodies promoting trade and particularly the Department of Commerce should study the matter and update and advice exporters on how they could make use of this opportunity.

“However, both countries are powerful economic and trading partners of Sri Lanka. Any adverse effect could affect Sri Lanka as well,” he said.

The US-China trade war has prolonged for over a year with tariffs amounting to about 25 percent of the value of the item on Chinese goods worth US$ 200 billion. The US is threatening to slap duties on other goods worth $325 billion from China. With the quantum of tariffs being increased companies are considering shifting locations away from China.

The number of companies moving out of China has increased to over 50 from Apple to Nintendo to Dell trying to escape punitive tariffs of the US. It is not only foreign entities that are rethinking their location, Chinese companies too are moving out from China.

The US personal computer makers HP and Dell are said to have moved around 30 percent of their notebook production in China to South Asia. Apple has requested its suppliers to evaluate the cost implications of shifting around 15 to 30 percent of their production capacity from China to India.

Economists and representatives of think tanks at recent discussion on the US-China trade battle held at the Chinese embassy in Colombo noted that the negative implications of the trade war between the US and China on Sri Lanka will be minimal as  Sri Lanka’s trade exposure to these countries are limited.

“There will not much of an impact from the trade war to Sri Lanka as trade with USA and China is at a low level. However, we must be watchful of the situation unfolding over time,” Professor of Economics University of Colombo, Sirimal Abeyratne said.

Data shows that exports from India to China fall by around 9.7 percent for the first time in nine months and Indonesia which exports a large volume to China had exports fall by around 8.9 percent. Exports from South Korea too fell by around 13.5 percent. - LF

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