Paul Cavey

Japan – Tankan shows inflation pressure increasing

Korea – core inflation up again

Region – weak activity, but firm pricing in Korea and Japan

China – not undergoing Japanification

In recent months, I've been doing quite a lot of work on Japanification. I summarised the arguments in this opinion piece for The Wire China.

Japan – Tankan keeps May alive

China – muddling through at risk from tariffs

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Korea – and now the hit from auto tariffs

Pulled by the policies of previous US administrations and pushed by rising China competition in EM, Korea has focused more on the US market. As a result, US tariffs will hurt more than they would have a few years ago, and with domestic demand weak, there's not much else to support the local economy.

Japan – more talk of upside risks to inflation

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China – profits subdued, especially in heavy industry

Profits rebounded YoY in Jan-Feb, but in level terms remain subdued. That overall picture, however, masks big sectoral differences. Aggregate profits in heavy industry have fallen, and are no higher than in 2013. Earnings in machinery and electronics are more stable.

China – still difficult to get excited

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Japan – Services PPI inflation slower, at least until FY25

Sequential momentum in services PPI has eased in recent moths. However, the data have been volatile since covid, and in 2023 and 2024 there was a big re-acceleration at the beginning of the new fiscal year. Given continued wage growth, a rebound seems likely in April 2025 too.

Korea – sentiment drops again

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Korea – no consumer stagflation

Consumer confidence fell back again in March, and remains well below the long-term average. However, general inflation expectations were stable, and while house price expectations ticked up, the change isn't enough to suggest a big acceleration in the real estate market.

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Taiwan – unemployment rate stable at 3.4%

There's really not much change happening in Taiwan's labour market. But right now, that's what makes it interesting. Taiwan's unemployment rate is holding at lows not seen in 20 years. That in turn forms the backdrop for wage and core CPI rises which are the highest in 20 years.

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Japan – PMI shows continued inflation pressure

Today's flash shows no change from recent themes: manufacturing is weak, services rather volatile, and inflation pressure everywhere is holding up, with manufacturing prices "comfortably above their long-run trend levels", and input costs in services "increasing at the fastest pace in 25 months".

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China – Japanification scorecard: part 2

A follow-up to the video a couple of weeks ago. That looked at demand-side factors. This delves into the supply-side and factors behind the "deflationary mindset". In these areas, China today looks even more different from Japan in the 1990s.

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China – auto exports lose momentum

The slowdown in auto exports that began in 2024 has continued through early 2025. EV sales and shipments to DM have been flat-lining for a while already, and rising exports of hybrids hasn't been big enough to make up the difference.

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Japan – manufacturing under pressure, services holding up

The standout feature of the Tankan Reuters remains the unusual strength of services relative to manufacturing. Today's march survey shows that this gap isn't expected to close in the next few months, and is one reason for the higher rate of inflation that Japan is experiencing.

Korea – BOK remains dovish

Taiwan – TSMC, Trump and the TWD

China – overall, somewhat stable

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China – property price momentum softens

The recovery in new property prices from Q4 faded in February, with prices dropping MoM. That makes some sense given mortgage lending, which has stopped slowing, but hasn't started to lift.

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