China becomes Japan’s largest trade partner

Agence France Presse

Tokyo, January 26:

China including Hong Kong replaced the United States as Japan’s largest trade partner in 2004 for the first time since World War II, the finance ministry said on Wednesday.

Japan’s trade with China, including the administrative region, totaled 22.2 trillion yen ($214 billion) last year, outpacing the 20.5 trillion yen with the United States. With China alone, Japan had a trade deficit of 2.20 trillion yen, up 5.0 per cent from 2003, as exports rose 20.5 per cent to 7.99 trillion yen and imports rose 16.8 per cent to 10.19 trillion yen.

“As China’s economy continues to grow, we will see a further expansion of trade between the two countries,” a ministry official said.

China is both a global manufacturing center backed by cheap labour and land, and a consumer market growing on the back of an emerging middle class hungry for cars and electronics products.

Low-priced Chinese-made goods have been flowing into the Japanese market while Japanese firms are boosting their factory capacity and sales networks in the neighbouring country.

Last week, Prime Minister Junichiro Koizumi promised to mend fences with China, saying bilateral rows should not hurt trade. “Even if we (Japan and China) have different opinions, I will enhance cooperation in wide-ranging fields from a broader viewpoint,” he told parliament. In 2004, Japan’s trade surplus with Asia rose 32.9 per cent to a record 7.43 trillion yen as exports gained 17.1 per cent to a record 29.6 trillion yen with imports up 12.6 per cent at a record 22.2 trillion yen, the ministry said.

Japan’s overall trade surplus in 2004 hit a five-year high at 12.0 trillion yen on the back of brisk exports to Asia. Meanwhile, Japan’s trade surplus with Asia in December fell 2.3 per cent to 706.9 billion yen ($6.9 billion) as exports of hi-tech products slumped.

Asia-bound exports, which account for some 50 per cent of Japan’s total shipments, grew 7.5 per cent to 2.63 trillion yen from a year earlier.