China says protectionism hurts everyone after US sets new tariffs | East Asia Tonight (Aug 1)

East Asia Tonight - Summary

Key Concepts:

• US Tariffs: Impact on East Asian economies, trade negotiations, protectionism.
• Trade War: US-China relations, potential for escalation, global economic impact.
• Asian Stock Markets: Reaction to tariff announcements, market volatility, safe haven assets.
• Foreign Caregivers in Taiwan: Aging population, labor shortage, policy changes, potential impact on families.
• Myanmar Elections: Concerns over unrest, military rule, civilian-led government.
• Nintendo Switch 2: Sales performance, impact of tariffs on manufacturing.
• Chinese EV Makers: Adaptation to EU tariffs, market share in Europe.
• AI in Digital Entertainment: Applications in gaming and animation, legal and compliance issues.
• ASEAN Coffee Market: Growth, local businesses, unique blends, economic integration.

US Tariffs and Trade War

• China's Stance: China condemns US protectionism after new tariffs are announced on exports from numerous trading partners, including a 35% tariff on Canada. A foreign ministry spokesman reiterates that there is no winner in a trade war.
• Taiwan's Situation: Taiwan faces a 20% tariff, reduced from an initial 32%. President William Li hopes for a better rate through negotiations with the US.
• Japan and South Korea: Japan secured a 15% tariff rate, down from 25%, and will continue to press for cuts on auto tariffs. South Korea also achieved a 15% tariff deal but faces a 50% tariff on copper exports, which is expected to significantly impact exports.
• Market Reaction: Asian stock markets reacted negatively to the tariff news. South Korea's KOSPI plunged by over 3%, marking its worst weekly performance since April. Japan and Taiwan also experienced significant losses due to their export dependence and exposure to US tariffs. China and Hong Kong stocks saw their steepest weekly losses, compounded by contracting factory activity in China.
• Currency and Safe Havens: Risk sentiment led to a weakening of Asian currencies, particularly the Taiwan dollar. Investors moved to safe haven assets like the Japanese yen and gold.
• Expert Analysis (May Yuen, Singapore Management University):
  • The 5% tariff difference between Taiwan (20%) and South Korea (15%) could significantly impact semiconductor supplier choices for the US market.
  • Tariffs on one country (e.g., 25% on India) can affect the entire global supply chain, impacting sourcing decisions for components like semiconductors produced in Singapore.
  • If the US and China fail to reach a deal by August 12th, it will hurt the global economy.
  • Smaller economies have fewer bargaining chips but might benefit if the US focuses on major trading partners.
  • The US is "weaponizing tariffs" as a foreign policy tool, and these tariffs may persist beyond the Trump administration.
  • Like-minded countries should work together to further liberalize trade with each other.
  • China has become more liberalized after the initial US-China trade war, showing interest in joining mega trade agreements like CPTPP and potentially forming a three-country trade agreement with Japan and South Korea.

FBI Expansion in New Zealand

• Countering China's Influence: China expresses shock at the FBI's expansion plans in New Zealand, which the US says is aimed at countering China's influence. The FBI opened its first standalone office in New Zealand, aligning it with other Five Eyes intelligence sharing nations.

Myanmar's Planned Elections

• Concerns over Unrest: Japan voices concerns over potential unrest ahead of Myanmar's planned elections. Foreign Minister Takeshi urges Myanmar authorities to refrain from violence and release detainees, including Aung San Suu Kyi.
• Civilian-Led Government: Myanmar's military announces the formation of a civilian-led interim government to prepare for elections, but military chief Min Aung Hlaing retains power as acting president.
• Martial Law: Martial law is imposed across nine regions and states for 90 days, affecting over 60 townships, citing the threat of armed violence. CNN's Leong Wit suggests that people in these areas will likely be unable to vote. ASEAN chair Malaysia has stated that it won't accept partial elections.

Nintendo's Performance

• Switch 2 Success: Nintendo beats top and bottom line estimates for the June quarter, driven by the success of the Switch 2, which became the world's fastest-selling console.
• Financials: Quarterly revenue more than doubled year-on-year to $3.8 billion, and net profit grew 19% to $638 million. The Switch 2 sold 5.8 million units by the end of June.
• Tariff Impact: Nintendo maintains its full-year sales forecast, stating that US tariff measures have had no significant impact. However, analysts suggest this may change as Nintendo outsources manufacturing to Vietnam, which faces a 20% tariff starting August 7th.

Chinese EV Makers in Europe

• Market Share Recovery: Chinese EV makers have recovered their pre-tariff market share in Europe by adapting to EU tariffs. They captured 10.6% of the European EV market in June, led by BYD.
• Adaptation Strategies: Chinese companies have built local manufacturing facilities and avoided ultra-low pricing. SAIC-owned MG pivoted to hybrid and combustion models, while BYD added plug-in hybrids to its lineup. Xpeng is scouting sites across the EU for manufacturing.

Apple's Performance

• Strong iPhone Sales: Apple saw its largest quarterly revenue growth in almost four years, driven by strong iPhone sales and a turnaround in China.
• Financials: Overall sales reached $94 billion, 10% higher than the previous year. Revenue from Greater China gained 4.4% to $15.4 billion, ending seven quarters of declining sales.
• Tariff Impact: Apple CEO Tim Cook warns that tariffs could cost $1.1 billion in the current quarter.

South Korea's Exports

• Record High: South Korea's exports surged to their highest level ever for July, driven by semiconductors, vehicles, and frontloading ahead of US tariffs.
• Financials: Exports rose 6% to almost $61 billion in July.
• Tariff Impact: Washington will impose a 15% across-the-board tariff rate on imports from South Korea, an increase from the previous 10% levy. 50% duties remain on steel and aluminum exports.

Southeast Asian Manufacturing

• Pessimistic Outlook: Southeast Asian factories are the least optimistic since the COVID era, despite a slight recovery in July.
• PMI Data: The S&P Global ASEAN Manufacturing PMI showed confidence in future output tanked to its lowest level since July 2020. Headline factory activity grew for the first time since March, reaching 50.1, indicating a mild expansion.
• China Halts US Investments: China has reportedly paused approving outbound investments for companies looking to set up or expand operations in the US amid trade tensions.

Taiwan's Aging Society and Foreign Caregivers

• Super-Aged Society: Taiwan is now a super-aged society, with nearly one in five people over 65.
• Policy Change: A revised law took effect, making it easier for seniors aged 80 and above to hire live-in foreign caregivers without a health evaluation.
• Controversy: The policy change has sparked debate, with concerns that it could limit access for those most in need due to labor shortages.
• Labor Shortage: Taiwan faces a shortage of caregivers and workers across various sectors. Wages for caregivers are relatively low compared to countries like Japan and South Korea.
• Potential Issues: Critics warn that the policy easing could widen the gap between demand and supply, creating competition for caregivers and potentially disadvantaging high-needs families.
• Government Response: The Ministry of Labor plans a six-month review and is exploring backup plans, including investments in long-term care and efforts to attract young Taiwanese into the field.

Heatwaves in East Asia

• Extreme Temperatures: Japan, South Korea, and China are experiencing scorching temperatures, with some areas reaching highs of over 40°C.
• Japan: Japan's weather service issued heat stroke alerts for 32 prefectures.
• South Korea: South Korea recorded 23 tropical nights in July, a record since modern weather observations began.
• China: Chongqing issued a red alert as temperatures topped 48°C. Residents are using air raid shelters as cool spaces.

Memoir Writing in China

• Emerging Profession: A Chinese millennial, Tongajin, makes a living writing memoirs for ordinary people.
• Cost: Short memoirs cost 20,000 yuan, while longer ones cost 50,000 yuan.
• Motivation: A MoneyMind survey found that 83% of Chinese respondents would quit their job due to poor workplace culture and values.
• AI Usage: Tongajin uses AI as a tool to streamline his work, such as sorting interviews and restoring old photos.

China Joy Expo

• Digital Entertainment Expo: China Joy, Asia's largest digital entertainment expo, opened in Shanghai.
• Focus on AI: Artificial intelligence is a key focus, particularly for character animation and game creation.
• Attendance: The event spans 18 soccer fields and features over 700 companies. The number of foreign companies has decreased.

ASEAN Coffee Market

• Growth and Consumption: Southeast Asia's modern coffee market is experiencing robust growth, driven by rising disposable income and consumer preferences.
• Local Businesses: Local coffee businesses are creating unique ASEAN blends.
• Challenges: Challenges include intense competition and rising costs.
• Economic Integration: Fee trade for ASEAN countries will help Malaysia theme.
• Social Media: Social media is helping young entrepreneurs promote uniquely Azan coffee blends.

Conclusion

The news program "East Asia Tonight" covers a range of critical issues impacting the region, from the economic fallout of US tariffs and trade tensions to domestic challenges like aging populations and labor shortages. The program highlights the interconnectedness of global trade and the adaptability of businesses in response to changing economic landscapes. It also sheds light on social and political developments within East Asia, including concerns over elections in Myanmar and the evolving digital entertainment landscape in China. The interviews with experts provide valuable insights into the complexities of these issues and potential future trends.