Japan-China Trade Set to Pick Up ‘Slightly’ After Two-Year Slump

Trade between China and Japan, Asia’s biggest economies, is set to pick up this year after a two-year slump, irrespective of political tensions, according to the Japan External Trade Organization, or Jetro.

Japan’s trade deficit with China widened last year by 18 percent to a record $52.2 billion, as the Chinese economy restructured and its growth slowed, Yoichi Maie, head of research at Jetro’s China and North Asia division, said at a briefing yesterday. Japan’s exports fell by 10 percent as China cut construction and mining machinery orders, he said.

A deepening conflict between the two nations over a chain of islands in the East China Sea has threatened security in the region amid escalating rhetoric over their World War II pasts. Protests broke out in China in late 2012 after Japan’s government bought some of the disputed islands from a private owner. Some Japanese auto dealerships in China were damaged in the protests.

“I can’t say that political issues between Japan and China did not have an effect -- we saw the drop in Japanese car sales -- but by far the biggest influence on trade volumes was economic,” Maie said at a briefing in Tokyo. “This year we’re looking for volumes to pick up slightly.”

China’s push for more environmentally friendly equipment and to reduce industrial overcapacity, and rising consumer spending and factory output, should boost trade, he said. Jetro, a government agency, forecasts a recovery in Japanese exports of auto parts, and continuing growth in Japan’s purchase of Chinese smart-phones and telecommunications equipment, to also weigh positively, Maie said.

Last year’s weakening of the yen and strengthening of the yuan against the dollar also damped trade between the Asian nations, Maie said. The cheaper yen and a recovery in the U.S. economy helped it overtake China as Japan’s top export destination for the first time since 2008, he said.

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