Global Manufacturing Update

(Originally Posted September 3) The world’s largest manufacturers, ex-China, are showing troubling signs of slowdown

South Korea’s year-over-year exports fell 13.6 percent in August, marking the ninth consecutive month of decline. An ongoing trade dispute between that nation and Japan only exasperates the situation, particularly as nationalism replaces economic cooperation. And as Japanese output sinks into contraction, ditto Taiwan. Even India, which hoped to sidestep U.S.-China trade carnage, showed factory output sliding to the lowest level in more than a year. 

Speaking of China, it seems that the Communist Party has evolved into a more sophisticated trade warrior. Instead of reacting with traditional indignation against recently imposed tariffs on $110 billion of Chinese consumer goods exports, a recent editorial from Party-controlled Global Times simply laid bare that “[the] Administration has shot Americans in the foot. When more and more Americans feel the pain, maybe it will be time for Washington to recover rationality.” In the meantime, China is also filing a complaint against U.S. tariffs at the World Trade Organization.

What does this portend? China is prepared for the long game just as everyone else is feeling the pain.