East Asia Today
Three updates today: details of the surge in China's auto exports at end-2025; further signs of improvement in Japan's government finances (at least that's true before the election pledges); and strengthening Korean export data.
Car exports rose strongly in 1H25 – but really took off through the 2H of the year. Sales of all types of car grew, but the surge was led by exports of hybrids. That's good news for China, in the sense hybrids have higher unit prices. For ICE vehicles, China is quite dependent on Russia and Central Asia. For hybrids and EVs the big markets are Europe and bigger EM economies like the UAE and Thailand. You can map and chart these and other details of China's foreign trade using our app:
Paul Cavey
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Market concerns about Japan's fiscal position have intensified since Sanae Takaichi's pledge to reduce (temporarily, according to the PM) the sales tax on food prices. It will be difficult to roll that promise back, at least before the election, though she could alleviate some market concerns by saying it will be funded by higher taxes on corporates. In the meantime, monthly data through November show current tax revenues remaining strong, and social security spending (albeit in a narrow sense) remaining under control. On a flow basis, the fiscal position in FY25 is likely to have continued to improve.
After doing little between late 2023 and mid-ish 2025, it is starting to look like exports have now turned up. In the first 20 days of January, there was further decent sequential growth. As would be expected, that was led by semiconductors. Export growth is still nothing like that seen in Taiwan since late 2024. Matching that performance will be difficult, given Korea's more diversified export base. However, given the crazy rise in DRAM prices and the associated rally in the Kospi, it is difficult not to be optimistic about further acceleration in export growth this year.
