Last week, next week

Paul Cavey

Jun 26, 2022

East Asia Today

Another round of weak domestic demand data for China. Japan Q2 GDP growth softened, but I thought the details looked ok. Taiwan's FDI into the US is once again increasing sharply.

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China – domestic demand still weakening

Retail sales have been anchored around zero for more than a year, property activity is still dropping and FAI is contracting. Nonetheless, IP is growing around 5%, partly because of exports, and the government's attitude suggests that it continues to think that is enough.

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Last week, next week

China macro isn't weak enough to trigger a change in policy direction. The JPY is weak enough to speed up BOJ tightening and puts pressure on Takaichi to change fiscal rhetoric. KRW is starting to look more interesting than rates, while in Taiwan, domestic demand puts the focus on rates.