Committed to PEOPLE'S RIGHT TO KNOW
Vol. 5 Num 410 Fri. July 22, 2005  
   
Business


Japan sees export trouble as China's soaring economy grows self-reliant


Japan's trade deficit doubled in June with its top trade partner China, whose booming economy is developing local production that is gradually replacing the need for imports, official data showed Thursday.

The trade surplus with Asia as a whole fell for the eighth straight month in June, dropping 16.1 percent year-on-year to 623.1 billion yen (5.5 billion dollars).

Asia-bound exports, which account for nearly a half of Japan's total shipments, rose 3.2 percent while imports grew 10.9 percent. Exports are a key driver of Japan's economic recovery.

With China alone, Japan's trade deficit jumped 105.3 percent to 234.5 billion yen as exports to the mainland edged up only 2.3 percent, far less than the 36.2 percent gain posted a year earlier.

Analysts said the figures reflect some economic tightening by China but also structural changes in its economy, which Wednesday posted a hot 9.5 percent growth for the first half of the year despite trying to hit the brakes.

"The recent economic data from China show its economy is still robust but Japan's export growth is slowing," said Toshio Sumitani, economist at Tokai Tokyo Research Center.

"This indicates Japan's shipments of machine tools and other goods to China to start up production there have run their course as local production began to get into gear," he said.

The trend shows "the possibility that Japan's exports may no longer grow as sharply as before."

China-bound steel shipments in June rose 22.8 percent but exports of semiconductors and other electronics parts fell 13.3 percent.

Imports from China climbed 16.4 percent, boosted by 27.3 percent growth in audio-video equipment and parts, and a 12 percent rise in computers and peripheral equipment.

Kiichi Murashima, an economist at Nikko Citigroup also said "China is no longer so dependent on imports.

"It has become capable of producing many products on its own so we can't expect exports to China to rise sharply going forward," Murashima said.

Sumitani said there was no immediate worry over the health of major Japanese companies, which have been globalized and gaining money from local operations.

"We do not have to worry too much at the moment although there is uncertainty over the Chinese financial tightening and crude oil prices," he said.

Japan's overall trade surplus in June fell 23.5 percent from a year earlier to 873.1 billion yen, marking the third consecutive year-on-year decline.