TOKYO -- East Asian corporate chiefs' worries about U.S. President Donald Trump have faded over the last year, according to a recent newspaper poll that also shows diverging views on global and national economic outlooks for 2018.
Nikkei Inc., Chinese daily Global Times and South Korea's Maeil Business Newspaper surveyed executives in December, receiving responses from 100 businesses in each of Japan, China and South Korea.
Not so bad
A majority or plurality of business leaders in each country said the Trump administration has not affected their companies much for good or ill -- 83% in Japan, 51% in China and 48% in South Korea. These answers were immediately followed by the 10.6% of Japanese respondents that saw a small boost, and the 29% in China and the 42% in South Korea that reported a slight negative impact.
The mood was rather different in the previous survey shortly before Trump's inauguration last January, amid comments by the then-president-elect about renegotiating free trade agreements and withdrawing from the Paris climate change accord. Around 40-50% of Chinese and South Korean executives said they expected the new U.S. government to hurt their business eventually, while 65.5% of those in Japan were uncertain about Trump's impact.
Measures such as the huge corporate tax cut passed last month likely did much to ease their minds. Makoto Ono, senior economist at the Mizuho Research Institute, acknowledged some turmoil, but said Washington had shown itself to be business-friendly. Yet protectionism may rear its head again as November's midterm elections approach.
With its economy expected to hold steady for some time, the U.S. was among the top markets where executives anticipate stronger demand for their products or services, placing second among Japanese respondents and third in China and South Korea.
Corporate leaders see promise in emerging markets as well. Japanese respondents cited Southeast Asia as their top growth market, with China ranked third. The Chinese and South Korean lists put China in first place, followed by Southeast Asia. Africa and the Middle East ranked high among these two groups as well, while Japanese respondents expressed less interest.
Though China is a vital market for Japan and South Korea, political friction often gets in the way of business. But more respondents see brighter prospects for bilateral ties. Asked whether relations with China will improve, 47.3% of Japanese and 80% of South Korean executives said they will, up from just 7.8% and 24%, respectively, last year.
Odd one out
Chinese business leaders sounded gloomier about the outlook for the global economy in 2018 than their Japanese and South Korean counterparts. While 18% of Chinese respondents said they expect conditions to worsen this year, just 1% of Japanese and 5% of South Korean participants said the same. But the mood was generally optimistic across all three countries, with 93% in Japan and more than 70% in China and South Korea anticipating improvement.
As for the Chinese economy, 17% of Chinese business leaders expect significant economic improvement, while none in Japan and only 1% in South Korea said the same. Meanwhile, 42% of Chinese respondents predicted steady improvement, far more than the 17.5% in Japan and 29% in South Korea.
This dynamic was flipped when it came to the South Korean economy, where 26% of Chinese business leaders foresee a moderate economic slowdown, compared with around 10% of the Japanese and South Korean respondents. Another 10% of Chinese business leaders see the South Korean economy cooling rapidly, a view shared by no executives in Japan or South Korea. The answers on the Chinese side may owe partly to hard feelings over Seoul's hosting of an advanced U.S. missile defense system.
As for Japan, 51.5% of Japanese respondents and 36% of those from South Korea expect a strong or steady economic recovery, compared with just 11% in China. Conversely, 34% of Chinese executives expect a gradual or sharp downturn, compared with none in Japan and a mere 6% in South Korea.
Meanwhile, executives' concerns about potential obstacles to growth reflected local developments. Tied at the top of the Japanese list, at 45% each, were a lack of public- or private-sector capacity for innovation, along with labor shortages and skill mismatching. The top Chinese headwind was higher labor and other input costs at 55%, while 56% of South Korean executives cited excessive government regulation. Up to two answers were permitted.
Song Won-geun, vice president of the Korea Economic Research Institute, criticized policies costly to business, including a corporate tax hike and a minimum wage increase. The government should promote private investment via regulatory reform and lightening the tax burden, Song argued.