N Asia trio looks to export, consumption boost in 2014, China lags

FE Team | Published: January 24, 2014 00:00:00 | Updated: November 30, 2026 06:01:00

TOKYO, Jan 23 (Reuters): The first weeks of 2014 showed North Asia's manufacturing and export giants enjoying mixed fortunes, with South Korea and Japan starting the year positively, while China, the biggest of the trio, was still struggling to regain momentum.
Asia's top export powers, which together account for a fifth of global economic output, expect to get a lift this year from anticipated US and eurozone recovery and better global growth in general.
Yet, a survey released on Thursday showed factory activity in China turned negative in January for the first time in six months, after gross domestic product data released earlier in the week raised prospects that growth in the world's second largest economy will sink to a 15-year low this year.
China's economy is passing through a difficult period as the new Communist Party leadership, in charge for just over a year, re-calibrates priorities.
"They are in the middle of a reform right now to fix shadow banking ... to open markets to the private sector," said Kyoya Okazawa, head of global equities and commodity derivatives in Tokyo at BNP Paribas. "In the middle of those reforms, those PMI (purchasing manager index) numbers are going to be quite bumpy."
Things appear to be going better with China's neighbours.
A Reuters survey in Japan showed the business mood improved in world's third largest economy. And, South Korean data showed Asia's fourth-largest economy on track for a solid 2014.
"Compared to Japan and China, which are dependent more on domestic consumption for growth, South Korea will likely benefit more from the recovery in the advanced countries," said Kim Sang-Hoon, fixed income analyst with Hana Daetoo Securities in Seoul.
South Korea is the most open economy of the three with exports worth nearly 50 per cent of GDP, while China's amount to about half of that and Japan's account for about 15 per cent.
South Korea could lose some of its advantage to Japan, due to the yen's sharp decline over the past year against all major currencies, including the South Korean won.
Some economists tip Japan to benefit the most from a recovery in the West. That has already made South Korean automakers Hyundai and Kia predict their lowest sales growth in a decade this year.