JETRO Survey: Analysis of Japan-China Trade in the first half of 2012
January 30, 2015     Japanese 
	  Network - Home
JCN Newswire
  Home  |  Companies  | Annual Reports  |  CSR  | News Alerts     
JETRO Survey: Analysis of Japan-China Trade in the first half of 2012 - JCN Newswire
JETRO Survey: Analysis of Japan-China Trade in the first half of 2012
Total trade sees a modest rise due to China's economic slowdown, while export growth falls

Tokyo, Aug 28, 2012 - (JCN Newswire) - Converting yen-denominated statistics for imports (preliminary) and exports (revised) released by Japan's Ministry of Finance in July 2012 to US dollars, the Japan External Trade Organization (JETRO) found that Japan's total trade with China rose 1.1% to US$165.1 billion in the first half of 2012, setting a new record on a first half-year basis, and the second largest on a half-yearly basis, behind the second half of 2011 which registered US$181.8 billion.*

Imports from China rose 7.5% to US$91.3 billion, while exports to China fell 5.7% to US$73.7 billion, marking the first drop in 3 consecutive first half-year periods since 2009.

As a result, Japan's balance of trade logged a deficit of US$17.6 billion, an increase of 2.6 times over the same period of the previous year. This was the first deficit exceeding US$10 billion in 5 consecutive first half-year periods since 2007.

Summary points:

Overview of the first half of 2012

-- On the back of sluggish domestic demand due to China's economic slowdown, a decrease was seen in the exports of general machines, and raw materials including iron and steel, with the exception of some products. Although exports of consumer products such as video equipment and automobiles recorded high increases, overall exports dropped for the first time on a first half-year basis since 2009.

-- With imports, an increase was noted in those of foodstuffs, car components and communication instruments fueled by expanding demand for smart phones in Japan. While the growth remained at the single-digit level because of sluggish domestic demand in Japan, imports did reach a record high on a first half-year basis.

-- As a result, Japan-China trade showed a slight increase over the same period the year before. China's share of Japan's total trade dropped by 1.3 points to 19.3% from the same period of the previous year, as the growth rate in trade with China fell below that of Japan's total trade with the world. It is the first time China's share has fallen below 20% in four running first half-year periods since 2008.

Outlook for 2012

-- The Chinese government has been intensifying efforts towards easing its monetary policies to avoid further economic slowdown. However, they are cautious about implementing large-scale stimulus measures to create domestic demand, and any increase in demand resulting from such economic measures is expected to be limited. In addition, China's slowing industrial production is forecasted to continue, thus Japan's exports to China are likely to decline.

-- Imports from China are expected to see a modest rise, fueled by the increasing imports of smart phones.

-- In view of the circumstances, Japan-China trade throughout 2012 is not expected to see a large increase, but could possibly set a new record high with a modest increase over the previous record set in 2011.

-- The trade deficit is likely to surpass the previous record of US$28.8 billion set in 2005.

Detail analysis

EXPORTS: Exports of machines and raw materials decline due to China's economic slowdown

Owing to China's sluggish rise in domestic demand due to its economic slowdown (its real GDP growth rate over the first half of the year: 7.8%) and the strong yen, Japan's exports of general machines and raw materials have been on the decrease, with the exception of some products. On the other hand, those of video equipment and automobiles showed a high increase, while foodstuff, which was greatly affected by Chinese import restrictions on food after the Great East Japan Earthquake last year, also picked up.

Breakdown by product category:

-- Due to a drastic slowdown in China's industrial production, exports of semiconductors/flat-panel manufacturing equipment, textile machinery, motors, organic compounds, iron and steel which increased last year all showed a decrease this year. Also, 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 electronic components including semiconductors also showed a sharp decrease in growth rate.

-- Thanks to expanding demand worldwide for smart phones and tablet PCs, an 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.

-- On the back of China's market expansion, Japan's exports of consumer products including audiovisual equipment such as single-lens reflex digital cameras and automobiles showed a considerable increase. Also, food exports, especially marine products, picked up as China eased food import regulations it had established in the wake of the nuclear accident following the March 11 disaster.

-- When looking at the influence of Europe's debt crisis on Japanese exports to China, a decrease was noted in China's exports of clothing, as well as in solar power cells due to falling prices in Europe, which in turn triggered a sharp drop in Japan's exports of high-pure silicon, wafers and textile machinery to China. However, the proportion of these products in Japan's overall exports to China was small, so it could be said the EU debt crisis had only a limited effect on Japan's overall exports to China in the first half of 2012.

IMPORTS: Imports surge, fueled by smart phones, food and car components

A steady increase was noted in Japanese imports from China in the first half of 2012. However, the growth remained single-digit due to stagnant domestic demand. In addition to imports of electrical equipment such as communication devices, those of transportation equipment centering on automobile components were on the rise. Food imports also posted a positive growth centering on fish and shellfish.

Breakdown by product category:

-- Imports of high-value added communication devices continued to surge with an increase in smart phone popularity. Those of tablet PCs and car components centering on multi-purpose items also increased. Food imports showed a double-digit increase, backed by fading concern for Chinese food safety, rising domestic demand for low price products, and a price hike in broiled eel.

-- Imports of rare earths and rare metals considerably dropped reflecting China's tightening export regulations and falling prices. Also, with a drastic sales decrease of liquid crystal televisions in Japan, audiovisual products saw a sharp decline of nearly 20%.

-- Imports of clothing and clothing accessories were up modestly despite a continuing trend among manufacturers to shift production from China to other Asian countries and regions in search of lower production cost. The growth was fueled by rising import unit value which has followed greater emphasis on the production of value-added products in China.

China's share of total Japanese trade drops, the first decline below 20% in four consecutive first half-year periods

The pace of increase in Japan's trade with China was less than that of Japan's overall trade, 7.8%. As a result, China accounted for 19.3% of all Japanese trade, dipping 1.3 points from the same period last year. This is the first decline below 20% in four consecutive first half-year periods since 2008. Japan's share of exports to China dropped to 18%, dipping two points and making it only 0.9% higher than the share of exports to the US. Japan's share of imports from China also declined to 20.5%, dipping one point from the previous year. China, however, remains Japan's largest trading partner in terms of import, export and total trade value.

Outlook for 2012:

Total trade to remain at modest growth, while trade deficit with China to be the largest ever

On the back of China's slowing economy, the Chinese government has been further easing its monetary policies such as by decreasing the reserve-requirement ratio and interest rates. On the other hand, they seem to be cautious about implementing large-scale economic stimulus measures and easing regulations of real estate investment based on past experience of having an overheated economy emerge after implementation of an economic-stimulus package of 4 trillion yuan. Any increase in demand due to future economic measures is therefore considered to be limited and it is also believed that industrial production will only post a modest rise. As a result, these factors will probably force a downturn in Japanese exports to China. Japanese imports from China are expected to increase continuously but modestly led by communication devices. Considering the above, the trade value between China and Japan is expected to increase modestly in comparison to that of 2011, but unlikely to see large-scale growth. The trade deficit is expected to grow reflecting the downturn in exports and modest rise in imports. There is a strong possibility that the degree of Japan's deficit will surpass the US$28.8 billion marked in 2005 and become the largest ever.


-- Considering that government-led investment demand in China seems to be limited, Japanese exports related to infrastructure investment such as construction and mining machinery are expected to remain stagnant. Also, exports of facility machinery, components and raw materials, which are used for production of finished goods in China, will continue to decline or level off. Moreover, because industrial production in China is expected to grow at a sluggish pace, local procurement is likely to further expand.

-- Meanwhile, exports of consumer products centering on cars and single-lens reflex digital cameras will continue to rise, fueled by the expanding Chinese market.

-- At the same time, if the yen's appreciation continues and third country/region exports to China and local Chinese production increase, that may possibly put downward pressure on Japanese exports to the country.


-- Imports of communication devices will likely see continuous growth with increasing domestic demand for smart phones. Food imports are expected to remain strong thanks to rising domestic demand for low price products and the recent tendency among people to eat at home instead of going out due to the slumping economy.

-- Imports of rare earths and rare metals will see a decrease as their prices were already in decline from the same period last year due to progress in developing alternative technology.

-- Reduced import prices induced by further appreciation of the yen may facilitate an even greater increase in imports from China.

* On a yen-basis, figures of Japan's total trade with China dropped by 2.0% to 13.1 trillion yen, with imports rising 4.2% to 7.3 trillion yen and exports declining 8.6% to 5.9 trillion yen. From the April 1996 reports, the Ministry of Finance 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 50.2%, 47.1% and 0.4%, while the figures reach 72.0%, 26.3% and 0.2% for Japan's imports from Asia. The US dollar is the most-used currency for trade settlement.


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


Mr. Kunihisa Nakai or Mr. Mitsuhiro Kawano
China and North Asia Division
Tel: +81-3-3582-5181

Aug 28, 2012
Source: JETRO


From the Japan Corporate News Network
Topic: Production report
View more news from these Sectors: Trade General

CSR Report Download
Annual Reports

  More >>    
Most Popular

About JCN | Privacy Policy | Terms of Use | JCN Network (日本語)