China’s trade pivot from US could be a boon for South Korea, Japan and Taiwan
- South Korea, Japan and Taiwan seen as likely economic winners as China turns away from reliance on US imports
- Asian hi-tech exporters expected to soak up demand from world‘s second largest economy as it looks to skirt sanctions
China’s effort to cut its reliance on US imports – especially for advanced technologies – by shifting demand to other Asia nations is likely to make big winners out of South Korea, Japan and Taiwan, analysts said.
China remains vulnerable to bottlenecks in cutting-edge computer chips and key components embedded with American intellectual property, something made apparent by US sanctions on Huawei Technologies Co. imposed by the Trump administration.
It is the first time China, South Korea and Japan have been part of the same free-trade pact, making it easier for China to purchase hi-tech goods with embedded research and development from its two neighbours as a way around US sanctions, analysts said.
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“Japan and Korea get the best of both worlds,” said Rory Green, China and South Korea economist at brokerage TS Lombard, “They will benefit from greater China market access and, on the flip side, it’s now easier for them to invest into Southeast Asia and profit from cheaper production there.”
Shaun Roache, S&P Global Ratings’ chief economist for the Asia-Pacific region, said Japan and South Korea would generally be favoured for capital expenditure by firms in machinery and other capital goods that are needed to keep the trade cycle powering ahead into next year.