East Asia Econ

East Asia Today

Highlights of a longer note looking at the impact of China "shocks" through the prism of the terms of trade. The conclusion is that for Asia, the second China shock is shaping up to be less damaging than the first. Also, summary charts of today's machine orders in Japan, which were strong.

Paul Cavey

Feb 19, 2026 • 2 min read

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Region – Asia and the China Shock 2.0

As capital goods exporters, the rest of East Asia is vulnerable to the second China Shock. But the first was deflationary not just because export prices fell, but because import prices also rose, squeezing local incomes. By contrast, the terms of trade this time are stable, and starting to improve.

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East Asia Today

With most of the region still on holiday, today's daily focuses on today's export release from Japan. The big rise in January, led by shipments to China, will largely be the result of holiday front-loading. But the general direction is for exports and manufacturing to be a bit stronger in 2026.

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East Asia Today

December services activity in Japan dipped. But that is likely temporary: service sector sentiment remains strong, and falling China tourism has been offset by more visitors from Korea. Details of Taiwan's Q4 GDP release shows the terms of trade boosting real national income per capita by 15% in Q4.