More evidence this week of just how strong a force China has been in driving the economic rebound in the Asian region.
It’s been talked about, it’s been written about, especially here in Australia, and now other economies growing rapidly because of the strength of the Chinese rebound.
Around 70% of our exports go to Asia now, led by China, Japan, South Korea and Taiwan.
This is very good news for us and companies large and small, but especially in resources.
Thanks to China, the region didn’t take the big hit that Japan, the US and Europe took last year, but smaller economies like Taiwan, South Korea, Malaysia, Singapore and Thailand didn’t escape damage.
A series of reports this week from Japan, Thailand, Hong Kong, Taiwan, Singapore and Malaysia reveal the extent of the impact of China’s growth, and why the $US585 billion stimulus package announced in late 2008, saved the region (except Japan) from following Europe, the US and Japan down the tubes.
But even Japan is now seeing stronger demand for its exports.
The country is gripped by deflation, poor policymaking, unemployment and low domestic demand, but as usual it depends on exports to get it out of trouble.
Until Chinese demand started kicking in the second half of 2009, there seemed no way Japanese exports would grow.
Traditional markets in the US and Europe were depressed by recession, and no one wanted manufactures, something that even impacted China.
But the strength of Chinese internal demand and the spending on infrastructure has dragged in exports from across the globe, but especially from the region.
So this week Japan reported that a strong rise in shipments to Asia helped produce the biggest increase in exports in almost 30 years in January.
Of course it was really helped to look good by the record 45.7% plunge in exports in January 2009, as demand plunged across the world.
Recovery from a fall of that magnitude would look good for any amount of increase, but the 40.9% rise year on year was still impressive .
(That still leaves the level of exports under the level of two years ago.)
Shipments to Asia accounted for more than half of total exports and were up 68.1% on the previous year while exports to China, its biggest trading partner, surged 80%.
In January shipments of motor vehicles were up 342.8% while the value of auto parts sales rose 156.6%.
China had its biggest ever year for car sales in 2009 and it is reported to have continued into this year.
Chemicals exports from Japan jumped 107.5%, and machinery shipments rose 68.8%.
News of Japan’s very solid rebound came after Singapore, Taiwan and Thailand produced news of better than expected actual or forecast growth.
Like Japan, Taiwanese exports to China, its biggest trading partner, jumped 45%, Thailand’s shipments grew an astonishing 94% (but again from that depressed January 2009 base in all cases).
These very high growth levels will slow over the next six to nine months and we probably won’t get a truer picture of real demand until June onwards, but they are encouraging.
And, Japan provided one last bit of information which showed that its economy, or rather the export sector, is coming back.
In January, imports rose for the first time since October 2008, up 8.6%.
Not bad and a sign that demand is growing for things like iron ore, coal, chemicals, LNG etc.
China’s property boom is well known, in Hong Kong, property is really bubbling to the point where the government has started trying to prick the balloon.
So much so that in Wednesday’s 2010 budget, Hong Kong Financial Secretary John Tsang revealed the government would increase the levy on luxury property transactions in an attempt to offset the risk of a property price bubble.
He said that from April 1, the levy on transactions of properties valued at more than 20 million Hong Kong dollars ($US2.58 million) will be raised to 4.25%, up from its current level of 3.75%.
In addition, buyers will no longer be allowed to defer payment of the levy.
Mr Tsang said the government will consider extending the same measures to lower-priced properties if it finds "excessive speculation".
China has already moved to tighten lending into property by removing exemptions on tax and forcing people who buy to hold on to the full five year period, otherwise they have to pay a special tax that was suspended in late 2008.
As well, banks have been told to limit lending to property groups, and this week were told to limit lending to local governments to more worthwhile purposes i.e. not property. Local governments in China have been players in residential and commercial property developments.
News of the strong rise in exports from Taiwan and Thailand was accompanied by the latest economic growth numbers.
Taiwan said GDP rose 9.2% in the 4th quarter of last year from the same depressed quarter of 2008.
The Thai economy grew 5.8% on the same comparison (although a bout of political uncertainty at the moment could hit that growing level of activity).
Taiwan and Thailand exited recession last quarter and Malaysia followed, as Asia lead the global recovery.
The Malaysian economy grew 4.5% in the final quarter of last year, much stronger than forecasts which predicted growth of around 3.4%.
Taiwan’s economy also grew a strong 4.2% from the third quarter of last year, thanks to China.
But it still fell 1.8% over the year, but sees that improving to 4.7% annual rate in 2010.
China grew 10.7% annual in the final three months of last year and is forecast to have grown by 9%
