Japanese flu does not chart as fever for Asia

PUBLISHED : Wednesday, 05 August, 1998, 12:00am
UPDATED : Wednesday, 05 August, 1998, 12:00am

This column has several times featured the argument that Japan's economic troubles do not necessarily translate into further big problems for the rest of Asia.

Proving the point with figures, however, is not always as easy as simply stating it.

The easiest way is to ask friendly stockbrokers, but sometimes they just have not bothered to do the work themselves, particularly in such things as intra-Asian trade statistics which won't do much for their revenues.

So this columnist has had to do the work himself.

The three charts show the result of long hours of trawling through a database and compiling the numbers. This is original work. Who says journalists never do it? The first chart shows the percentage of exports from the rest of Asia that goes to Japan.

The trend has been steadily down over the years. Japan takes less than 12 per cent of Asian exports and possibly less than 10 per cent if one excludes oil and gas exports.

It simply is not a big market for Asia and has long been a declining one. The growing markets are Europe and the United States.

The second chart shows the trade deficit that Asia excluding Japan runs with Japan in billions of US dollars monthly.

This was certainly big at one time, running more than US$9 billion at one point in 1995, up from less than $1 billion in 1985.

But it is now back down to little more than $5 billion.

The big deficit, largely the result of heavy imports from Japan, was in part just the flip side of a big surplus on capital flows from Japan in past.

But the figures may also reflect that Japan no longer has a lock-hold on the machinery and capital-goods business. There are increasingly other foreign sources for this, such as South Korea, or domestic sources.

Nor need it trouble the rest of Asia that imports from Japan have declined recently.

It is a buyers' market at the moment.

The imports are down because Asia is being forced to produce a current-account surplus, not because Japanese producers are turning down orders.

One interesting feature of the figures, however, is that the mainland, Taiwan and Hong Kong together have a growing trade deficit with Japan, while the Association of Southeast Asian Nations (Asean) has a sharply declining one.

It shows you where the real economic troubles lie. The mainland, Taiwan and Hong Kong do not have much trouble with their current accounts but Asean certainly does.

Overall, the figures confirm the thesis that the rest of Asia's dependence on Japan, at least in trade, is not great and is, in any case, in decline.

It is still the US and the US dollar that count.