Few benefit from a trade war, but intra-Asia shipping stands to gain from a Sino-American spat
 While most agree trade wars serve no one, there are some who question whether a Sino-American trade dispute benefits the intra-Asia shipping.
That's because there is too little high-value trade in truly intra-Asian trade lanes, and any diminution of US-Chinese business, is likely to lead to greater volumes flowing within or exported from of the Asia-Pacific region.
With the spirit of protectionism alive in the US - and a countervailing pushback in China - there is now pressure to resolve the old problem of each Asian nation making its neighbour's cross-border trade more difficult than it should be.
Both Standard Chartered and HSBC see this plainly. If trade with the US and China becomes too troublesome, then supply chains will re-configure, they say. HSBC has its eye on India as a big beneficiary, while Standard Chartered has its money in a number of emerging markets.
The World Bank’s South Asia Economic Focus sees the benefits flowing to the region from the collapse of mega-regional trade deals like the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership. Had the TPP - with zero-tariff access to US markets- gone through, countries like Nepal and Bangladesh, for example, would have lost out on textile exports to Vietnam.
It could be added that the imposition of new standards under the TPP would have thrown up a range of non-tariff barriers too. Therefore, the folding up of the TPP was good news for South Asian exports.
The report also said exports to US from Mexico and China would slump 30 per cent overall. “South Asian countries would be able to scale up their exports to the US between 10-15 per cent,” said the World Bank report.
But gains, says the World Bank, will be large only if South Asia starts exporting new products - a fact that underlines an altogether different set of challenges.
India’s deepening relationship with Bangladesh is viewed as a bright spot. If Delhi manages to push through all that it has planned, then we can hope for a measure of regional integration around Bangladesh, Bhutan and north-east India. As the report points out, these countries also happen to be economic bright spots in the region. It is important that Delhi pushes ahead on this front.
Writing in the Times of India's Economic Times of New Delhi, Natalie Blyth, head of trade finance division at HSBC, said: "Protectionism will lead to more intra-Asia trade. We anticipate more intra-Asia regional activity and India is well placed to benefit."
Ms Blyth said the risk that global trade will be derailed is much less now, but it will not go up to 2.5 times of GDP as it once did, but will still rise 1.2-1.3 times, which is a viable business model.
"The macro environment is actually becoming much more positive. We are seeing a big shift like the three billion people joining the middle class. It is a force that no one policy maker can change," she said.
"Protectionist measures and the potential for trade wars are making people look for partners to trade with closer, which is driving more inter-regional activity.
"So, we anticipate more intra-Asia regional activity and India is well placed to benefit from that," Ms Blyth said.
No country may be able to replace the US or China, but Ms Blyth said there will see some diversification in the top 10. Half of HSBC’s trade business is in Asia, which is growing faster than other regions.
Trade today is dominated by the dollar, she said. I don’t believe that will last indefinitely. There are other currencies like the renminbi coming into play under a very controlled internalisation.
"If you look at the top 15-20 commodities and who consumes them, why should they be traded in dollars because the buyers, sellers and producers are not dollar-based companies," she said.
In China, trade is already being settled in renminbi, but the shift away from the dollar will be slow, she said. "These uncertainties for the next three to five years due to the unprecedented forms of government and the different kinds of leaders we have globally."
In an interview with CNBC, Standard Chartered Bank CEO Bill Winters said: "We are a very big trade bank, interested in intra-Asia trade and trade between Asia and the Middle East, in Africa but less active in trade between China and the United States.
"If the only issue were a US-China trade spat that had the effect of producing trade between those two countries, there would be no material impact on Standard Chartered," said Mr Winters.
"Even if it escalates?" asked the CNBC interviewer. "Like the US$200 billion threat; the $267 billion is another threat. Won't that have an impact?"
Said Mr Winters: "There's been no material impact so far - there's a little bit of a fear or lack of confidence causing people to hold back on investments. But that's on the margin - nothing too material has happened.
"Impact would depend on how supply chains adjust and to the extent that supply chains start to circumnavigate or circumvent entirely the Chinese market because it's just become too expensive.
"That would certainly have a knock-on consequence for trade between China and the rest of Asia given how interlink the supply chains are between China and its neighbours," he said.
Mr Winters, chosing to call it a "spat" rather than a trade war, was not hostile to the US Administration's approach. "We're hopeful that this confrontational process turns into one that's more co-operative with basic agreements on how to establish routes of free and fair trade. That's the US express purpose. China has every interest in finding a way to accommodate. So we remain hopeful.
"I can't speak for President [Donald] Trump of course. I am sure he doesn't think that the trade war is a good thing. He just may think that he may win one and come back to a better place afterwards." Mr Winters said.
Standard Chartered's biggest concern in the US-China dispute is what it may do in diminishing the role of the World Trade Organisation.
"The WTO framework is flawed and needs continual renewal. It was a multilateral and is a multilateral framework to resolve exactly the kind of disputes that are being fought right now," he said.
Despite some startlingly changes in Chinese governance with constitutional change providing for a president for life, Mr Winters is sanguine about the future.
"It would concern me if there is a big shift in the Chinese economy although I don't see that coming. I think the Chinese have been very thoughtful about the way they delivered in the period between 2017 and into early 2018.
"They substantially cleaned up the shadow banking system and the associated wealth management products that were a source of some concern. Of course our high debt levels in pockets of China but also very high asset levels in China from their foreign currency reserves to the ability for the population in China to absorb additional taxes should that ever be necessary.
"And so I think on balance the assets that China possesses are ample to deal with their liabilities and they're very thoughtful about how they're approaching this period of economic questionability. I wouldn't say lack of confidence but a bit questionability. And they've got plenty of monetary and fiscal policy tools to deal with the short term shocks," Mr Winters said.
Given a cursory glance at readily available evidence, there appears to be little reason to fear serious negative consequences resulting from the Sino-American trade war. Certainly little that will impact the intra-Asia trade in a negative way. In fact, there even seems to be good reason to accent the positive.
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