When the world gets closer.

We help you see farther.

Sign up to our expressly international daily newsletter.

Already a subscriber? Log in .

You've reached your limit of one free article.

Get unlimited access to Worldcrunch

You can cancel anytime .

SUBSCRIBERS BENEFITS

Exclusive International news coverage

Ad-free experience NEW

Weekly digital Magazine NEW

9 daily & weekly Newsletters

Access to Worldcrunch archives

Free trial

30-days free access, then $2.90
per month.

Annual Access BEST VALUE

$19.90 per year, save $14.90 compared to monthly billing.save $14.90.

Subscribe to Worldcrunch
InterNations
Economy

Serious Risks Of Trump Presidency For The Asian Economy

Watching share prices in Seoul
Watching share prices in Seoul
David Roman and Edna Curran

HONG KONG — Just when China's economy seemed to be stabilizing, Donald Trump's election as U.S. president poses significant new risks. Not just for Chinese growth, but the entire Asia region.

That's because the president-elect campaigned on a policy platform with protectionism at its center. Trump wants to slap punitive tariffs on Chinese goods and label the world's No. 2 economy a currency manipulator.

Such a move would hurt Chinese exports. But it could also trigger a trade war if Beijing retaliates, catching other Asian economies in the crossfire.

Other worries: A planned major regional trade pact, the Trans-Pacific Partnership, likely won't get off the ground. Slower trade flows and rising uncertainty means less investment and weaker growth. Then there are controls on movement of people, the risk of capital repatriation back to the U.S. and major security concerns.

"Profound changes in U.S. trade and security relations with the region are likely and probably negative," economists at Morgan Stanley wrote in a note.

Targeting China with trade barriers could pose an unpleasant choice for policy makers in Beijing: Accept the hit to growth from weaker exports or respond in kind, economists at Goldman Sachs Inc. wrote in a note. A weaker yuan could trigger an acceleration in capital outflows, pressuring China's international reserves and draining money from a slowing economy.

"One possible measure would be to allow a somewhat faster weakening of the yuan, although from China's perspective this or other trade measures could carry the risk of escalation," the Goldman economists wrote.

[rebelmouse-image 27090499 alt="""" original_size="1200x602" expand=1]

An investor survey conducted in July by Nomura Holdings Inc. flagged a long list of worries under a Trump presidency: from a possible rise in trade protectionism to threats to regional security if the U.S. cuts its military commitments in Asia.

The conclusion is clear: After Mexico, Asia is most at risk. In Nomura's report, titled "Trumping Asia," 77% of respondents in its survey expect the U.S. will brand China a currency manipulator under Trump and 75% predict he will impose tariffs on exports from China, South Korea and Japan. Only 37% think he will follow through with a pledge to build a wall along the Mexican border.

Nomura didn't disclose how many respondents it surveyed. Investors' fears aren't unwarranted. Asia is the world's manufacturing hub and many nations are export-dependent, putting them at risk if trade barriers start rising. China was the U.S.'s biggest trading partner last year, and if trade restrictions are imposed on the nation, the knock-on effects on the rest of Asia would be substantial, according to Nomura.

None are more vulnerable in Asia than South Korea and the Philippines. South Korea faces a possible backlash from two sides: Trump has criticized a 2012 free-trade agreement with the country, saying it has destroyed almost 100,000 American jobs; and he has vowed to force South Korea to meet the full cost of security guarantees provided by the U.S., which may add to fiscal woes there, Nomura said.

[rebelmouse-image 27090500 alt="""" original_size="1200x764" expand=1]

Donghai bridge, China — Photo: Shang2008

The Philippines faces risks because of possible immigration restrictions. The U.S. is host to 35% of the total number of Filipinos working abroad, and Nomura estimates they account for about 31% of total worker remittances, a key source of foreign inflows for the local economy.

The Philippines has one of the biggest export exposures to the U.S. in Southeast Asia and Trump's pledge to bring jobs back to the U.S. may threaten the nation's burgeoning business process outsourcing sector. The industry caters mostly to U.S. companies and attracts revenue that may equal the size of total worker remittances, about 9% of GDP, over the next two years, according to Nomura.

To be sure, it remains to be seen how much Trump delivers on his campaign rhetoric. His promise to ramp up fiscal spending could cushion the U.S. economy, which is a potential positive for world growth too.

But even then, the absence of any new trade agreements would probably offset that.
"Asia would, therefore, benefit less from a faster pace of U.S. growth than it would have otherwise," economists at Deutsche Bank AG wrote. "Asian exporters — especially in North Asia — are particularly vulnerable, having long relied on external demand as the main impulse to growth."

You've reached your limit of free articles.

To read the full story, start your free trial today.

Get unlimited access. Cancel anytime.

Exclusive coverage from the world's top sources, in English for the first time.

Insights from the widest range of perspectives, languages and countries.

Green

Inside Copernicus, Where All The Data Of Climate Change Gets Captured And Crunched

As COP28 heats up, a close-up look at the massive European earth observatory program 25 years after its creation, with its disturbing monthly reports of a planet that has gotten hotter than ever.

A photo of Sentinel-2 floating above Earth

Sentinel-2 orbiting Earth

ESA/ESA
Laura Berny

PARIS — The monthly Copernicus bulletin has become a regular news event.

In early August, amid summer heatwaves around the Northern Hemisphere, Copernicus — the Earth Observation component of the European Union's space program — sent out a press release confirming July as the hottest month ever recorded. The news had the effect of a (climatic) bomb. Since then, alarming heat records have kept coming, including the news at the beginning of November, when Copernicus Climate Change Service deputy director Samantha Burgess declared 2023 to be the warmest year on record ”with near certainty.”

For the latest news & views from every corner of the world, Worldcrunch Today is the only truly international newsletter. Sign up here.

Approaching the dangerous threshold set by the Paris Agreement, the global temperature has never been so high: 1.43°C (2.57°F) higher than the pre-industrial average of 1850-1900 and 0.10°C (0.18°F) higher than the average of 2016 (warmest year so far). Burgess, a marine geochemistry researcher who previously served as chief advisor for oceans for the UK government, knows that the the climate data gathered by Copernicus is largely driving the negotiations currently underway at COP28 in Dubai.

She confirmed for Les Echos that December is also expected to be warmer than the global average due to additional heat in sea surfaces, though there is still more data to collect. “Are the tipping points going to be crossed in 2023,?" she asked. "Or is it just a very warm year part of the long-term warming trend varying from one year to the next?”

Keep reading...Show less

The latest