Japan exports fall due to China
2023.01.19 07:18
Japan exports fall due to China
By Ray Johnson
Budrigannews.com – As China-bound shipments fell for the first time in seven months in December, Japan’s export growth slowed significantly, raising concerns about a further slowdown in the global economy and external demand for Japanese shipments.
According to Ministry of Finance (MOF) data released on Thursday, exports increased by 11.5 percent year-over-year in December, following a gain of 20 percent in November. This marked the slowest growth since the beginning of 2022 and was exacerbated by a decrease in sales of automobiles, auto parts, and chip-making machinery to China.
The weak data dampens policymakers’ hopes of a coronavirus pandemic recovery driven by exports, increasing pressure on the government to convince Japanese businesses to accelerate wage increases to help boost domestic demand.
In December, exports to China, the world’s largest trading partner, decreased by 24% in volume and 6.2% in value year over year.
Cars, mining equipment, and aero-engine parts led December’s 16.9% increase in exports to the United States.
“On top of the slowdown in Europe and the United States, the unexpected stalling of the Chinese economy occurred. Atsushi Takeda, chief economist at ITOCHU Research Institute, stated, “In the worst case, it may deal a blow to Japanese exports, which could in turn hit Japan’s factory output and capital expenditure.”
Japan would then be forced to rely on domestic demand to fill the void. As a result, spring wage negotiations between management and employees will be crucial in determining whether private consumption will continue to propel virtuous economic growth.
Since the government began removing its stringent “zero-COVID” controls in December, a rash of COVID-19 infections has hampered economic activity in China.
Takeda stated that despite the fact that China’s most recent wave is anticipated to have subsided by spring, the world’s second-largest economy will need time to return to pre-pandemic levels, and there are still risks of additional COVID waves.
Record Trade Deficit The trade data also highlighted the difficulty of a resource-poor nation that heavily depends on commodity and energy imports. The yen’s 19.5% fall against the dollar on average last year also helped to boost its value.
In terms of value, imports increased by 20.6%, with oil, coal, and liquefied natural gas leading the way. This led to cost-push inflation, which could hurt demand in the economy and raise the cost of living and doing business.
Consequently, the 17-month streak of trade deficits was extended to 1.45 trillion yen ($11.29 billion) in December.
Japan recorded a trade deficit of 19.97 trillion yen for the entire year 2022. This was the second consecutive annual deficit and the highest since 1979.
“Despite the slowing of import growth, falling oil prices, and the weakened yen, trade deficits will remain high. According to Taro Saito, executive research fellow at NLI Research Institute, “that’s because exports continue to be weak due to lackluster global demand.”
