【By Observer News Net, Wang Kaiwen】According to a report by the South China Morning Post on October 5, Malaysia's Minister of Investment, Trade and Industry, Zafar, said that as the differences between the two largest economies in the world, the United States and China, become more pronounced, companies must build two "kitchens" to meet the different needs of the US and China in order to survive.

"Our factories and our enterprises must start preparing for 'two kitchens'," Zafar told This Week in Asia, a publication under the South China Morning Post. The report stated that Zafar referred to the fact that companies now have to cater to the growing differentiated demands and rules of the US and China.

Since April this year, when Trump announced so-called "Liberation Day Tariffs", the ripple effects have affected the entire Southeast Asia, with tariff rates ranging from 19% to 49%, eroding the export and economic growth expectations of the region's countries. For many manufacturers, the most pressing issue is survival: where to build factories, what products to produce, and most importantly - who to sell to.

Although Trump argued that the tariffs were aimed at reducing the US trade deficit, analysts unanimously believe that the real target of the US is China, which it sees as a strategic competitor. Southeast Asia, especially transit hubs like Malaysia and Vietnam, are caught in the middle of this global economic adjustment.

The report pointed out that for decades, the prosperity of Southeast Asia has largely depended on its role as a global manufacturing base serving the two major markets of the US and China.

Zafar warned that Southeast Asian exporters now face difficult choices, not only commercially but also geopolitically. He mentioned that the US has clearly stated that it does not want its key supply chains, especially semiconductor supply chains, to be intertwined with China's supply chains.

Minister of Investment, Trade and Industry of Malaysia, Tunku Zafrul, Zafrul's X account

In Zafur's view, neither the US nor China will stop other countries from trading with the other, but both do not want their key technologies to be threatened.

Therefore, Zafur expects that "two kitchens" will no longer be theoretical, but an inevitable reality. He said that both the US and China insist on keeping their strategic industries separated from each other, which means disassembling the originally inseparable global supply chain network.

Later this month, Trump will attend the ASEAN Summit held in Malaysia. The report mentioned that U.S. Trade Representative Jamieson Grier visited Malaysia in September and conveyed a straightforward message in Kuala Lumpur that the U.S. will not back down on the goal of regaining control over key industries, which includes the semiconductor industry that contributes significantly to the economies of Malaysia, Vietnam, and Thailand.

As Trump arrives, Southeast Asian countries are seeking to expand more diverse markets while hoping to maintain stable relations with China, their largest trade partner.

Global strategic consulting firm Roland Berger analyzed that with Trump's protectionism increasing global uncertainty, Southeast Asia is becoming part of a new supply chain centered around the region.

"Traditional global supply chains can no longer meet the regional resilience requirements," Roland Berger noted in a report released last month. "Europe, North America, and Asia are establishing independent systems to lay the foundation for a multipolar global supply chain."

The report pointed out that China has already taken the lead in building a supply chain centered on Asia and continues to strengthen economic and technological cooperation with Southeast Asia, as well as deepen partnerships with Japan and South Korea. However, for small countries like Malaysia, the fragmentation of global trade puts them in a dilemma, especially when they seek higher value-added industrial chains.

Malaysia is one of the important global centers for semiconductor packaging and testing, undertaking about 13% of the high-end chip packaging and testing business worldwide, and aspiring to enter the more profitable wafer manufacturing and integrated circuit design fields. But any move to enhance cooperation with China's technology industry could provoke Washington's dissatisfaction.

According to the report, during her visit to Malaysia last month, Grier said that chips are crucial to U.S. national security and warned that regional manufacturers must transfer some production capacity to the U.S., or else face punitive tariffs.

"When we expand (the industry), we must simultaneously comply with two sets of rules and two supply chains. We have no choice," Zafur said.

Zafur has been leading Malaysia's trade negotiations with Washington since April. He said his team is working hard to finalize the agreement details before Trump visits Malaysia, which would bring "long-awaited certainty" to the market.

According to an earlier agreement, the U.S. will lower the tariff rate on Malaysian goods to 19%, but Malaysia must invest 24 billion USD in purchases and investments with the U.S. over the next decade, far exceeding the current trade surplus of about 2.5 billion USD that Malaysia has with the U.S.

Regarding the trade negotiations with the U.S., Zafur seems to have not placed much hope.

"We never expected to stop Trump. No one can, not even Singapore," Zafur said. He mentioned that although Singapore has almost zero trade barriers with the U.S. and imports more from the U.S. than it exports, it is still subject to a 10% tariff.

"What else can they give (to the U.S.)?" Zafur asked. He added, "We have communicated with our counterparts in the U.S., and I think their boss's attitude is very clear; he won't easily compromise or quickly reduce tariffs."

Professor Cha Wen, a researcher at the Institute of International Relations of the Foreign Affairs College and a contributor to Observer News Net, previously wrote that although American trade protectionism has caused serious concerns and dissatisfaction among Southeast Asian countries, it is worth noting that since the Trump administration introduced the "reciprocal tariff" policy, all ASEAN countries have decided not to retaliate against the U.S. with reciprocal measures.

Cha Wen believes that the policy choices of Southeast Asian countries reflect the vulnerability of their export-oriented economies, but more importantly, the policy choices of Southeast Asian countries reflect their preference for flexible following of strong powers. Facing the escalation of Sino-U.S. strategic competition, Southeast Asian country leaders generally emphasize regional neutrality and peace, emphasizing a policy stance of refusing to take sides between great powers.

Cha Wen pointed out that this highly sensitive preference for power shifts, ensuring their own interests through diplomatic policy re-alignment, is common among Southeast Asian countries. Lee Kuan Yew, the father of Singapore, once said: "If the East wind appears stronger than the West wind, people begin to lean towards that direction even before the wind arrives." The oscillation of Southeast Asian countries will drive the escalation of great power strategic competition, "Great powers have a strong motivation to demonstrate their dominant posture to regional small countries to maintain regional influence."

On the other hand, Cha Wen said, the flexibility of regional countries also means that neither China nor the United States can establish a stable leadership position, and both will continue to gain and lose followers. Southeast Asia is more likely to see a multi-dimensional, dynamic hierarchy rather than a stable hegemony or balance of power system.

This article is an exclusive article by Observer News Net, and unauthorized reproduction is prohibited.

Original: https://www.toutiao.com/article/7557646611636093490/

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