Japanese exports to China fall amid islands row

Japanese exports to China continued to decline in October amid tension over the Diaoyu Islands, while China's slowing economic growth and sluggish demand in the debt-troubled European Union also took their toll on Japanese exports.

Japanese shipments to China, its largest export market, slumped 11.6 percent year-on-year in October to 948 billion yen ($11.55 billion), compared with a 14.1 percent year-on-year drop in September, according to Japan's Ministry of Finance.

Meanwhile, Japanese imports from China rose 3.6 percent year-on-year to 1,354 billion yen, yielding a trade deficit of 406.5 billion yen, the eighth consecutive monthly deficit.

China's slowing economic growth this year reduced demand for Japanese products, while the EU debt crisis and the US economic downturn damped Japanese exports as well as exports to China for manufacturing and re-export to these two major markets.

"The territorial dispute over the Diaoyu Islands and Chinese consumers' boycott of Japanese brands further affected Japanese exports," said Jin Baisong, deputy director of the Department of Chinese Trade and Studies at the Chinese Academy of International Trade and Economic Cooperation, a think tank of the Ministry of Commerce.

Owing to differences in statistics, China's General Administration of Customs showed that Chinese imports from Japan declined 10.2 percent in October from a year earlier to $13.94 billion, compared with a 9.6 percent drop in September. Bilateral trade in the January to October period dropped 2.1 percent from a year earlier, compared with a 1.8 percent decline in the first nine months.

Japanese exports to the EU fell 20.1 percent in October from a year earlier, while those to the US went up 3.1 percent year-on-year.

The country's exports decelerated for a fifth month in October, down 6.5 percent from a year earlier with a trade deficit of 548.97 billion yen, the Finance Ministry said. And the first 10 months, saw Japanese shipments reach 53.5 trillion yen, down 2.3 percent from a year earlier with a record trade deficit of 5.3 trillion yen.

"Japan's economic growth depends quite heavily on external demand. The country's lowering export competitiveness and robust imports of energy products will leave Japan with a trade deficit for a while and drag the country's economy into recession," Jin said.

He added that the decline in Japan's exports to China will extend to the last quarter of this year and even to the first half of 2013 as the boycott of Japanese products showed no signs of letting up.

"Japan is going to hold an election in December and the new government may start to ease the diplomatic tension in February or March," said Jin.

"It will be very good news if Asia's two biggest economies reach an agreement in the first half of 2013 when the boycott of Japanese products fades out."

Amid the boycott, Japanese automakers suffered the most, with Japanese motor-vehicle exports to China slumping 82 percent year-on-year in October, the largest monthly drop since October 2001, according to Japan's Ministry of Finance.

Toyota Motor Corp, Asia's largest automaker, reported a 44 percent year-on-year decline in deliveries in China in October, while Nissan Motor Co lowered its whole year profit forecast by 20 percent.

Japan's declining exports to China, including motor vehicles and key auto parts, will have little impact on China's industrial upgrading progress given Japan's curbs on exports of high-tech products, said Jin.

Tension over the Diaoyu Islands has not only hit bilateral trade but also dented Japanese investment in China.

October saw Japanese investment in China slump 32.4 percent year-on-year, while it rose 10.9 percent year-on-year in the first 10 months, according to China's Ministry of Commerce.

Jin said the slump was mainly due to security concerns over anti-Japan protests, and the boycott of Japanese brands.

lijiabao@chinadaily.com.cn