The View | How China’s slowdown is shaking up Asia’s economic calculus

In Tokyo, Bank of Japan Governor Kazuo Ueda is searching for an exit from 23 years of quantitative easing. However, the answers he seeks could lie more in Beijing.

Japanese policymakers are as surprised as anyone by the underperformance of China’s economy. Back in January, Team Ueda fully expected a powerful growth boost from Asia’s biggest economy that buttressed the argument for higher borrowing costs. Instead, Japan and its neighbours are grappling with the fallout from Chinese deflation, overcapacity and dithering on efforts to end the property crisis. Even if Chinese exports are thriving, weak import activity is being felt throughout the region.

Ueda is hardly alone. Over in Seoul, Bank of Korea officials know that the 2.7 per cent growth that many expect for Asia’s fourth-largest economy is China-dependent. South Korea’s export-driven model doesn’t work when the world’s biggest trading nation is struggling.

The same is true of officials in Bangkok, Jakarta, Kuala Lumpur, Singapore, Taipei and elsewhere in the region. This is particularly true as the “higher for longer” era in the United States looks set to persist as the US Federal Reserve slow-walks interest rate cuts.

Europe, meanwhile, is hardly booming as German growth stagnates. The geopolitical scene is chock full of potential landmines that could shake Asian markets. They range from Russia’s invasion of Ukraine to increased provocations from North Korea to Saudi Arabia’s ambitions to boost oil prices to a US election cycle that is making trade wars great again.