2013-02-19 12:17:49 -
Tokyo, Feb 19, 2013 - (JCN Newswire) - Converting yen-denominated statistics for imports (preliminary) and exports (revised) released by Japan's Ministry of Finance in January 2013 to US dollars, the Japan External Trade Organization (JETRO) found that Japan's total trade with China dropped 3.3% to US$333.664 billion in 2012, marking the first drop since 2009.
Imports from China rose 3.0% to US$188.955 billion, setting a record high with single-digit growth, while exports to China fell 10.4% to US$144.794 billion, also marking the first drop since 2009, following Lehman's fall.
As a result, Japan's balance of trade logged a deficit of over US$44.246 billion for the first time, an increase of two times over the previous year. This was the first deficit
exceeding US$40 billion.
Also, Japan's total exports with the world decreased 2.4% from the year earlier to US$801.282 billion, a total decrease of US$19.511 billion, of which the drop in value of exports to China reached US$16.758 billion. Japan's contribution ratio in export fluctuation to the world was the largest ever with minus 2.0 points. The drop in exports to China became a major reason for Japan's decreased exports.
Overview of 2012
1. Exports to China decrease for first time in three years
On the back of China's economic slowdown and the recent demonstrations, a serious decrease was seen in Japanese exports of general machines such as motors, construction and mining machines, steel and automobiles. In particular, those of automobiles drastically fell after the September demonstrations began; in comparison with the previous year, there was an 82.4% drop for the month of October, the year's largest decline, and a 63% drop for the entire period of September to December. That became one of the main factors for a decline in Japan's overall exports. On the other hand, those of metal processing machines showed sound growth with a 4.9% rise from the previous year. In particular, those of machining centers recorded continuously strong growth with a 27.5% rise.
2. Imports from China reaches record high, while growth remains at single-digit level
With imports, a continued increase was noted in foodstuff, car components and communication instruments fueled by the continuously expanding demand for smart phones in Japan. Meanwhile those of petroleum products, chemical goods, iron and steel and non-ferrous metal decreased because of sluggish domestic demand.
3. China's share of total Japanese trade drops for two consecutive years
Japan's exports with the world rose slightly, while Japan-China trade showed a decrease. As a result, China's share of Japan's total trade dropped for the second consecutive year by 0.9 points to 19.7% from the year earlier. China's share of Japan's exports declined by 1.6 points to 18.1%, marking the first fall in 15 years, while its share of Japan's imports dropped for the third consecutive year, falling by 0.2 points to 21.3%.
Outlook for 2013
1. The Chinese economy is picking up from the low seen in the third quarter of 2012, and Japan's exports to China seem to be on the way to recovery. However, since the Chinese government has been taking a stance toward emphasizing structural reform over its economic growth rate, it is unlikely that the government will implement large-scale stimulus measures to create domestic demand. Therefore, even if the exports to China improve, the growth rate will likely remain modest.
2. Imports from China are expected to see a continuous rise, fueled by development of local production of parts and raw materials in addition to finished products, strong demand for smart phones and Japan's economic recovery and expansion of public projects.
3. Considering the above, Japan-China trade throughout 2013 is expected to see an increase after the decline in 2012 and is even likely to exceed the previous record set in 2011.
Exports of general machines, raw materials and products related to automobiles decline due to China's economic slowdown and recent demonstrations
In addition to China's sluggish rise in domestic demand due to its economic slowdown (its real GDP growth rate in 2012 was 7.8%), the strong yen, development of local production and demonstrations in China, Japan's exports of general machines, raw materials, automobiles and auto components have been on the decrease. On the other hand, those of audiovisual equipment, especially single-lens reflex digital cameras, and scientific and optical instruments such as liquid crystal devices enjoyed a strong growth thanks to the high competitiveness of these Japanese products in the Chinese market. Meanwhile, foodstuff, which was greatly affected by Chinese import restrictions after the Great East Japan Earthquake the year earlier, picked up as a result of partial easing of the regulations.
Breakdown by product category:
1. A sharp drop was seen in production and sales volume of automobiles and components under the influence of demonstrations in China and Japanese exports to China decreased drastically over the second half of the year. Also, due to sluggish growth in China's industrial production, exports of motors, pumps, centrifugal machines, iron and steel, plastic and electric products such as semiconductors which increased in 2011 all showed a decrease in 2012. Moreover, the rate of decline in exports of construction machinery rose, led by Chinese government real estate investment controls and slowing fixed asset investment. Those of material handling equipment also showed a sharp drop in growth rate.
2. Thanks to expanding demand worldwide for smart phones and tablet PCs, a continued increase was seen in Japanese exports of metalworking machinery such as machining centers needed for production in China, liquid crystal devices and polarizing plates for liquid crystal panels.
3. Japan's exports of audiovisual equipment such as single-lens reflex digital cameras, which have high competitiveness in China, were continuously on the rise. Also, food exports, especially fishery products, picked up as China eased food import regulations it had established in the wake of the nuclear accident following the March 11 disaster.
Imports surge, fueled by smart phones, food and car components
An increase was noted in Japanese imports from China in 2012, fueled by communication devices centering on smart phones. In addition, those of transportation equipment centering on automobile components were on the rise. And food imports, especially meat, also posted a positive growth. However, petroleum and chemical products, iron and steel and non-ferrous metals showed a double-digit decrease due to stagnant domestic demand.
Breakdown by product category:
1. Imports of high-value added communication devices continued to surge with increasing demand fueled the release of new smart phone models. Those of tablet PCs and car components centering on general-purpose items also increased. Food imports showed a steady increase centering on processed meat, backed by rising domestic demand for low price products.
2. With an enormous sales decrease of liquid crystal televisions in Japan, triggered by the end of the eco-point system in Japan, imports of acoustic imagining equipment showed a drastic fall. Also, those of chemical products saw a sharp decline by double digits, reflecting a considerable drop in those of rare earths due to advancement in technology development by Japanese companies, diversification of importing countries and falling prices.
3. Imports of clothing and clothing accessories overall almost leveled off, as low-value added items such as T-shirts declined despite a modest rise in those of high-value added ones. Although those of T-shirts from China still account for the largest share by country, they have been decreasing both in monetary value and quantity due to a continuing trend among manufacturers of shifting production from China to other Asian countries and regions in search of lower production cost. In 2012, China's share of T-shirt imports to Japan in quantity was 77.8%, a 8.2 point drop in comparison to that of 2010, while Vietnam's share, the second highest, was 9.5%, a 3.6 points increase, and Bangladesh's share, the third highest, increased to 5.6%, up 2.7 points from the year earlier.
3. China's share of total Japanese trade drops, the first decline below 20% in four years
A decrease was noted in Japan's trade with China, while Japan's overall trade posted an increase of 0.9%. As a result, China accounted for 19.7% of all Japanese trade, dipping 0.9% points from the 20.6% posted in the previous year. This is the first decline below 20% since 2008, and marks a two-year decrease in share. While China remains Japan's largest trading partner in terms of import, export and total trade value, Japan's share of exports to China dropped to 18.1%, dipping 1.6 points and making it only 0.6 points higher than the share of exports to the US, which was ranked second. Japan's share of imports from China also declined to 21.3%, dipping 0.2 points from the previous year.
4. Outlook for 2013:
Total trade to remain at modest growth
The Chinese economy, which showed slow recovery in industrial production, consumption and fixed asset investment, is gradually recuperating from a low posted in the third quarter of 2012. Its real GDP growth rate is likely to exceed 8% and in turn Japanese exports to China are expected to modestly increase.
Japanese imports from China in 2013 are likely to steadily increase thanks to an expected increase in exports of automobile components led by expanding local production in China and continuous rising demand for communication devices in Japan. Therefore, total trade with China is expected to increase in 2013 from the previous year's decline.
1. The rate of decline for exports of automobiles, which were negatively affected by demonstrations, slowed over the end of 2012 and there might even be a positive reversal in the second half of 2013.
2. The pace of growth in China's industrial production will improve, as will Japanese exports of equipment machinery, parts and raw materials, which are used for production of finished goods in China. However, with advancement in local production, the growth is expected to be limited.
3. With the expanding Chinese consumer market, exports of consumer products, particularly single-lens reflex digital cameras, are expected to see a rise.
4. If the yen continues to weaken, the price competitiveness of Japanese products will relatively rise in the Chinese market and that may possibly boost exports of main items such as electronic parts and automobile components.
1. Imports of communication devices are likely to see continuous growth with strong domestic demand for smart phones, although the speed of expansion is expected to be slow compared to the last few years. Food imports are expected to remain strong thanks to rising domestic demand for low price products.
2. The production shift of parts and finished products including high-value added items to China may facilitate an increase in imports of electrical products, automobile components and scientific and optical instruments from China.
3. While Japan's imports from China are expected to increase on the back of expanding demand from Japan's economic recovery, there is a possibility that rising import prices due to the weak yen may have a negative impact on imports.
* On a yen-basis, figures of Japan's total trade with China dropped by 3.6% to 26.5 trillion yen, with imports rising 2.7% to 15.3 trillion yen and exports declining 10.8% to 11.5 trillion yen. From April 1996, the Finance Ministry began releasing trade statistics figures only in yen. Since then, JETRO has converted yen-denominated trade figures to US dollars, based on the rates posted by the Ministry.
According to the Ministry, as the currency of settlement for Japan's exports to Asia in the second half of 2012, the US dollar, Japanese yen and Chinese yuan account for respectively 51.7%, 45.3% and 0.5%, while the figures reach 71.4%, 26.8% and 0.3% for Japan's imports from Asia. The US dollar is the most-used currency for trade settlement.
<BR /><BR />The Japan External Trade Organization, or JETRO, is a government-related organization that works to promote mutual trade and investment between Japan and the rest of the world. Originally established in 1958 to promote Japanese exports abroad, JETRO's core focus in the 21st century has shifted toward promoting foreign direct investment into Japan and helping small- to medium-sized Japanese firms maximize their global export potential. For more information, please visit www.jetro.go.jp
Contact:JETRO Mr. Kenji SHIMIZU or Mr. Mitsuhiro KAWANO China and North Asia Division Tel: +81-3-3582-5181 E-mail: ORG@jetro.go.jp
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