LAHORE: Pakistan has been named alongside Malaysia and Japan amongst the top three countries that could be beneficiaries of import substitution precipitated by a US-China trade war intensification, said Nomura Securities strategists.
The analysis conducted by Nomura Securities is founded on an exhaustive study of 7,705 items which will be hit by tariffs and counter-tariffs by US and China if the trade tensions continue.
According to Nomura’s research, the US list impacts 3,477 products imported by the US from China amounting to $270 billion.
The product categories impacted by the tariffs include electrical equipment, appliances and components, machinery and mechanical appliances, furniture and related products.
On the contrary, China’s tariff list includes 4,228 products with a cumulative value of $110 billion and comprises of food, beverage, tobacco and vehicles.
As part of its research, Nomura created two indices as part of its research namely NISI (Nomura Import Substitution Index) and NPRI (Nomura Production Relocation Index).
Nomura believes Malaysia will benefit most, especially from its exports of “electronic integrated circuits, liquefied natural gas and communication apparatus”.
“Vehicles with only spark-ignition internal combustion reciprocating piston engines” will assist Japan and Pakistan’s yarn cotton exports could gain.”
Also, if the trade war continues between the US and China, Nomura stated this could result in production relocation of industrial units from China to other countries in the region.
The major beneficiaries of this relocation would be Vietnam, Malaysia, India and Singapore and Pakistan benefits least from the diversion of production and foreign direct investment, said Nomura Securities.
Correction: The previous version of the article had incorrectly stated Pakistan was amongst three countries likely to benefit from US-China’s trade war. The error is regretted.