Recession fears as Japan’s economy shrinks for first time in a year | East Asia Tonight (May 16)
This is East Asia Tonight. Good Friday evening. I’m Mutelli Edwards. Tonight’s top stories. Apac issues a joint statement on the fundamental challenges facing raing up talks in South Korea overshadowed by divisions over US tariffs. The group secretar’s executive director joins us for more insights. Now, Japan’s economy shrank for the first time in a year and at a faster pace than expected, underscoring the fragile nature of its recovery and threats from looming US tariffs. As South Korea’s presidential campaign enters day five, latest poll showing Democratic Party candidate maintaining a solid lead against his rival, People Power Party rival Kimunsu. And China is hoping for a fair lasting deal in Russia Ukraine talks as Turkey hosts the first direct peace talks between the waring parties in three years. Ahead on East Asia tonight, investors had been closely watching the first quarterly results of China’s tech giants looking for cues of revival of long struggling tech sector. CNA’s Roland Lim has the lowdown on whether the market got ahead of itself when it comes to expectations for Alibaba and 10 cent and their AIE rallies. APAC trade ministers have voiced concerns over fundamental challenges to global trade as they wrap up two days of talks with a joint statement in JJ South Korea amid increasing fallout from US President Donald Trump’s tariffs. Well, officials are saying they remain committed to overcoming economic issues in the region and urge a greater cooperation. South Korea’s trade minister says the joint statement was hardworn. The block during the meeting stressed the importance of global trading mechanisms such as the World Trade Organization and also highlighted the role APEC plays in creating a more resilient and prosperous Asia-Pacific region. Meanwhile, protesters outside the venue felt that the South Korean government and companies could have done more to resist the pressure from Washington. For the very latest, let’s cross now to Linuk in Juju Island where the APE trade gathering uh was held. Uh first up Yunsuk just how significant is this joint statement breakthrough by these 21 member economies? Well, it is significant. You know, even a a few hours before the meeting ended, there were some delegates and concerns that they were not able to reach any kind of a joint statement because they were not able to agree on some of the wordings in that statement. And so, it is significant. Um and the trade minister Chonging Go was saying at a press conference after the two-day meeting today that you know that all the 21 economies were able to agree on this and have that joint statement. Now he said that you know they were engaged in intense um discussions and there was thoughtful deliberations but then at the end of the day he was deeply proud that they were able to reach um this historic agreement and he was calling it the miracle of Chichu. Now in that statement apparently the members agreed that there was going to be a fundamental um challenges facing the global trading system here. But after um they also agreed that they remain committed to APE being the main forum for the regional economic cooperation and regarding WTO apparently they were talking about the World Trade Organization and they all agreed that they would be supporting um the WTO and there was support for the WTO but they all agreed that there must be reforms um being carried out. Now um the delegates there you know that I spoke to earlier did say that that the atmosphere there was quite good and you know they did discuss a lot inside the meeting rooms which were close to the for to the media here and so we didn’t know exactly what was going inside but it seemed like the delegates every time they were going in and out of this international um convention center here in Chiju and I was talking to them they did say that they were very happy that there was this multilateral um trade um trade ministers meeting going on u because it allowed them to um exchange um ideas, opinions and hold meetings which they all thought was very good. So it’s great that they got this joint statement but one area that seems to lack this same official response is over US tariffs. Um what’s the stumbling block there? Well yes I mean Chongo the trade minister here also told reporters that you know there was no official discussion on that matter. um though some of the economies here alluded to this issue in in certain context but he also said that you know it is very difficult to pursue a joint response as the as the issues facing the various economies there were very different and so let’s listen to what he said at the press conference on this issue So you know as we heard there it seems like there was some discussion about this but they were not able to form so you know a sort of a united front against the United States on this issue. Now the representative of the US side Jameson Greer was here for this two-day meetings and he was there at the meetings but also he had a very busy schedule here in Chu where he were where he was holding bilateral meetings with several countries including South Korea. Now, the bilateral meeting um ended not too long ago here between the United States and South Korea. And after that meeting, we had the South Korea’s Minister for Trade, Industry, and Energy, Andun, telling reporters that the two sides agreed to hold a second round of formal talks um next week in Washington. Now, the talks then will be focusing on six areas such as the balance, trade, economic security, and also the non-tariff issues. Hey, thanks very much Linian Suk there with two days of reporting live from JJ Island in South Korea. And for more insights into the APE meeting, we will be speaking to Eduardo Pedrosa. He’s the executive director of the Apex Secretariat a little later this hour on East Asia tonight. China says it hopes Russia and Ukraine can reach a quote fair lasting deal as the two sides meet for direct peace talks in Istanbul for the first time after more than three years of war. In Istanbul, US Secretary of State Marco Rubio wrapped up talks with his Turkish and Ukrainian counterparts earlier today. A three-way meeting was chaired by Turkish Foreign Minister Hakan Fidan. Mr. Rubio had said he does not have quote high expectations for the Russia Ukraine talks, calling the current state of affairs a log jam that only Donald Trump can break. The US president says he would like to meet Mr. Putin as soon as they can set it up. Well, Ukrainian leader Zilinski yesterday slammed the Russian president’s absence in Turkey and accused Moscow of not making efforts to end the war. He said his team has a mandate to discuss an unconditional ceasefire, a proposal Mr. Putin has repeatedly rejected. And for more Ross Cullen joins us live now from Istanbul. Uh Ross, so what came out of those trilateral meetings and uh how can we read Mr. Rubio’s no-show at direct talks with the waring parties? Well, that’s a bit of management as far as I think we can understand in terms of the fact that the Russians didn’t send the president didn’t send the foreign minister and they chose to dispatch a lower level team of negotiators here to Turkey. And in response, Ukraine said, “Well, we did have the president here ready for face-to-face talks.” Vadomir Zilinski was physically present in Turkey, but he didn’t come to Istanbul. And the delegation is being led by his defense minister because the US delegation is not directly being led by Marco Rubio. It is being led by Michael Anton who is the head of policy planning for the United States government. So it’s about trying to manage making sure that you are not uh unbalanced when it comes to the levels of the different representations that are having the talks. We’ve had those first round of talks and I understand the Russian delegation has now arrived ready for their participation in the afternoon session which is Russia, Turkey and Ukraine. Uh that symbolic moment that we have been waiting for since even Thursday morning. Now finally we might get that chance to see the Russians and the Ukrainians in the same room at the same time for the first time since spring 2022 when they met here in Turkey. We’ve also had in the last hour word from Andre Yermarmac who is the chief of staff to Vadomir Zalinski. He has been holding meetings with the national security advisers of Britain, France and Germany and the US special envoy to Russia and Ukraine. Keith Kellogg and Andre Yermach has been saying that we coordinated our positions ahead of the upcoming meeting between the Ukrainian and Russian delegations. Ukraine is ready for peace and for a lasting unconditional ceasefire. We are also prepared for meetings and negotiations at the highest level. Well, that’s a reference to his boss being here in Turkey yesterday, ready for a face tof face with President Putin, but the Russian leader choosing not uh to come here to Turkey. We also know that Donald Trump has said, I think it’s time for us to just do it in terms of a level a meeting at that level. So, there certainly seems to be encouragement on that side. We’ve heard from Dimmitri Pescov recently, the Russian top press spokesman for the Kremlin saying that there is that contact. It is necessary to have a Russian leader and the US leader speaking. So we are understanding there will be a meeting at that presidential level at a certain time in the future but there was an unsuccessful attempt by Vadomir Zilinski to have a similar meeting with President Putin and now we are seeing the delegations meeting and they are certainly at a lower level than presidential. Uh Ross, what about Ke’s allies though? I mean what are they doing to uh you know exert some kind of pressure on Moscow to enter ceasefire negotiations? Yeah. Well, Otelli, there’s a meeting of the European political community today. Now, that’s a gathering of pretty much every country in Europe, including countries like Turkey and the UK that are not in the EU. They’re meeting in Albania. So, it’s another chance for face-to-face talks between Vadom Zalinski, Emanuel Macron, Retip Tire, Perduan Kia Star, and the new German Chancellor Friedrich Mess as well. and they’re going to be discussing this idea of imposing massive sanctions on Moscow if it does not sign up to an unconditional ceasefire which is an an ambition that pretty much everybody shares from the United States to China, Europe, Turkey and of course uh Ukraine. They are also discussing the possibility of a trade embargo on Russian exports and as according to the French foreign minister Jean Noel Bahu he said it might come a time to suffocate the Russian economy with devastating sanctions. So that’s what’s being discussed by Kiev’s allies ways to force and pressure Vladimir Putin to agree to a halt in the fighting. Atelli many thanks uh for that Ross Cullen reporting to us live from Istanbul. Alexander Corv from the University of New South Wales tells us why President Putin’s absence from the peace talks might be justified. I don’t think it was supposed to be uh a highest level meeting. Uh Putin never mentioned that he would go there in person. He he suggested to start negotiations but he never committed himself uh to be present at those negotiations. Delanski tried to sort of flip it over by by saying that look I’m here uh but you are not here so you don’t want to negotiate but uh this is not how such serious negotiations work. Top decision makers like presidents or prime ministers usually step in when uh there is a lot of groundwork has been done and they usually step into the process uh ready to sign the documents or when the the agreement is already there. I don’t think that we are this stage. So um I think the the relatively low level of delegation from the Russian side is strategically justifiable because again the president doesn’t uh participate in the negotiations when when when there is no can can be um cannot be a positive outcome. So uh and it it applies not only to Putin u generally speaking like top leaders only start direct conversation when when there is something to talk about. Coming up on East Asia tonight, US chip maker Nvidia plans to build an R&D center in Shanghai as tighter export restrictions threaten sales in the key Chinese market. And South Korea’s government for the first time acknowledges the exports are slowing, reflecting concerns over a worsening global trade environment fueled by US tariffs. Hello again. Time now for your business news with Roland Lim. So Roland, Japan facing headwinds from the US president’s trade war. You heard right. Japan’s economic woes are running deeper than just the trade war. Experts say the economy remains without a driving force and flagging domestic and foreign demand. And that’s reflected in the first quarter GDP print. Japan’s economy suffered its first contraction in a year in the March quarter, even before the bulk of US President Donald Trump’s tariff measures took force. GDP for the first quarter shrank at an annualized pace of 0.7%, slightly worse than the 0.3% contraction economists had forecasted. That’s also a reversal from the revised 2.4% gain in the fourth quarter. Stagnant private consumption and falling exports caused the decline. Exports fell 0.6% while imports increased by nearly 3% as compared to the previous quarter. Private consumption which is the biggest contributor to GDP was flat for the period. The data highlights the challenges policy makers face as steep US tariffs cloud the outlook for the export reliant economy particularly for the automobiles segment. It also raises the chances of a technical recession as Prime Minister Shigarro Iroshiba heads into an election. The contraction is likely to fuel ongoing political debate over the need for tax cuts or cash handouts. Observers say the figure could also mean that the Bank of Japan will have to wait a little longer before resuming its monetary tightening program. It recently signaled a one-year delay in reaching its inflation target. The calls for a pause in rate hikes gathering pace as well. One of the most doubbish board members of the Bank of Japan says that the central bank must hold off raising interest rates for the time being, warning of growing downward pressure on the economy from higher US tariffs. Japanese shares recouped earlier losses to ended choosing to focus on stronger than expected corporate earnings overlooking a firmer yen and a weak GDP print. The Nicay 225 ending flat after falling as much as 0.7% earlier in the session. The broader topics also reversed course inching up 0.05%. And meantime the yen is also gaining against the greenback by a tenth of 1% 14550 to the dollar. The nicay had reclaimed that psychologically important level of 38,000 earlier this week. That’s on hopes that a Japan trade deal could be on the cards after a tariff truce between US and China. But since then, the market has drifted lower as a lack of clarity on trade negotiations crimped the gains. Midsize brokerages in Japan have been hit by fraudulent trading with third party gaining access to client accounts and conducting illicit trades in Japanese equities. This comes after the country’s biggest securities firms added new safeguards to protect client accounts. Japan’s financial services agency reported that fraudulent trades stemming from account takeovers surged more than 10fold from $179 million US in March to around $2 billion in April, racking up losses for the account holders. There were more than 4800 cases of unauthorized account access in April as compared to 1,420 a month before, underscoring the growing scale of the threat. Now, in total, nine brokerages were affected in April, and that’s up from five in March. At least 10 brokerages have pledged to compensate clients for their losses. Meanwhile, the financial sector is tightening its defenses with firms adopting multiffactor authentication to safeguard against hacking. South Korea’s finance ministry says the economy is facing increasing downward pressure with a slowdown in exports amid trade uncertainties weighing heavily on growth. Now this is the first time that the government has pointed to strong exports in its monthly economic report reflecting concerns over US tariff policies. It adds that the country faces sluggish domestic consumption while the jobs market difficulties persist. The ministry had forecast 1.8% growth for the economy in 2025. The finance ministry says the government will implement the 10 billion US extra budget to support export firms and to boost their competitiveness while revitalizing the domestic economy. Despite the tapid outlook, the South Korean shares rose logging in a fifth week of gains. The benchmark costby closed up 0.21% for the week. The index is also up about 2%. Meanwhile, the Korean one has strengthened against the dollar. Chinese and Hong Kong stocks extended their losses. Market sentiment came under pressure from renewed US China tech tensions and a disappointing earnings report card from Alibaba. Alibaba closed down 4.27% after the e-commerce giant posted quarterly revenues below analyst expectations yesterday. Nvidia is planning to build a research and development center in Shanghai. Now, it’s a bid by the chipmaking giant to remain competitive in the world’s second largest economy amid falling sales brought on by US export controls. A sources familiar with the matter says that Nvidia’s chief Jensen Huang had discussed plans with Shanghai Mayor Bong Chang last month. The chipmaker employs some 2,000 in the city, mostly in sales and support functions, but it is looking to expand by hiring engineers and researchers to work on global R&D projects with a focus on autonomous driving among others. It says that the design and production of chips will remain outside China to comply with US export controls. The tougher US controls in recent years have prevented the California-based firm from selling certain AI chips to China. As a result, it now faces tougher competition from local players in crucial markets, including Huawei. Chinese clients, however, remain cautious if the chip maker can offer a chip that satisfies both their needs and Washington’s demands. Nvidia’s announcement comes also as the Trump administration takes a tougher stance on Huawei. It issued a warning this week to companies around the world that the use of AI chips manufactured by Huawei could trigger criminal penalties for violating US export controls. Taiwan chip materials maker Global Wafers will be more than doubling its investment in the US. It is planning to spend an additional $4 billion US bringing its total expenditure in America to 7.5 billion dollars. Global wafers said that the additional spending will be used to meet US clients growing demands for locallymade supplies to reduce potential tariff uncertainties. The firm made the announcement at the opening of its new facility in Texas. It also revealed its intention to expand the plant to boost its production capabilities. The factory manufactures Global Wafers’s most advanced integrated silicon wafer and is the only such site in the US currently. The Taiwanese company plans to boost its presence in America is part of a larger trend of similar firms moving there. TSMC, one of Global Wafers clients, also among those shifting production. The Taiwanese ferms have been migrating to America in recent years due to US sanctions on China, but the shift has since been accelerated after President Trump’s threats of tariff and trade barriers. Taiwan Premier Chong Thai has says that trade talks between the US is one of the highlights of his cabinet’s performance in the past year. That’s as the cabinet prepares to mark the first anniversary of in being in office last week. A trade and response to US tariff policies are expected to be at the front and center of William Li’s government’s first annual report card. Premier Ch says that the first round of trade talks with the US concluded amicably in end of April and Taiwan is working closely with the US to bring down tariffs that have been hit by some of the island’s key export sectors. Mr. Ch didn’t go into specifics but stressed that Taiwan’s negotiating team is walking a fine line. Now it’s actively pushing for lower duties while making sure that the island’s industries don’t lose their competitive edge. Fore and I’ll be back a little later on. Otelli. All right. Looking forward to that. Thanks so much in the meantime, Roland. All right. Time now for another break. But coming up next on East Asia tonight, impact members born Asia is facing stalled trade and an economic slowdown even as they call for greater cooperation in a joint statement. We’ll get more insight when we speak next with Eduardo Padrosa, executive director of the Apex Secretariat. You’re watching East Asia Tonight and here are the headlines we’ve been following. South Korea’s presidential campaign enters day five. Latest poll from Gallup Korea showing Democratic Party candidate EJ Mil maintaining a solid lead against his rivals. Now, Japan’s economy shrank for the first time in a year and at a faster pace than expected, underscoring the fragile nature of its recovery and threats from looming US tariffs. And APEG trade ministers wrap up two days of talks in South Korea, saying they are concerned about fundamental challenges to global trade, but officials stress they remain committed to overcoming those difficulties and call for greater cooperation. And for more, let’s uh bring in Eduardo Pedrosa, executive director of the Apex Secretariat. Well, thank you very much, Mr. Padrosa, uh for joining us this evening. Um firstly, I want to talk about that last uh minute agreement that was reached that you got a a joint statement out of that. I’m curious to know what are some of the key compromises that had to be made in order to get everybody on the same page and do you foresee, you know, these compromises also holding up in the future? Hi, good evening Valelli. I’m here in Jju. Uh it took a lot of work to get the joint statement out. There are lots of different uh concerns about the trade system at the moment, but there are also a lot of shared interests in making progress on these issues. So, it does take some time. We have different and divergent set of economies that are uh members of APEC. But there is a strong will uh to succeed and use the trade system and use trade as a d as a driver of growth. Right. And I I certainly hear uh optimism there when you talked about shared interest and you’re trying to reach that common goal. Uh but the but unfortunately there wasn’t um a discussion in terms of of agreeing to a joint response that’s specific to US uh tariffs though. I guess each country has been mentioned facing significantly different circumstances. But do you think those differing positions could cause problems for Apex Unity? Uh maybe not now, but down the road. Well, I think what we saw today was a really useful exchange of views and it it really plants the seeds for further discussions in the leadup to the APE leaders um week uh coming up at the end of October. I mean, this is the first meeting to take place after the Switzerland talks. So we’re very happy with the amount of space that was created then and it really created a platform for not just China and the US to to to speak again but for other economies in the region to engage in those discussions and how how the current trading environment affects them and and I guess part of that you know with um US trade representative uh Jameson Gria um you know also there I guess you know a lot of countries were trying to meet him and we’ve talked about he had recent meetings with China’s um vice commerce minister and also other APEC trade ministers. I know that you you know you’re not supposed to divulge um a lot of these bilateral discussions, but can we just get a hint, you know, some sort of an outcome or commitment we can expect from these talks, particularly regarding that 90-day uh tariff reduction agreement with China? Yeah. Well, I think I mean I can’t speak directly to the to the bilateral talks, but I think all of the trade ministers that were there tried to have discussions uh with Ambassador Greer, and I understand that there is success in that. So, we we are very hopeful on what will come out of that on the 90-day um reprieve. There’s still time for all of the region’s economies to make progress on these issues. And of course the APEC meetings did provide that platform for the bilateral discussions and finding mutual landing zones on what are the US concerns, what are each other’s uh concerns. So let’s you know I keep a very positive outlook on this. I mean if we think think about where we were at the beginning of April and where we are now and that’s an enormous change in in outlook that we see and Apex value was really demonstrated here in providing a a way forward and a way to engage each other on these issues and what is a kind of best case scenario outcome you you think uh you know will happen after the 90 days well it’s going to take time to reach agreements but as we have been seeing being some of these agreements have been much faster than expected. So what we will see over the coming months we’re not quite sure uh but again I’m I’m optimistic and we have to understand what the US interests are uh what our own respective interests are the impact they have on our economic growth and the willingness that we c we have to move forward. So now Mr. agree. I mean, aside from representatives from China, he’s also met up with South Korea and Malaysia during the APEC uh conference. These sort of bilateral talks, how do you see it influencing um perhaps broader APEC uh negotiations because there is going to be another uh leaders summit sometime later this year? That’s am I right? That’s right. The bilateral discussions really do help to build mutual understanding and find ways that the whole apex system can come to agreement when it comes to actually drafting a statement. It’s hard to know what exactly each other want. uh if you don’t talk to each other on a bilateral basis. Uh yeah and actually when we were speaking to our Korean uh correspondent earlier she said there was actually good really good atmosphere when she was talking among uh the delegates that you know uh they were happy with all these multilateral trade meetings. Um there’s so much focus now right on on all the terrorists from uh the US. H how important do you think uh it is right now for Apac to back up the World Trade Organization and and ensure that it remains a solid framework uh for global trade. There was a lot of discussion during our meetings about backing up the World Trade Organization. They were very frank about these issues and finding issues where we could come to agreement. It was very clear for example uh that the trade rules are somewhat behind the curve and we haven’t we don’t have something that really covers e-commerce. There are other issues that are on the table which we call the joint statement initiatives. We’re looking at subsidies for fish and these were all issues that were well addressed. So yes, the atmospheres at JJU were extremely positive and people really did see common ground on how to address this with a specific focus on what can we do to improve the WTO including its rule making and dispute settlement mechanism. So Mr. Pedrosa were there any uh new strategic partnerships or alliances being uh explored to pro to protect some of the key industries uh from like whether it’s ship building or automotive exports uh from this fallout surrounding the US tariffs. We didn’t come to any specific issues for specific sectors. Uh but for sure there were issues on the sidelines where our member economies could discuss these um kind of more you know sort of sector specific issues. I mean there was discussions for example about the next round of of for addressing fishery subsidies. So again there’s so many issues that are on the table and finding ways amongst you know 21 regional economies is is going to be difficult. uh but it’s also uh extremely important for the global economy. Oh, thank you so much for taking time out of your busy schedule to chat with us, Eduardo Pedrosa, executive director of the Apex Secretariat. Now, the latest opinion poll for South Korea’s presidential race shows Democratic Party candidate EJ Mong maintaining a solid lead against his People Power party rival Kimun Su. Well, a Gallup Korea survey shows opposition leader E has 51% support among the 1,000 South Koreans pled this week. Now, that’s head and shoulders above the ruling PPP candidate who earned the nod from just 29% of those surveyed. Ejun Suk of the New Reform Party has 8% support in the three-way race for the top job, while 12% said they were simply undecided. Campaigning is in its fifth day and the candidates will be holding their first televised debate this Sunday. The vote early next month will pick a successor to former president Yunsung who was ousted over his failed martial law bid that threw the country into political turmoil. Taiwan is set to turn off its last nuclear reactor on Saturday in line with the island’s so-called nuclear-free homeland goal to phase out all atomic energy. this year. The power plant in question is the 40-year-old Maans reactor in southern Pingong County. Well, it’s only supplying some 4% of Taiwan’s energy needs, but the timing raises the risk of an energy crunch amid heightened energy needs from its chip manufacturing sector. The move will increase Taiwan’s reliance on fuel from abroad and also will make the island more vulnerable to a Chinese blockade, which could cut off critical imports. Renewable energy has been built around the site and more is planned on the facility grounds. Nuclear plants used to supply more than 50% of Taiwan’s energy needs. But anti-uclear sentiment grew after the 2011 Fukushima disaster in Japan. Taiwan President William Lie has insisted that the island’s energy supply will remain stable. But he also said that a return to nuclear energy one day is not entirely off the cards. On Wednesday, lawmakers revised legislation that allows a restart of the island’s atomic plants, suggesting a policy shift is in motion. Our Thai authorities have arrested 17 people in connection with the collapse of a high-risk building in Bangkok that was triggered by an earthquake late March. One of them is Thai Construction Tycoon, a Premi Kasut, who heads Italian Thai Development or ITD. His company was in a joint venture with China Railway Number 10, the Thai office of the state-owned Chinese infrastructure giant to build a new state audit office, which collapsed while under construction. Engineers, architects, and executives working for the project’s contractors have also been arrested. The 17 are being charged with building code violations and professional negligence leading to death, offenses that carry a penalty of up to 20 years imprisonment. Police say their investigation uncovered discrepancies in the design and the actual building as well as subpar material being used. 92 people were killed in the collapse. All of them workers involved in the construction. Coming up on East Asia tonight, a roundup of the first quarterly performance of China’s tech giants and an assessment of the country’s tech sector with Roland Nim. Singapore is seeking preferential tariffs as low as 0% on pharmaceuticals with the US. Deputy Prime Minister Gimyong says that talks with the US Secretary of Commerce are underway, but it may take a long engagement before any details are known. The US previously announced it might introduce tariffs for this sector. Well, Mr. Gun spoke on the issue when he was updating the progress of the Singapore Economic Resilience Task Force. Both Singapore and US can sit down and discuss some form of a concession for Singapore to have a beneficial or preferential tariff even to the extent of a zero tariff for pharmaceutical exports to the US. that you will require uh uh uh uh some uh efforts on the Singapore side to ensure that the supply chain for this uh pharmaceutical is secured and these are the details that we are discussing and uh this is a significant uh opportunity and significant agreement because although it’s not the base baseline the 10% but it’s very it’s a very uh specific sectoral tariff and uh pharmaceutical export is important part of Singapore’s exports to the Now Mr. Gun also added that the US China agreement on lower tariffs is a good sign but uncertainty remains. So these are u uh encouraging developments but I should sound a word of caution because the outlook remains very uncertain. What will happen at the end of 90 days is still a big question mark is yet to be known and whether the uh negotiation with the other countries will progress smoothly. Whether they will eventually settle at a level that are uh mutually agreeable and um uh workable is something that is still yet to be seen. The discussion between China and US of course is right at the beginning is a starting point. I think the journey will be quite long. Roland is here once again to update us with the latest from the business world. And uh Roland, investors betting big on AI for the revival of China’s tech sector. They have got some kind of a wakeup call. That’s right, Otelli. Now, after Alibaba’s less than impressive performance, experts say that market expectations had perhaps run ahead of the realities on the ground, both in terms of China’s consumption recovery and the pace of AI monetization. I’ll delve into that in a bit. But first, Singapore Airlines says there has been a surge in passenger traffic into China in recent months. But outbound travel has still not recovered to prepandemic levels. That’s as the world’s second largest economy was slower than the rest of the world to return to international flying. Its chief commercial officer says capacity into China for the carrier’s full service airline was largely recovered to prepandemic levels but lowcost subsidiary scoot is flying about 80% of its precoid capacity into China. Singapore Airlines reported a record annual net profit boosted by one-off gains from a merger of its 49% Indian carrier Vistara as well as Air India. but lower airfares in response to increased competition weighed on operating profit. Singapore Airlines at the same time says it has 10 billion Singapore dollars in fixed deposits and another 3.3 billion sing in undrawn credit lines to withstand any slowdown in business. These include the potential impact of shifting tariff policies and geopolitical uncertainties. Still CEO Gon Go Gunfong says that challenges ahead are unlikely to match the scale of disruptions during the co9 pandemic. The airline posted a record annual profit of $2.8 billion for its latest financial year. Beyond its financial strength, the airline highlights two pillars of strength. A resilient workforce and its digital transformation efforts. Now it adds that its diversified car global passenger flight and cargo networks continue to give it a competitive edge. Wherever the cargo flows go, we had the network to be able to manage that. So for example in the days when immediately after the implementation of the US tariff on China, we were able to fill our Singapore USA flights with cargos from Southeast Asia rather than from China uh where it was more greatly impacted. Now with China’s tech giants reporting mixed earnings and the country’s AI race heating up, the question on everybody’s mind is has the AI frenzy, is it fading? And did the market get ahead of itself when it came to expectations for Alibaba, Tencent, and JD.com? Well, Roland Liv is back with us again. And let’s just get get straight to it. Roland, and talk about Alibaba’s revenue, apparently missed estimates despite strong growth in cloud and AI. Is this then a sign that the AI buzz is really starting to fizzle? Well, not quite. I’d say that the AI narrative is still alive and kicking. uh but investors are starting to differentiate between uh storytelling and actual revenue earnings power for these AI companies. So for Alibaba it’s it’s got an all-in-one AI strategies invested heavily $50 billion into AI infrastructure as well as its model like its Q13 that is uh developing very quickly. Uh so the payoff for Alibaba is very much at an early stage. So the frenzy isn’t uh about fading, but it’s also about the fact that it’s the market’s a little bit more sober, about where execution actually matters. Why did Alibaba shares go down when its AI revenues actually, as you said, uh logged in tripledigit growths? Well, the fact is it came down to expectations. I mean Alibaba’s analysts were expecting the kind of liftoff that they got from AI stocks in the US like Microsoft and Nvidia that didn’t happen. Why? Because well there is weakness of consumption in China and on top of that uh there are there is also uh intense competition from the likes of JD.com Pinto also that’s also eroding into Alibaba’s profits. I want to talk about 10 cent. Uh the quarter was pretty strong. 13% revenue growth, 14% profit. Would you say that they are considered the new AI darling? Well, 10 cent has been a lot more tactical. What I mean by that is that they actually quietly integrated their AI into their platforms like WeChat into advertising as well as into gaming. So they have a chatbot called uh Yenpa Yuenpa uh and tools like AI uh advert generating uh apps as well as nonplayer characters in gaming that’s all actually starting to create new monetization streams. So they’ve been very clever at doing that. So they they’re not only just investing in AI strategies and models like Alibaba, but they’re also putting it into products that people are using today. And so that’s actually boosted their bottom line. So then is it fair to make that comparison that the market overestimated Alibaba and underestimated 10 cent? Is that a fair thing to say? Yeah, you probably hit that on the nail. I mean, Alibaba’s earnings came into the reporting season with high expectations because of the buzz around things like uh Deep Seek as well as QAn. Uh 10 cent exceeded expectations because uh they had been practical about the AI side of things. But let’s not also forget JD.com who also exceeded expectations with their earnings simply because uh they outperformed on the fundamentals. They actually had strength in their logistics side of things and also the fact that their operating margins improved. So it’s not all just about AI for these tech companies. So um all in would you say that analysts basically jumped the gun on this idea of a tech revival um specific to China? I think to some extent yes. Uh I think uh there are hopes that the AI boom would actually lift all boats and that was a bit premature. Uh I think that we are seeing selective recovery in the AI sector. As I mentioned earlier, it’s all about execution. Uh Tencent is benefiting from a very deep ecosystem, practical use of AI. Alibaba still struggling with uh restructuring its business uh investing heavily into AI. So it’s not a proven uh revenue stream yet. And JD.com of course is also fighting uh heavily uh in fierce competition with the rest. All right. It’s always good talking to you Roland, but I’m going to leave you now to let you enjoy the rest of your uh Friday evening. Thank you so much for that Roland. Now, Soul says that the number of North Koreans employed in South Korea’s public sector has reached an all-time high. There were 211 North Korean defectors working in government and administrative roles last year. That’s 17, more than in 2023. Well, this increase comes as Seoul expands support for the escapees as they adjust to their new lives in the South. The South Korea’s Ministry of Unification meantime says that there is a growing need to boost opportunities for North Korean defectors and this will allow them to participate in and contribute to the government’s reunification efforts. Some 30,000 defectors currently live in the South. Before 2020, more than a thousand North Koreans fled to the South every year, but numbers have dropped since the pandemic, which saw border closures. Well, a work of calligraphy by a South Korean independence hero is breaking new auction records in Soul. It’s part of a wave of historic artwork being brought home by the country’s ultra rich. The calligraphy Green Bamboo fetched more than $650,000 US in an auction last month. That’s more than three times its opening bid. It’s the work of Anjungun who assassinated Japan’s first prime minister, Itto Hiuboomi, in 1909. He was hanged for the killing by Japanese authorities who see him as a terrorist. Anne wrote an autobiography and made hundreds of calligraphy pieces while waiting for his execution. Months after his death, Tokyo occupied the Korean Peninsula until the end of World War II. He remains controversial till today. A move to honor him in 2013 by Seoul and Beijing sparked a diplomatic row with Tokyo. Now, the piece was sold to the family of South Korean energy conglomerate Ellis Group, who said they wish to share it with the public and may donate it to a national institution. And that’s East Asia tonight this Friday. Don’t forget your headlines anytime at CNA. And you can also find us on Facebook and YouTube. Have a great Friday and a great weekend. Thanks for watching. Heat. Heat.
A larger-than-expected quarterly contraction of 0.2% could deal a blow to Japanese Prime Minister Shigeru Ishiba ahead of July election. Meanwhile, APEC trade ministers wrap up a meeting in South Korea’s Jeju with “concern” about global trade challenges. Also on East Asia Tonight: Taiwan to turn off its last nuclear plant as it phases out all atomic energy, while Thailand arrests at least 15 people, including a construction tycoon, in connection with the Bangkok skyscraper collapse. Also, South Korean historical art breaks a new auction record.
00:00 Headlines
01:40 APEC trade ministers release joint statement after two days of talks
14:40 Japan’s economy suffers first contraction in a year in March quarter
25:29 APEC Secretariat chief Eduardo Pedrosa on trade tensions
33:37 Taiwan shuts 40-year-old Maanshan nuclear power plant
34:52 Arrests made over Bangkok skyscraper collapse triggered by earthquake
45:06 More North Koreans working in South’s public sector
45:57 Calligraphy by South Korean independence hero breaks auction record