East Asia Today
The longer note today looks at a BOK report on spillovers from the chip boom. Exports in both China and Taiwan were softer in July, but probably because of noise. Japan released consumption data for June, exports for the first 20 days of July, and BOJ transaction data for the full month.
China's exports dipped in July. Few details are included in this first release of the monthly data, but what was made available today shows a mild slowdown in shipments of both autos and semiconductors. Imports, meanwhile, edged up, but not by enough to make any big difference to the trade surplus. The strength of imports of components points to exports remaining robust in 2H26, but this indicator could be distorted by the big price increases in the tech sector.
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The BOJ's monthly private consumption proxy showed a sharp decline in June. The main reason was a reversal of the bump in durables purchases that had been caused by new regulations around household AC units. Services consumption also dipped in June, but that could be noise, and the general upturn in spending since 2024 remains intact. In today's other releases, exports in the first 20 days of July remained strong, and detailed data from the BOJ show a continued fall in the bank's net purchases of JGBs.
Cycle – the BOK's view of the TOT boom. The BOK this week published a nice report on spillovers from the terms of trade boom. It wouldn't be fair to say that this pays only lip service to the usual concerns on why spillovers might be limited. But the report's central expectation is that the impact will be "both sizeable and persistent".
Taiwan's exports softened in July, and now haven't increased since March. It would obviously be important if the absolute peak in shipments has now been seen, but I am not convinced yet. The recent slowdown could be a pause after an exceptionally strong Q1, and TSMC's sales (through June – the company will release July data next week) don't indicate that the AI chip cycle has yet come to an end.
