What the maturing tech cycle signals for the global economy


2019/05/07 16:01

A maturing tech cycle has been one of the factors behind the significant trade slowdown in China at the turn of the year. The tech cycle argument rests on the fact that China and other key Asian economies, including Japan, are closely integrated through supply chains concentrated, especially, in the production of computers and other electronic devices – the tech sector. The maturing tech cycle may reflect a number of factors: it could be associated with more structural sector-specific drivers, such as the possibility of an increasing level of saturation in the global market for smartphones and for new data centres; it could relate to mini-cycles linked to the launch of new models of tech products; or it may signal, more generally, a turn in the global business cycle. This box reviews basic characteristics of the Asian tech sector and shows that it has played an important role in the recent weakness in China’s trade. At the same time, the box also suggests that the trend in the global tech cycle associated with weaker trade in Asia may be bottoming out.

成熟的技术周期是年初中国贸易大幅放缓的原因之一。科技周期论证的依据是,中国和包括日本在内的其他主要亚洲经济体通过供应链紧密结合,特别是在计算机和其他电子设备 - 科技行业的生产中。成熟的技术周期可能反映了许多因素:它可能与更具结构性的行业特定驱动因素相关联,例如智能手机和新数据中心全球市场饱和度增加的可能性;它可能涉及与推出新型科技产品相关的小周期;或者它可能更普遍地表明全球商业周期的转变。本文回顾了亚洲科技行业的基本特征,并表明它在近期中国贸易疲软中发挥了重要作用。与此同时,本文还表明,与亚洲贸易疲软相关的全球科技周期趋势可能正在触底反弹。

Weak merchandise imports from other key Asian economies have accounted for a substantial share of decelerating Chinese imports in recent months (see Chart A). Imports from the United States have also declined, partly as retaliatory tariffs on soybeans have diverted Chinese demand for soybeans to Brazil. At the same time, China has significantly increased imports of various commodities, including crude oil.


Chart A


Chinese imports by exporting country and regions


(USD billions)


Sources: China Customs via Haver Analytics and ECB calculations.


China and other Asian economies are specialised in tech sector production and satisfy around half of global demand for tech products. China alone accounts for more than a quarter of the sector’s global value added. The structure of Asian economies, with a notable exception of India, which specialises in IT services, is skewed towards tech production. This sector accounts, on average, for around 7% of total value added in the region. A high degree of specialisation in tech production is even more pronounced when looking at exports, where tech products account, on average, for more than a quarter of exported goods from the region (see Chart B). Asia dominates the tech sector also from a global perspective: it accounts for around half of the sector’s global value added and for more than two-thirds of global tech exports. Asian tech exports account for 10% of total global trade.


Chart B


Specialisation in the tech sector is common across Asian economies


(percentages; index: 2015)


Sources: OECD and ECB calculations.


The Asian tech supply chain connects advanced economies and emerging markets, with China the largest producer of final products. Japan and Korea are positioned upstream in the supply chain and, together with Taiwan, specialise in the production of semiconductors and chips. China remains the key assembler of final products in spite of a significant decline in import intensity. The import content of its tech production, which is subsequently exported, declined to 27% in 2015 from 40% only a decade ago, pointing to its declining dependence on intermediate goods sourced from the region. A country’s relative position in the supply chain determines whether domestic macroeconomic developments could provide useful signals also for global trends.


While the global tech cycle turned in early 2018, an orderly slowdown followed by some stabilisation seems the most likely scenario looking ahead. Recent indicators of the tech cycle point to a slowdown in the global tech cycle (see Chart C). However, there are some signs that suggest a stabilisation in the period ahead. First, financial market expectations for sectoral developments in the region – approximated by the Philadelphia Semiconductors Index (see Chart C, red line) – point towards some bottoming out this year, after falling in 2018. Second, while the global PMI for new export orders in the manufacturing sector has remained below the expansion-contraction threshold of 50, the pace of its decline in recent months has been significantly less steep than in the first half of 2018. Although it covers a broader set of exported products, it also shows a fairly high correlation with sectoral stock prices and thus could provide some further evidence of stabilisation in the global tech sector. And third, Korean exports of semiconductors – often used as another leading indicator of activity in the tech sector – have recently shown signs of stabilisation. Broader indices of activity in the technology sector, which are published with a somewhat longer lag and include the US Tech Pulse Index, and global trade in electronic components also suggests some limited weakening in the sector’s growth momentum. Overall, therefore, the turning of the global tech cycle seems partly to reflect a rather exceptionally strong period in 2017, related to substantial investment in expanding capacities of data centres globally. Despite a high degree of uncertainty, a soft landing currently seems a more likely scenario.

虽然全球技术周期在2018年初出现转机,但随后出现了有序放缓,然后出现了一些稳定的情况。最近的技术周期指标显示全球科技周期放缓(见图C)。然而,有一些迹象表明未来一段时期会出现稳定。首先,金融市场对该地区行业发展的预期 - 费城半导体指数(见图C,红线) - 指向2018年下跌后的今年触底反弹。其次,新出口订单的全球采购经理人指数制造业仍然低于50的扩张 - 收缩门槛,近几个月的下降速度明显低于2018年上半年。虽然它涵盖了更广泛的出口产品,但它也显示了与部门股票价格具有相当高的相关性,因此可以为全球科技行业提供一些稳定的进一步证据。第三,韩国半导体出口 - 经常被用作科技行业活动的另一个领先指标 - 最近出现了稳定迹象。技术部门的更广泛的活动指数,包括美国技术脉冲指数,以及全球电子元件贸易,也表明该部门的增长势头有限的削弱。因此,总的来说,全球科技周期的转变似乎部分反映了2017年相当异常强劲的时期,与全球数据中心扩容能力的大量投资有关。尽管存在很大程度的不确定性,但目前似乎更有可能出现软着陆。

Chart C


Tracking the global “tech cycle”


(left-hand scale: diffusion index; right-hand scale: annual percentage changes)


Sources: Markit, Thomson Financial Datastream, FRED, KITA and ECB staff calculations.

消息来源:Markit,Thomson Financial Datastream,FRED,KITA和ECB员工计算。

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