The Minister of Economy and Finance said last week that the trade tensions between the United States and China have not had a negative impact on the Cambodian economy yet, but warned that a protracted trade war could hurt the Kingdom.
Cambodia has yet to feel the negative effects of the US-China trade war, Minister Aun Pornmoniroth said Friday during a meeting with the EU-Asean Business Council.
Far from being adversely affected, Cambodia has been helped by the trade war, which has helped expand its export markets while increasing foreign direct investment flows into the country, the minister said.
“Trade tension could create opportunities for developing countries such as Cambodia, expanding our export markets and attracting more FDI,” he said.
In the long-term, however, the trade war will damage the Kingdom’s economy, he said. A protracted trade war will lead to a global economic slowdown, which, in turn, will lead to fewer tourist arrivals and less foreign investment in Cambodia.
“In this context, Cambodia will combat any negative influence on its economy by preparing strategies to promote trade competitiveness, attract more investment and strengthen economic growth,” he added.
The trade conflict between China and the United States escalated last month when US President Donald Trump raised tariffs on hundreds of billions of Chinese imports to 25 percent and threatened levies on all Chinese goods.
Kaing Monika, deputy secretary general of the Garment Manufacturers Association in Cambodia, said the hike in tariffs will impact investor’s confidence in China as a manufacturing base, arguing that many firms will relocate to other countries in the region with cheap labour forces, including Cambodia.
“I could say that more and more companies that produce travel goods will choose to exit China, which could, of course, mean a boost for our industry,” Mr Monika said, adding that China still exports almost $5 billion to the US in travel goods.
Yasuyuki Sawada, Asian Development Bank chief economist, recently said the US-China trade war is the biggest risk to the Asian economy, with the prolonged trade tension threatening to undermine investment and growth in developing countries.
“The largest risk we identified is still centred on the trade conflict. Prolonged negotiations are the biggest risk,” he was quoted as saying in an interview with South China Morning Post.