TOKYO -- The collapse of China's stock bubble and its continued economic slowdown have other countries bracing for impact.
South Korea, which relies heavily on the world's No. 2 economy, could see the worst of the spillover if the Chinese stock turmoil spreads to real estate, shadow banking and other sectors. That was the warning put forth recently by JoongAng Ilbo, a South Korean daily.
The paper noted that in the first half of 2015, 25.5% of all South Korean exports went to China -- double the ratio of shipments to the U.S. South Korean investments in Chinese stocks amounted to 7.4 trillion won ($6.42 billion), accounting for 40% of total overseas stock investments.
The International Monetary Fund estimates that every 1-percentage-point drop in Chinese real growth pulls down the aggregate growth of other Asian economies by 0.3 of a point the following year. Economies outside the region take a 0.15-point hit.
South Korea, Malaysia, Thailand and Taiwan will be affected more seriously than others because they rely on exports of key goods to China, according to the IMF. The list includes machinery and transport equipment from South Korea and Malaysia; electronic parts from Taiwan; and raw materials from Thailand.
The fund expects China's slowdown to have a limited impact on Japan and India. Ironically, Japan's struggles to expand its presence in Chinese import markets could shield it from heavy damage.
Bitter success?
The 2015 White Paper on International Economy and Trade, released by Japan's Ministry of Economy, Trade and Industry, analyzes the country's exports to China.
The paper shows that while Japan accounts for 10-20% of Chinese imports, by value, in eight major sectors, its shares are relatively low in markets seeing the most import growth.
Germany, meanwhile, has been expanding its presence in high-growth sectors. German companies have captured large shares of markets such as passenger cars, railway parts, trucks, medical equipment and autoparts.
