East Asia Econ

Last week, next week

Themes: capital flows v CNY appreciation in China; fiscal fear v real policy rate in Japan; foreign v domestic equity strength in Korea; policy status quo v export surge in Taiwan.

Paul Cavey

Jan 12, 2026 • 6 min read

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East Asia Today

Longer notes today on China inflation, Korea balance of payments, and Taiwan 2025 trade and external surpluses. In Japan, data were released today on the monetary base, consumption, and 20-day exports.

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Taiwan – trade surplus back to 1980s levels

Even with data today showing a dip in exports in December, Taiwan's trade surplus last year reached the sort of sky-high levels last seen before the big TWD appreciation of the 1980s. Barring a real dislocation in AI hardware demand, underlying pressure for renewed appreciation will grow in 2026.

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China – inflation up, for now

The second-derivative improvement in inflation is continuing, and should be seen in a better deflator when the Q4 GDP data are released later this month. However, there's not yet enough to think the trend can persist beyond Q126. One factor that could derail the improvement would be a stronger CNY.