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So if China sneezes, what does the rest of Asia catch?
We asked last week what happens to Asia if the US sneezes economically. Does Asia catch pneumonia? Andy Xie of Morgan Stanley, in an economic report, wrote that despite all of China’s newfound economic might, there still isn’t enough high-powered economic activity to offset the threat to the region from an American economic downturn. But that’s nothing compared to what would happen to the rest of the region if China runs into trouble. Robert Rountree, Head of Investment Services at Prudential Asset Management, points out in the following chart from Datastream that it’s when China sneezes that the rest of Asia outside Japan really has to get concerned:
The chart shows Asian exports to China soaring upwards to nearly 25 percent of the total, while exports from the region to the United States have slumped from around 33 percent annually down to around 16 percent. Starting in 2003, China replaced the US as Asia’s export destination of choice. Atchoo!