Ja­pan-China trade pros­pers

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ex­pected to con­tinue its rapid ex­pan­sion. There are con­cerns, how­ever, that the Chinese gov­ern­ment, as a mea­sure against in­fla­tion, may al­ter its cur­rent “ap­pro­pri­ately ac­com­moda­tive” mon­e­tary pol­icy to a more “neu­tral” one. As China’s con­sumer mar­ket ex­pands, Ja­pan’s ex­ports of parts, ma­te­ri­als, ma­chin­ery and high-value added prod­ucts for pro­duc­tion of fin­ished goods in China are likely to grow de­spite ex­pan­sion of lo­cal pro­duc­tion of such items.

More­over, along with China’s eco­nomic growth and tech­ni­cal ad­vances, Ja­pan has in­creased its to­tal in­vest­ment in China and broad­ened the spheres for its in­vest­ment in the coun­try.

Fig­ures pub­lished by China’s Min­istry of Com­merce show that Ja­pan’s in­vest­ment in China had reached $60.7 bil­lion by 2007. Its di­rect in­vest­ment in the coun­try has also un­der­gone a shift from pro­cess­ing in­dus­tries such as raw ma­te­rial and food­stuffs to man­u­fac­tur­ing such as the me­chan­i­cal and elec­tri­cal in­dus­try.

The Ja­pan-China eco­nomic re­la­tion­ship is driven by com­ple­men­tar­i­ties in eco­nomic struc­tures and the mul­ti­lat­eral set­tings in which both are deeply in­te­grated. These fac­tors have been more pow­er­ful driv­ers of trade than the ups and downs of pol­i­tics.

What emerges from con­sid­er­a­tion of the China-Ja­pan eco­nomic re­la­tion­ship is the power of strong mul­ti­lat­eral in­sti­tu­tions in over­whelm­ing the in­con­sis­ten­cies of po­lit­i­cal dis­tur­bance to com­merce

Ac­cord­ing to a re­cent re­port from the Ja­pan Ex­ter­nal Trade Or­ga­ni­za­tion (JETRO), Ja­pan’s to­tal trade with China (im­ports and ex­ports com­bined) rose 30.0% year-on-year to US$301.9 bil­lion in 2010, ex­ceed­ing US$300 bil­lion and set­ting a new (year-on-year) record. Ja­pan’s ex­ports to China rose by 36.0% to US$149.1 bil­lion, while its im­ports from China rose by 24.7 % to US$152.8 bil­lion.

Ja­pan’s trade with China posted pos­i­tive growth (year on year ba­sis) for 12 con­sec­u­tive months in 2010 and was also up over­all ver­sus 2009. The im­prove­ment was at­trib­uted to an in­crease in ex­ports to China on the back of the coun­try’s high eco­nomic growth and a rise in Ja­pan’s im­ports fol­low­ing its own grad­ual eco­nomic re­cov­ery. China re­mains Ja­pan’s largest trad­ing part­ner in terms of im­ports, ex­ports and to­tal trade.

This ex­pan­sion was larger than the in­crease in Ja­pan’s over­all trade (28.6%), giv­ing Ja­pan-China trade a record 20.7% share of Ja­pan’s to­tal trade in 2010. The share of Ja­pan’s ex­ports to China out of over­all ex­ports reached 19.4%, also a record.

Ja­pan’s ex­ports to China reached its high­est level ever (in value terms) in 2010. This growth was fu­elled by rapid ex­pan­sion of the Chinese econ­omy, which grew 10.3% in 2010. Im­ports from China rose due to a surge in im­port of mo­bile phones, liq­uid crys­tal dis­play tele­vi­sion sets and food, on in­creas­ing de­mand in Ja­pan amidst an eco­nomic re­cov­ery.

Ja­pan’s im­ports from China showed a clear sign of re­cov­ery, post­ing pos­i­tive growth (year-on-year) for 11 con­sec­u­tive months be­tween Fe­bru­ary and De­cem­ber 2010.

The im­ports mostly in­cluded elec­tri­cal ma­chin­ery, per­sonal com­put­ers and non­fer­rous met­als.

Ja­pan’s trade with China in 2011 is likely ex­ceed the record growth seen in 2010, with China

Ja­panese Vice For­eign Min­is­ter Kenichiro Sasae (L) and Chinese Vice

For­eign Min­is­ter Zhang Zhi­jun shake hands in Tokyo.

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