Hanoi (VNA) – A trade war waged by the US is likely todeliver a further blow to China’s economy in 2019, but the Association ofSoutheast Asian Nations (ASEAN) may benefit from the dispute between theworld’s two biggest economies, according to Japan’s Kyodo News.

If the US-China trade tension is prolonged, the Chinese economy mayface significant downward pressure as weakening consumer and business sentimentcould weigh on the country’s household spending and investment.

Meanwhile, some ASEAN member nations are expected to become analternative destination for foreign direct investment instead of China as theireconomies grow steadily on the back of robust domestic demand.

China’s economy grew by 6.5 percent in the third quarter of 2018, the lowestsince the first quarter of 2009 when the world economy suffered from theaftermath of the global financial crisis the previous year.

Though Chinese President Xi Jinping has pledged to enforce large-scalefiscal stimulus measures, including tax cuts, the country’s leaders may have toaccept an economic slowdown of about 6 percent the next year, analysts said.

Given economic data like production,corporate profits, the job opening-to-application ratio, retail sales andexports, China's economy fell into a stagnant phase in August 2018, said KaoriYamato, senior economist at the Mizuho Research Institute in Tokyo.

The economy would remain sluggish foran extended period if a downturn in exports, triggered by a series of tariffpaybacks with the US, negatively affects investment and consumption in thecountry, Yamato noted.

So far, the US, one of the world’smajor markets, has imposed tariffs of up to 25 percent on 250 billion USD worthof Chinese imports – or around half of the goods the US imports from Chinaannually. In response, China has introduced tariffs on more than 80 percent ofall US imports.

At their meeting in Buenos Aires onDecember 1, Chinese President Xi Jinping and US President Donald Trump agreedto hold off on levying tariffs on each other’s imports and attempt to concludetalks about technology and intellectual property rights issues within 90 days.

However, the US warned that if at theend of this period of time, the parties fail to reach an agreement, the10-percent tariffs will be raised to 25 percent, meaning trade strainsrekindled.

The gap between what the US wantsfrom China and what China will be willing to give the US is very big and thetrade tension is likely to continue another year, said Malcolm Cook, a seniorfellow at the ISEAS-Yusof Ishak Institute in Singapore, adding that the tradewar will hurt China more than the US.

Jeff Kingston, Director of AsianStudies at Temple University Japan, expressed concerns that the slowdown in theworld’s second biggest economy would drag down the economies of ASEAN nationsthat have supplied components to manufacturers in China.

China has been the regional engine ofgrowth, so if it weakens, the consequences would be severe, Kingstonemphasized.

But other analysts are ratheroptimistic about the outlook for the ASEAN economies, as several majoreconomies, particularly Japan, have been accelerating investment in SoutheastAsia amid the escalating US-China trade war.

A number of foreign companies havebeen recently moving their production bases from China to the ASEAN regionbecause the goods they make in China face heavy US tariffs and are not in muchdemand in the US.

According to a recent survey of morethan 5,000 Japanese enterprises operating in Asia-Pacific conducted by theJapan External Trade Organization (JETRO), 57.4 percent of responded firms areeager to expand their business in the ASEAN region within the next one or twoyears, compared with 48.7 percent that are keen to do so in China.–VNA