US-China trade conflict: business opportunities for the ASEAN region

This study examines the dynamics change before and after the US-China trade conflict on ASEAN, focusing on how geopolitical tensions influenced trade relationships, investment patterns, and business opportunities in the region. Using paired t-tests, trend analyses, and regression models, the research evaluates the role of trade uncertainty, FDI inflows, and economic indicators such as GDP growth and unemployment rates in shaping ASEAN’s response to global disruptions. The findings reveal that the trade conflict significantly altered trade and investment dynamics in ASEAN. Trade relationships with both the US and China evolved during the conflict, with ASEAN maintaining its position as a neutral partner while benefiting from redirected investments, particularly from China. Chinese FDI inflows increased significantly, driven by rising trade uncertainty and the need to diversify supply chains. Total FDI also grew during the trade war, reflecting ASEAN’s attractiveness as a stable investment destination. However, US FDI inflows remained stable, showing limited responsiveness to trade uncertainty, which indicates a longer-term strategic approach rather than short-term adjustments. The study also highlights how these shifts translated into business opportunities. A significant reduction in unemployment rates was associated with increased Total FDI, underscoring the role of investments in fostering job creation and strengthening the labor market. However, the lack of a significant relationship between FDI and GDP growth suggests that the broader macroeconomic benefits of these investments may take longer to materialize. The findings further confirm that trade uncertainty escalated during the conflict, shaping investment and trade decisions while positioning ASEAN as a reliable partner in global value chains. Overall, the study illustrates ASEAN’s resilience and adaptability during a period of global instability. By leveraging its strategic advantages, ASEAN deepened its trade relationships, attracted foreign investments, and created new business opportunities. However, uneven impacts across FDI sources and trade partnerships highlight the need for more diversified and sustainable strategies to maximize long-term benefits.