(Bloomberg) -- China’s increasing dominance of global trade means that the ongoing shutdown of many factories will resonate across Asia, doing the largest amount of damage to the economies of South Korea and Japan.
China’s share of global manufacturing is much higher than during the SARS outbreak in 2003, and it’s also exporting a lot more intermediate goods, so any disruption to output has a larger effect across the region, according to economists at Natixis SA in Hong Kong.
“The electronic, automobile, machinery and textile sectors are most impacted by disruption of the Chinese chain due to their sheer economic and also high dependency on Chinese production,” according to the report. “That directly hurts North Asian corporates such as Japan, South Korea and Taiwan the most,” and also Southeast Asian economies such as Vietnam via inputs for electronic, textile and footwear production it buys from China, they wrote.
Many companies in Asia are not only importing from China but also produce and sell in the country, and that trade will be damaged as well, the report said, adding that disruption in Southeast Asia will be bad for companies from North Asia which have been increasing investment there.
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