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Which Asian Economies Have the Most Sustainable Trade Policies?

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Hinrich Foundation 2020 STI

Hinrich Foundation STI

Which Asian Economies Have the Most Sustainable Trade Policies?

To say that Asia has benefited from international trade is an understatement. By opening its economies to the rest of the world, the region has become a leading exporter in many of today’s most important industries.

Trade has also improved Asia’s quality of life, lifting over one billion people out of poverty since 1990. Without the proper controls, however, such rapid growth could have harmful effects on Asia’s environment and society.

In this infographic from The Hinrich Foundation, we break down the results of their 2020 Sustainable Trade Index (STI). Since 2016, this index has ranked 19 Asian economies and the U.S. across three categories of trade sustainability: economic, social, and environmental.

What Exactly is Sustainable Trade?

International trade is an important source of economic growth, enabling domestic businesses to expand, reach new customers, and gain exposure to foreign markets.

At the same time, countries that focus too heavily on exports put themselves at greater long-term risk. For example, an aggressive expansion into manufacturing is likely to impair the quality of a country’s air, while overdependence on a single product or sector can create an economy that is susceptible to demand shocks.

“The primary principle which underpins sustainable trade is balance. Trade cannot be pursued solely for economic gains, without considering environmental and social outcomes.”
– Merle A. Hinrich

Thus, sustainable trade supports not only economic growth, but also environmental protection and strengthened social capital. It involves finding a balance between short-term incentives and long-term resilience.

Measuring Sustainable Trade

The Sustainable Trade Index (STI) is based on three underlying pillars of trade sustainability. Every economy in the STI receives a score between 0 and 100 for each pillar.

PillarNumber of IndicatorsExamples of Indicators
Economic pillar21
  • Use of trade tariffs
  • Logistics performance
  • Growth in labor force
Social pillar12
  • Level of economic inequality
  • Presence of child labor
  • Educational attainment
Environmental pillar14
  • Level of air pollution
  • Reliance on natural resources
  • Environmental standards

The economic pillar measures a country’s ability to to grow its economy through trade, while the social pillar measures a population’s tolerance for trade expansion, given the costs and benefits of economic growth.

Last but not least, the environmental pillar measures a country’s proficiency at managing climate-related risks. Individual pillar scores are then aggregated to arrive at an overall ranking, which also has a maximum possible score of 100.

The Sustainable Trade Index 2020: Overall Rankings

For the first time in the STI’s history, Japan and South Korea have tied for first place. Both countries have placed in the top five previously, but 2020 marks the first time for either to take the top spot.

RankEconomyOverall Score
1 (tied)🇯🇵 Japan75.1
1 (tied)🇰🇷 South Korea75.1
3🇸🇬 Singapore70.2
4🇭🇰 Hong Kong68.3
5🇹🇼 Taiwan67.0
6🇺🇸 U.S.66.2
7🇨🇳 China56.5
8🇵🇭 Philippines55.9
🌏 Average55.1
9🇹🇭 Thailand50.5
10🇱🇰 Sri Lanka50.4
11🇲🇾 Malaysia49.5
12🇧🇩 Bangladesh49.4
13🇧🇳 Brunei48.5
14🇰🇭 Cambodia47.8
15 (tied)🇮🇳 India46.9
15 (tied)🇻🇳 Vietnam46.9
17🇮🇩 Indonesia46.3
18🇱🇦 Laos46.1
19🇵🇰 Pakistan43.9
20🇲🇲 Myanmar40.3

Advanced economies like Singapore, Hong Kong, and Taiwan were also strong performers, each scoring in the high 60s. At the other end of the spectrum, developing countries such as India and Vietnam were tightly packed within the 40 to 50 range.

To learn more, here’s how each country performed in the three underlying pillars.

1. Economic Pillar Rankings

Hong Kong topped the economic pillar for the first time thanks to its low trade costs and well-developed financial sector. Financial services have increased their contribution to Hong Kong’s GDP from 13% in 2004 to 20% in 2018.

The region’s recently initiated national security law—which has resulted in greater political instability—may have a negative effect on future rankings.

RankEconomyEconomic Score
1🇭🇰 Hong Kong69.6
2🇸🇬 Singapore68.7
3🇨🇳 China64.9
4🇰🇷 South Korea63.3
5 (tied)🇲🇾 Malaysia61.2
5 (tied)🇺🇸 U.S.61.2
7🇹🇼 Taiwan60.3
8🇧🇳 Brunei59.3
9 (tied)🇯🇵 Japan58.6
9 (tied)🇵🇭 Philippines58.6
🌏 Average56.9
11🇧🇩 Bangladesh56.3
12🇰🇭 Cambodia56
13🇱🇰 Sri Lanka54.7
14🇻🇳 Vietnam53.9
15🇮🇩 Indonesia52.1
16🇮🇳 India51.4
17🇲🇲 Myanmar49.5
18🇹🇭 Thailand47.4
19🇵🇰 Pakistan46.9
20🇱🇦 Laos44.0 

China was also a strong performer, climbing to third for the first time. Asia’s largest economy benefits from a well-diversified group of trading partners, meaning it doesn’t rely too heavily on a single market.

The bottom five countries—India (16th), Myanmar (17th), Thailand (18th), Pakistan (19th) and Laos (20th)—suffered from issues such as payment risk, which is measured as the difficulty of getting money in and out of a country. This risk is especially damaging to trade because it discourages foreign direct investment.

2. Social Pillar Rankings

The social pillar features the highest average score, but also the largest gap from top to bottom. This gap has expanded over recent years, growing from 43.9 points in 2018 to 52.3 in 2020.

RankEconomySocial Score
1🇹🇼 Taiwan88
2🇯🇵 Japan87.3
3🇰🇷 South Korea86.9
4🇺🇸 U.S.83.1
5🇸🇬 Singapore63.1
6🇵🇭 Philippines62.4
7🇹🇭 Thailand60.9
🌏 Average59.1
8🇭🇰 Hong Kong57.8
9🇧🇩 Bangladesh55.8
10🇲🇾 Malaysia53.6
11🇱🇦 Laos53.0
12🇮🇳 India52.5
13🇮🇩 Indonesia52.4
14🇧🇳 Brunei51.6
15🇻🇳 Vietnam50.4
16🇨🇳 China50.2
17🇰🇭 Cambodia46.2
18🇱🇰 Sri Lanka46.1
19🇵🇰 Pakistan45.6
20🇲🇲 Myanmar35.7

Taiwan claimed the top spot for the second time, solidifying its reputation as Asia’s leader in human capital development. It performed well in the educational attainment indicator, with 93.6% of its population receiving a tertiary education.

China, despite its success in other pillars, only managed 16th. This was partly due to the effects of its now defunct one-child policy, which has been responsible for creating gender imbalances and a shrinking population.

3. Environmental Pillar Rankings

The environmental pillar has the lowest average score of the three. Japan, Singapore, Hong Kong, and South Korea were the only countries to score above 75.

RankEconomyEnvironmental Score
1🇯🇵 Japan80.0
2🇸🇬 Singapore78.7
3🇭🇰 Hong Kong77.4
4🇰🇷 South Korea75.2
5🇨🇳 China54.5
6🇺🇸 U.S.54.3
7🇹🇼 Taiwan52.8
8🇱🇰 Sri Lanka50.4
🌏 Average49.1
9🇵🇭 Philippines46.6
10🇹🇭 Thailand43.2
11🇰🇭 Cambodia41.2
12🇱🇦 Laos41.1
13🇵🇰 Pakistan39.3
14🇮🇳 India36.7
15🇻🇳 Vietnam36.3
16🇧🇩 Bangladesh36.0
17🇲🇲 Myanmar35.6
18🇧🇳 Brunei34.6
19🇮🇩 Indonesia34.3
20🇲🇾 Malaysia33.8

The top four performed well in areas such as air quality and water pollution, and with the exception of Hong Kong, have all introduced carbon pricing schemes in the past decade. This doesn’t mean these countries are without their flaws, however.

Land-constrained Singapore, for instance, ranked 16th in the deforestation indicator. The city-state is one of the densest population centers in the world, and has cut down forests to clear space for further settlement and urbanization.

Building Back Better From COVID-19

Despite the damage that COVID-19 has caused, there are some silver linings. This includes the environmental benefits experienced by China, where lockdowns reduced carbon emissions by 200 million tonnes in a single month. It’s been estimated that after two months, China’s reduced pollution levels saved the lives of 77,000 people.

These temporary improvements are an explicit reminder of the environmental and social costs associated with economic growth. In response, governments in Asia are taking steps to ensure the long-term sustainability of their nations. Japan and South Korea both announced their commitments to achieving carbon neutrality by 2050, while China set a similar goal for 2060.

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Will Tesla Lose Its Spot in the Magnificent Seven?

We visualize the recent performance of the Magnificent Seven stocks, uncovering a clear divergence between the group’s top and bottom names.

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Will Tesla Lose Its Spot in the Magnificent Seven?

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

In this graphic, we visualize the year-to-date (YTD) performance of the “Magnificent Seven”, a leading group of U.S. tech stocks that gained prominence in 2023 as the replacement of FAANG stocks.

All figures are as of March 12, 2024, and are listed in the table below.

RankCompanyYTD Change (%)
1Nvidia90.8
2Meta44.3
3Amazon16.9
4Microsoft12
5Google0.2
6Apple-6.7
7Tesla-28.5

From these numbers, we can see a clear divergence in performance across the group.

Nvidia and Meta Lead

Nvidia is the main hero of this show, setting new all-time highs seemingly every week. The chipmaker is currently the world’s third most valuable company, with a valuation of around $2.2 trillion. This puts it very close to Apple, which is currently valued at $2.7 trillion.

The second best performer of the Magnificent Seven has been Meta, which recently re-entered the trillion dollar club after falling out of favor in 2022. The company saw a massive one-day gain of $197 billion on Feb 2, 2024.

Apple and Tesla in the Red

Tesla has lost over a quarter of its value YTD as EV hype continues to fizzle out. Other pure play EV stocks like Rivian and Lucid are also down significantly in 2024.

Meanwhile, Apple shares have struggled due to weakening demand for its products in China, as well as the company’s lack of progress in the artificial intelligence (AI) space.

Investors may have also been disappointed to hear that Apple’s electric car project, which started a decade ago, has been scrapped.

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