Manufacturing activity last month remained relatively solid in major Asian economies, such as China and Japan, but exports showed signs of weakness across the region, a worrying development given heightened trade tensions between Beijing and Washington.
High-level US and Chinese officials are to meet in China this week, with trade expected to be top of the agenda as both sides have threatened reciprocal tariffs on hundreds of billions of dollars worth of imports.
The meetings’ outcome could be crucial for the outlook for Asian exporters as purchasing managers’ index (PMI) surveys of factory activity are already pointing to a slowdown.
Photo: Reuters
China’s Caixin/Markit PMI climbed to 51.1 from a four-month low of 51 in March, topping economists’ forecast for a modest slowdown to 50.9.
The survey suggested continued strength in the domestic economy, where consumption was a major growth driver in the first quarter.
However, a sub-index on export orders shrank for the first time since November 2016. An official PMI survey on Monday also showed external orders slowed last month.
Japan saw a similar trend. The Markit/Nikkei PMI rose to 53.8 last month versus a flash reading of 53.3 and a final 53.1 in the previous month.
However, growth in export orders slowed dramatically to only marginal levels due to a stronger yen.
Factory activity in South Korea contracted for a second month last month, with domestic and export orders shrinking.
Some firms said they had scaled back production due to weaker global demand, particularly for electronics and autos.
Data yesterday showed that South Korean exports declined last month for the first time in 18 months.
In Taiwan, factory growth slowed to six-month lows.
This suggests many Asian central banks can leave interest rates low to keep supporting their economies, analysts said.
“The big picture is that inflation in most countries in the region is set to stay benign, giving their central banks scope to keep monetary policy accommodative to support growth,” Capital Economics Asia economist Krystal Tan (譚恩) said.
A resurgent US dollar against emerging market currencies could also restore some of Asian exporters’ competitiveness.
However, that might not apply to the trio of Asian countries with trade deficits — India, Indonesia and Philippines — which have recently taken a one-two punch.
A rise in US Treasury yields to 3 percent and expectations of further US Federal Reserve interest rate hikes have increased concerns about potential portfolio outflows, while oil prices at three-and-a-half-year highs of about US$75 per barrel have significantly raised import costs.
All three nations’ currency and stock markets saw selloffs in the past week and policymakers are reacting.
The Indonesian central bank last week said it was prepared to raise rates to defend the rupiah and that it has recently intervened heavily in currency markets.
The Reserve Bank of India withdrew a restriction that allowed foreign investors to only invest in corporate and government debt with tenures of three years or more.
purpose: Tesla’s CEO sought to meet senior Chinese officials to discuss the rollout of its ‘full self-driving’ software in China and approval to transfer data they had collected Tesla Inc CEO Elon Musk arrived in Beijing yesterday on an unannounced visit, where he is expected to meet senior officials to discuss the rollout of "full self-driving" (FSD) software and permission to transfer data overseas, according to a person with knowledge of the matter. Chinese state media reported that he met Premier Li Qiang (李強) in Beijing, during which Li told Musk that Tesla's development in China could be regarded as a successful example of US-China economic and trade cooperation. Musk confirmed his meeting with the premier yesterday with a post on social media platform X. "Honored to meet with Premier Li
Dutch brewing company Heineken NV on Friday announced an investment of NT$13.5 billion (US$414.62 million) over the next five years in Taiwan. The first multinational brewing company to operate in Taiwan, Heineken made the statement at a ceremony held at its brewery in Pingtung County. It also outlined its efforts to make the brewery “net zero” by 2030. Heineken has been in the Taiwanese market for 20 years, Heineken Taiwan managing director Jeff Wu (吳建甫) said. With strong support from local consumers, the Dutch brewery decided to transition from sales to manufacturing in the country, Wu said. Heineken assumed majority ownership and management rights
ARTIFICIAL INTELLIGENCE: The chipmaker last month raised its capital spending by 28 percent for this year to NT$32 billion from a previous estimate of NT$25 billion Contract chipmaker Powerchip Semiconductor Manufacturing Corp (力積電子) yesterday launched a new 12-inch fab, tapping into advanced chip-on-wafer-on-substrate (CoWoS) packaging technology to support rising demand for artificial intelligence (AI) devices. Powerchip is to offer interposers, one of three parts in CoWoS packaging technology, with shipments scheduled for the second half of this year, Powerchip chairman Frank Huang (黃崇仁) told reporters on the sidelines of a fab inauguration ceremony in the Tongluo Science Park (銅鑼科學園區) in Miaoli County yesterday. “We are working with customers to supply CoWoS-related business, utilizing part of this new fab’s capacity,” Huang said, adding that Powerchip intended to bridge
Microsoft Corp yesterday said that it would create Thailand’s first data center region to boost cloud and artificial intelligence (AI) infrastructure, promising AI training to more than 100,000 people to develop tech. Bangkok is a key economic player in Southeast Asia, but it has lagged behind Indonesia and Singapore when it comes to the tech industry. Thailand has an “incredible opportunity to build a digital-first, AI-powered future,” Microsoft chairman and chief executive officer Satya Nadella said at an event in Bangkok. Data center regions are physical locations that store computing infrastructure, allowing secure and reliable access to cloud platforms. The global embrace of AI