Another quality thought provocative article from Nikkei. Not your usual western MSM propaganda.
US-China trade war threatens Japan's 'indirect exports'
Value-added shipments to China made up 5% of Japan's 2015 exports
YASUO TAKEUCHI, Nikkei staff writer March 05, 2019 14:40 JST
U.S. Trade Representative Robert Lighthizer, left, and Chinese Vice Premier Liu He are leading trade talks between the two countries. © Reuters
TOKYO -- Companies that form supply chains for Chinese exporters are still waiting to see if they will be spared the impact of higher U.S. tariffs after President Donald Trump said the levies would be put pending further talks.
The trade dispute reverberates far beyond the two combatants. $34.6 billion worth of Japanese goods made their way to the U.S. and other markets via China in 2015, the latest year for which an analysis is possible. That’s about 5% of Japan’s exports for that year.
The figure shows how value added in Japan gets to the U.S. in the form of exports from China. It also highlights the risk intensified trade tensions pose to Japan. More trade barriers between the U.S. and China would mean less demand for Japanese goods.
The impact on "indirect exports" can be appreciated by looking at Trade in Added-Value data compiled by the Organisation for Economic Co-operation and Development.
Using conventional measures, if a country exports $60 worth of parts to China that are then re-exported to the U.S. as part of $100 worth of finished products, that country's export figures would be booked as $60 and China's as $100.
Using TiVA measurements, they would be recorded as $60 and $40, respectively.
China is a larger export market for Japan than the U.S. on a customs-clearance basis, buying 22.1% of its exports according to the OECD. But the TiVA data show the U.S. as the bigger market, accounting for 22.2% of Japan's exports.
Japan's Cabinet Office has warned that these value-added exports would suffer from the trade war.
At $490 billion, information and communications equipment is China's biggest export. 3.3% of that represents value added in Japan. Much of that is handled by companies like Huawei Technologies, which is the target of U.S. government security measures. That means the Japanese shipments are also at risk.
Japan's value-added contribution to China's other exports are 0.8% for textiles and garments, 2% for electronic machinery and 1.6% for general machinery.
Japan's January exports to China were valued at over 958 billion yen ($8.6 billion) on a customs-clearance basis, down 17% from a year earlier. The fall was in part due to slowing domestic smartphone sales, which resulted in a drop in shipments of parts and semiconductors, according to the Japanese finance ministry.
The slide has widely been attributed to China's economic slowdown, but another decline would be unavoidable if trade frictions escalate further.
Japan is not the only country affected. In 2015, value added overseas contributed $370 billion, or 19%, of China's $2-trillion in exports. Japan's contribution to that figure is 1.8%, while those of South Korea and Taiwan stand at 2.2% and 1.7%, respectively.
The U.S. itself accounts for 2.1%, meaning some American companies could suffer if Chinese exports slow.
If the U.S. hikes tariffs to 25% on $267 billion worth of Chinese products and Beijing retaliated on a similar scale, the growth rates of the two countries would drop 0.3 and 0.9 percentage point, respectively, in 2020, according to the International Monetary Fund.
"Many countries supplying parts to China would be indirectly affected," said Akihiro Morishige, senior economist at Mitsubishi Research Institute.
US-China trade war threatens Japan's 'indirect exports'
Value-added shipments to China made up 5% of Japan's 2015 exports
YASUO TAKEUCHI, Nikkei staff writer March 05, 2019 14:40 JST
U.S. Trade Representative Robert Lighthizer, left, and Chinese Vice Premier Liu He are leading trade talks between the two countries. © Reuters
TOKYO -- Companies that form supply chains for Chinese exporters are still waiting to see if they will be spared the impact of higher U.S. tariffs after President Donald Trump said the levies would be put pending further talks.
The trade dispute reverberates far beyond the two combatants. $34.6 billion worth of Japanese goods made their way to the U.S. and other markets via China in 2015, the latest year for which an analysis is possible. That’s about 5% of Japan’s exports for that year.
The figure shows how value added in Japan gets to the U.S. in the form of exports from China. It also highlights the risk intensified trade tensions pose to Japan. More trade barriers between the U.S. and China would mean less demand for Japanese goods.
The impact on "indirect exports" can be appreciated by looking at Trade in Added-Value data compiled by the Organisation for Economic Co-operation and Development.
Using conventional measures, if a country exports $60 worth of parts to China that are then re-exported to the U.S. as part of $100 worth of finished products, that country's export figures would be booked as $60 and China's as $100.
Using TiVA measurements, they would be recorded as $60 and $40, respectively.
China is a larger export market for Japan than the U.S. on a customs-clearance basis, buying 22.1% of its exports according to the OECD. But the TiVA data show the U.S. as the bigger market, accounting for 22.2% of Japan's exports.
Japan's Cabinet Office has warned that these value-added exports would suffer from the trade war.
At $490 billion, information and communications equipment is China's biggest export. 3.3% of that represents value added in Japan. Much of that is handled by companies like Huawei Technologies, which is the target of U.S. government security measures. That means the Japanese shipments are also at risk.
Japan's value-added contribution to China's other exports are 0.8% for textiles and garments, 2% for electronic machinery and 1.6% for general machinery.
Japan's January exports to China were valued at over 958 billion yen ($8.6 billion) on a customs-clearance basis, down 17% from a year earlier. The fall was in part due to slowing domestic smartphone sales, which resulted in a drop in shipments of parts and semiconductors, according to the Japanese finance ministry.
The slide has widely been attributed to China's economic slowdown, but another decline would be unavoidable if trade frictions escalate further.
Japan is not the only country affected. In 2015, value added overseas contributed $370 billion, or 19%, of China's $2-trillion in exports. Japan's contribution to that figure is 1.8%, while those of South Korea and Taiwan stand at 2.2% and 1.7%, respectively.
The U.S. itself accounts for 2.1%, meaning some American companies could suffer if Chinese exports slow.
If the U.S. hikes tariffs to 25% on $267 billion worth of Chinese products and Beijing retaliated on a similar scale, the growth rates of the two countries would drop 0.3 and 0.9 percentage point, respectively, in 2020, according to the International Monetary Fund.
"Many countries supplying parts to China would be indirectly affected," said Akihiro Morishige, senior economist at Mitsubishi Research Institute.
