Asian nations would be dragged into the intensifying trade and geopolitical tensions between Beijing and Washington, even as the Philippines may emerge unscathed due to its neutral position in trade with both China and the United States (US), according to think tank Oxford Economics.

In a Sept. 22 report, Oxford Economics senior economist Thomas Rudgley said that amid rising tensions between the two economic superpowers, “trade policy escalating beyond tariffs to sanctions poses significant risk to global supply chains, with concerns that other nations could be pulled into the geopolitical standoff.”

“We identify Japan and South Korea as the most likely to be entangled as the US and China look to gain influence through foreign policy,” Oxford Economics said.

“Key supply-chain hubs Vietnam, Singapore, Malaysia, Thailand, and the Philippines will probably also be in the crossfire, as will India because of its growing regional importance,” the think tank added.

While Japan and South Korea are considered as “double exposed” for their huge exposure to trade with China and the US, Oxford Economics said that they are “the most likely to get a policy reprieve and exemptions given the size of their economies, industry mix, and strong trade linkages” with the Chinese and American economies.

As for Southeast Asia, the think tank said that the region “[faces] significant exposure but [is] potentially not vital enough for either [China or the US] to warrant additional policy,” given that they remain integral to the global supply chain.

“Geography exposes [Southeast Asia] to South China Sea trading routes; disruptions during Covid-19 lockdowns had severe consequences” across the region, it noted.

Oxford Economics noted that “Vietnam has a higher exposure to the US due to its role as a primary export destination.”

“Singapore, Malaysia, and Thailand face greater exposure to China; the Philippines and Indonesia are more neutral,” it said.

For net importer Philippines, China is the No. 1 source of the goods it consumes. On the other hand, the US is the top destination of Philippine exports.

According to Oxford Economics, Southeast Asian countries “hold greater importance for China’s economy than the US, potentially making them targets for US intervention to influence outcomes.”

In Oxford Economics’ China Economic Reliance Index (CERI), which evaluates nations’ exposure to the Chinese economy, the Philippines ranked 10th among 30 economies.

Oxford Economics explained that CERI “gauges China’s significance in trade, investment, and debt flows of a nation, and considers modeled trade rerouting from a US-China tariff trade war.”

“Countries with high scores have strong trade and investment ties with China or depend on China for debt, aid, or foreign investment. Importantly for risk and supply-chain management, these nations are less inclined to jeopardize these connections by opposing China in geopolitical events compared to those with lower scores,” it added.

The nine economies that scored higher than the Philippines include Hong Kong, Russia, Angola, Singapore, South Korea, Japan, Pakistan, Kenya, and Brazil.

The combined CERI data comes from the International Monetary Fund (IMF), the United Nations’ (UN) Comtrade database, and the World Bank (WB).