Daily Memo: Chinese Exports Climb, the Japan-South Korea Trade Feud Continues, Former Kyrgyz President Arrested

All the news worth knowing today.


An increase in Chinese exports. China’s exports unexpectedly rose in July, climbing by 3.3 percent compared to July 2018 against estimates in a Reuters poll of a 2 percent drop. In particular, exports to Association of Southeast Asian Nations countries and Europe picked up, rising by 15.6 percent and 6.5 percent year on year, respectively. The fall in exports to the U.S. (6.5 percent) was outpaced by the fall in imports (19.1 percent), and as a whole imports were weak, dropping by 5.6 percent. The spike in sales to Southeast Asia is likely getting a partial boost from transshipment (whereby Chinese goods are slightly altered in a third country before being re-exported to the United States) a practice the U.S. has warned about in recent months. All in all, the surprise increase is likely to be short-lived, with additional U.S. tariffs taking effect Sept. 1 – though there will probably be a flurry of activity in August to get ahead of those new tariffs. Even the Chinese central bank’s decision this week to let the yuan weaken against the dollar is unlikely to come close to offsetting the losses from higher tariffs.

The Japan-South Korea trade dispute. The Japanese government granted permission for exports to South Korea of extreme ultraviolet photoresists, a key component in the manufacture of semiconductors. But cumbersome controls requiring case-by-case approval of this and other chemicals needed in producing semiconductors and display panels remain in place, and Tokyo warned more could be on the way. In early July, Tokyo started requiring government approval for exports to South Korea of high-tech materials essential to the country’s tech industry. In announcing the decision, Japanese Trade Minister Hiroshige Seko warned that South Korea’s export management was still flawed – suggesting these high-tech products could find their way into chemical weapons factories in North Korea and elsewhere – and that controls could be tightened further. This came a day after the U.S. deputy assistant secretary of state for Japan and Korea called on both sides to do “some soul searching” to resolve their dispute, which centers on a series of South Korean court decisions requiring Japanese firms to compensate workers conscripted during Imperial Japan’s occupation of the Korean Peninsula. South Korea is still scheduled to be dropped from Japan’s list of preferential trade partners on Aug. 28, which would enable the Japanese Trade Ministry to order that nearly all exports to the country undergo screening. A reciprocal decision in South Korea was due today, but the government delayed the decision until more discussions can take place.

A political standoff in Kyrgyzstan. For the second time in two days, Kyrgyz special operations forces stormed the residence of former President Almazbek Atambayev in a village about 10 miles (16 kilometers) south of the capital on the evening of Aug. 7, attempting to arrest him on a variety of corruption charges. Their first attempt was met by a swarm of his supporters. One special forces member was killed, about 50 of the former president’s supporters were injured, and six members of the special operations unit were taken hostage. The second assault on Thursday afternoon succeeded, and Atambayev surrendered to police, according to the 24.kg news website. The standoff began after Atambayev said the current leadership was illegitimate, which prompted authorities to accuse the former president of involvement in corruption. The Kyrgyz parliament stripped Atambayev of his immunity in late June.

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