East Asia Econ

Quite a lot today, starting with a longer thematic piece on the outlook for Japanese consumption. In terms of the cycle, there's June machine orders and July exports for Japan, and July export orders and Q2 BOP data for Taiwan.

Korea's Q2 household debt release is important, given it is such an important issue for BOK thinking about monetary policy in the short-term, and the economy in the longer-term. The structural issues facing Korea are nicely analysed in a BOK report looking at the similarities with Japan.

No major releases today, but a few bits and pieces from China: the falls in interest rates and shifts in loan structure shown in the PBC's Friday monetary policy report; the re-acceleration in auto exports in today's detailed trade data; and signs of capital inflows in Friday's settlement data.

Many updates today. In China, property prices and the outlook for CPI, as well as the official activity data for July. The overall tone remains weak. By contrast, the first estimate of Q2 GDP data for Japan was solid. And detailed Q2 data for Taiwan, together with 2H25 forecasts, were more bullish.

Price data for Korea's foreign trade shows the same trends as for Japan: import prices falling YOY, and auto export prices dropping MoM. Also, China's monetary and credit data from yesterday. The rise in the credit impulse lost momentum, but stabilisation in the M1:M2 ratio is holding.

In Japan, July PPI, including export and import prices, as well as the Reuters Tankan for August. In addition, Korea labour market indicators for July.

There were no data releases today. So instead, an app showing changes in China's global market share; a recap of regional exports, where the standout isn't China but rather Taiwan; and the big shifts in the direction of Taiwan's trade, with surging exports to the US, and surging imports from Korea.

In today's summary, the PPI and CPI data that China released at the weekend, and Q2 current account data from Friday; today's export data from for the first 10 days of August in Korea; and Taiwan's wage data for June.

Some charts motivated by a nice BOK report on super-ageing; bits and pieces on Japan including the EW survey and recent rice prices; and more crazily strong export data in Taiwan.

China's foreign trade data for July, where I think imports are more interesting than exports; consumption trends for Japan in June; and Korea's BOP data, also for June, which showed the NPS outflow remaining large.

Until this year, there'd been similarities in post-pandemic inflation dynamics between Japan and Taiwan. Now, differences are emerging. In Japan, wage growth, already, firm, has reaccelerated. In Taiwan, the main dynamic is the sharp rise in the TWD is pushing the prices of tradeables down.

Today's update covers Korea CPI and Taiwan fx resrevss, and the services PMIs for Japan and China.

With no major data releases today, my focus has been the cheapness of the real CNY. That is interesting in part because of the comparison with Japan in the 1990s, so today's update includes some charts on China now versus Japan then, and others on currencies and inflation in the region today.

A video and dashboard related to China's trade surplus; for Japan, details of the BOJ outlook report and June labour market developments; July foreign trade for Korea; and the PMIs for Korea and Taiwan.

A busy day today – China PMI, Korean output, BOJ meeting and Japan consumer confidence, and more madly strong Taiwan export data.

In Korea, we've had the BOK minutes (published yesterday), and June JOLTS data. In Japan, the only releases have been 10D trade data for July and June Toyota sales. China's July Politburo was also released. That doesn't look to contain surprises, but I'll be going through it later.

The clear conclusion from the official leading indicators is that the cycle has peaked. However, given that exports always had to slow from the absolute surge in 1H25, that isn't news. The difficulty in 2H25 will be differentiating normalisation after that surge from a real cycle deterioration.

Data through July show upstream industrial prices have stopped falling. That should mean PPI deflation doesn't worsen further. However, underlying demand remains weak, with building material prices continuing to fall. And soft wholesale food prices suggest there's no pick-up in CPI either.

Japan's post-covid cycle has had two clear features. First, the strength of services and non-manufacturing. Second, inflation. Today's flash PMI shows both those trends persisting. Sentiment fell in manufacturing, but improved in services, while input price inflation remained "sharp".

IP dipped in June, but is still 40% above the trough of 2023, 100% higher than 6M ago, and dwarfs the cycle in Korea. The surge in IP/exports has supported the domestic economy when consumption has been weakening. The cycle thus remains unusually desynchronised, as it has been since the pandemic.

While easing in the first 20 days of July, exports didn't fully reverse the June bump. In the circumstances, that's not bad, though only semi shows any real momentum, and it seems unlikely anything else turns up given tariffs. Exporter sentiment in this week's business survey will tell us more.

The rise in exports and the trade surplus clearly isn't just about autos: there's now a large surplus in all major mfg categories. Auto exports in fact went sideways in 2023-24 as the initial rise driven by ICE shipments lost momentum. But there are now signs of a second wind, due to EVs and hybrids

Overall, the big recent drop in upstream prices has stabilised. But for building material prices, there's no respite, now being lower than any time since 2016. That shows the ongoing weakness in the property sector, which none of the policies of the last few years have managed to turn around.

Core machine orders dropped in May. It would be easy to think that was tariff related, but it really is too early to tell. The data are volatile, April was particularly strong, and May is still above the pre-April level. Still, the data do feel soft, though more because of softer domestic orders.

The pop in exports in June faded in the first part of July. That was perhaps because the pop in the DRAM price eased as well: semi exports have risen again in July, but at a slower pace, and exports of other products still aren't doing much. In terms of countries, there's also no big change.