Battle of the Giants: Inspecting How the Us-China Trade War is Shaking up FDI Inflows in the Asean+3

Cheah Wan Ching, Chuah Jolin () and Ting Yi Ernn
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Cheah Wan Ching: Universiti Tunku Abdul Rahman, Jalan Universiti
Chuah Jolin: Universiti Tunku Abdul Rahman, Jalan Universiti
Ting Yi Ernn: Universiti Tunku Abdul Rahman, Jalan Universiti

A chapter in Proceedings of the 13th International Conference on Business, Accounting, Finance and Economics (BAFE 2025), 2025, pp 424-439 from Springer

Abstract: Abstract This study investigates how tariffs and trade liberalization affect FDI inflows to ASEAN+3 economies, with a particular focus on sectoral inflows in manufacturing and services. The analysis incorporates the role of global value chain (GVC) integration in the context of U.S.–China trade tensions. The results indicate that while tariffs exert limited influence on overall FDI inflows, their effects are more pronounced within the manufacturing sector. Conversely, trade liberalization consistently promotes FDI across both total trade and GVC contexts, underscoring its central role in sustaining investment flows. The findings further reveal divergent sectoral responses to rising U.S. tariffs. Manufacturing FDI increases as multinational firms relocate production to cost-competitive ASEAN+3 economies, whereas services FDI contracts due to its dependence on globally dispersed demand and value-added linkages. Overall, the findings contribute to understanding how trade tensions reshape FDI patterns, underscoring the importance of trade liberalization and GVC integration in sustaining FDI inflows across ASEAN+3.

Keywords: FDI Inflows; Trade Liberalization; Global Value Chain (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-968-1_29

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DOI: 10.2991/978-94-6463-968-1_29

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