[LINK] "As Japan's exports cave, eyes turn to China"

[rfmcdonald]

We are doomed, it turns out.

Asia's economic downturn has reached new depths, with a collapse in Japanese exports casting fresh doubt on China's ability to stave off recession.

Japan, the world's second-largest economy after the United States, was already in full-blown recession before its January exports tumbled 45.7 per cent from the same month last year, according to figures released earlier this week by Japan's Ministry of Finance.

Japan is seeing its economy contract at a rate not witnessed since the oil price shock of the 1970s. Only a few months ago, Japan was considered to be in comparatively good shape because its banks were not saddled with toxic assets like their U.S. counterparts. Now, its economy is declining much more steeply than that of the United States or the major European economies.

"We don't see any signs of a pickup in the Japanese economy in the near term," Takeshi Minami, chief economist at the Tokyo-based Norinchukin Research Institute, told Reuters. "The economy will gradually worsen further."

Japan's slumping trade adds to concern about the collapse of inter-Asian trade and the once-unthinkable possibility that China, which has seen its growth rate slow, could actually see its economy contract.

[. . .]

All three export-reliant countries [South Korea, Taiwan, Singapore] were hit by a decline in demand from not only North America and Europe, but also from China, leading some economists to suggest that the world's third-biggest economy is faring far worse than Beijing's official statistics suggest. Japan's sales to China fell 45 per cent, while exports to Asia as a whole fell 46 per cent.

"Exports to Asia, particularly China, are tumbling at about the same pace as shipments to the United States, signalling that even China's economy may be shrinking," Mr. Minami said.

[. . .]

[F]falling global demand has led to growing unsold inventories at factories in China and elsewhere, forcing firms to rapidly cut back on production. While China's exports were down 17.5 per cent last month, Beijing still insists that the overall economy will grow at close to 8 per cent this year.

The new trade numbers mean that the Chinese economy--like most of those in Asia – is now shrinking, said Michael Pettis, a finance professor at Beijing University. "Both exports and imports are going down, so China's economy is definitely contracting," he said. "I've never believed that [decoupling] was even a small possibility."