Flagging market concerns

IN the Japanese port of Sabso, the grey navy ships practised their docking procedures. On the bow flew the Japanese flag, a red circle on a white background. On the stern flew the old Japanese Imperial flag with the 16 rays of the rising sun. Japan is now proposing to fly this Imperial flag as it hosts the Tokyo games. South Korea is deeply offended by this and has asked the IOC to ban the flag. This reflects an increasing concern with the remilitarisation of Japan under Prime Minister Abe, supported by the United States and Australia.

The concern has economic consequences with an increasingly bitter trade spat between Japan and Korea. Japan has tightened control over three chemicals that are crucial to producing semiconductors in Korea. Under new regulations, Japanese companies would need a licence for each chemical to export them to South Korea, and the process could take up to 90 days. Semiconductors have long been Korea's top export item, and a delay in their production could pose a significant threat to its economy. Later Japan removed South Korea from its "white list" of trusted trade partners. This creates even more delays in exports of items like auto parts and household electronics to South Korea.

This trade war poses a threat to the global tech supply chain by delaying exports to Korea. South Korean companies Samsung and SK Hynix provide 60 per cent of the world's DRAM memory chips. A shortage could affect everything from Apple iPhones to Dell laptops and potentially slow down an already cooling global economy.