A few years ago economists in Asia were talking about “decoupling,” a buzzword that meant markets and economies would continue to grow on the back of regional demand despite a slowdown in the West.

Now that decoupling may be coming back to bite them.

Manufacturing data out Thursday shows regional economies failing to benefit from a pick-up in economic activity in the U.S., Europe and Japan. The reason? Their deepening dependence on demand in China, where growth continues to decelerate.

“There’s a clear disassociation between the advanced industrial economies and Asian economies,” said Frederic Neumann, co-head of Asian economics for HSBC HSBA.LN +0.86% and a proponent of decoupling a few years ago. “The drag from China is trumping the lift from the G3 economies.”

There was a rare sign of optimism Thursday on China as the National Bureau of Statistics reported its Purchasing Managers’ Index, a key gauge of manufacturing activity, rose to 50.3 in July from June’s 50.1. But a similar index compiled by HSBC, which is less weighted toward economic activity by state-owned enterprises, fell to 47.7 in July from 48.2. Any figure over 50 represents expanding manufacturing activity, while a figure below 50 signals contraction.

This state of affairs is bad news for non-China Asia and that was reflected in other data. Australia, whose decades-long boom has been fueled by Chinese demand for its commodities, has among the most to lose. A manufacturing index compiled by the Australian Industry Group, an industry association, and PricewaterhouseCoopers dropped to 42.0 in July, down 7.6 points from the previous month. Other economies that are closely tied to China also fared poorly: HSBC’s PMI index for South Korea fell to a seasonally adjusted 47.2 in July from June’s 49.4 on weak new export orders. The pace of contraction was the fastest since September. HSBC’s PMI for Taiwan fell to 48.6 in July from 49.5 in June.

“Nothing in the data shows that Asian economies are benefiting from better economic activity in Europe, the U.S. and Japan, because they’re more dependent on China,” Mr. Neumann said. During the global financial crisis, Beijing spent billions of dollars to pump-prime its economy, offering some insulation to recessionary winds from the West. But now, that dependence is “turning out to be a double-edged sword.”

Some Asian economies with large domestic demand, like India and Indonesia, were relative bright spots. In India, HSBC’s July PMI was at 50.1, while in Indonesia it stood at 50.7 – both almost flat on June.

Robert Prior-Wandesforde, head of Indian and Southeast Asian economics for Credit Suisse, described the picture across Asia as “pretty poor.” But at least he can see some light at the end of the tunnel.

“My suspicion is that we are at or close to the bottom of the industrial export cycle in Asia, and Asia will see a modest improvement in industrial activity from here,” Mr. Prior-Wandesforde said. But he added: “Modest is the key word, because with China’s fundamentals still looking very sickly, it’s hard to get too excited.”

Even the mild improvement in the official data from China failed to raise much excitement.

“China is really a two-tier economy at this point,” Mr. Neumann said. State-owned enterprises “continue to float around with fairly generous lending support from state banks. But the SMEs” – small and medium enterprises that get more funding from the shadow banking sector, still reeling from June’s liquidity crisis — “increasingly are being squeezed by a cash crunch, and that’s showing up in activity.

Indeed, in many countries the PMI subindexes for new orders were weak, which will hamper any turnaround. And the nature of the recovery in the United States – driven by sectors such as housing, which is less import-intensive than consumer demand – means that’s failing to light a fire under Asian exports too.

http://blogs.wsj.com/economics/2013/...-to-bite-asia/

untungnya negara kita banyak KMN sehingga konsumsi domestik meningkat

tp hati2 aja sih di masa depannya klu cuma mengandalkan konsumsi domestik

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