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Tokyo (AFP) Dec 19, 2012
Japan's US-bound exports overtook shipments to China last month, official data showed Wednesday, as a new government in Tokyo vows to stand its ground in a bitter diplomatic dispute with Beijing.
Shipments to China tumbled 14.5 percent in November as demand for everything from cars to construction equipment fell away, while an improving US economy helped boost the flow of Japanese goods 5.3 percent on-year.
The result pushed exports to the US ahead of those to China for the first time in nearly a year, although Beijing remained Tokyo's biggest overall trade partner despite their simmering dispute over an East China Sea island chain.
The data "reflects the soundness of the US economy and brisk sales of Japanese cars there, but whether US exports will keep this pace depends on the settlement of the fiscal cliff," said Ayumi Maekawa, senior economist at Tokyo-based Mizuho Research Institute, referring to the US budgetary impasse.
"China's domestic demand is still weak but if its public spending increases that could boost exports of products like Japanese-made steel."
Overall, Japanese exports fell 4.1 percent while imports edged up 0.8 percent, translating into a $11.3 billion trade deficit for November, the fifth straight monthly shortfall and a record for the month.
Exports to Europe -- a key market for Japanese goods -- were off almost 20 percent as demand on the debt-strapped continent sagged.
"Japan's trade deficit is likely to continue for the time being as the European economy is weak," Maekawa said.
The gloomy data for Japan, which may have slipped into recession last quarter, comes days after the conservative Liberal Democratic Party swept to an electoral victory at the weekend.
Hawkish LDP leader Shinzo Abe has pledged to take a hardline stance in the dispute with China that flared badly in September after Tokyo nationalised the Senkakus, which Beijing refers to as the Diaoyu islands.
The dispute set off a bitter diplomatic row, huge anti-Japan protests across China and a consumer boycott that weighed heavily on China sales of well-known Japanese brands, including those of top automakers Toyota, Nissan and Honda.
However, sagging demand for goods such as construction equipment -- less likely to be influenced by the consumer boycott -- may also reflect uncertainty about the pace of growth in China's economy, the world's second-biggest after the US.
In a bid to reflate Japan's economy, Abe has pledged to boost infrastructure spending and pressure the Bank of Japan (BoJ) into more aggressive easing measures.
The central bank starts a two-day policy meeting Wednesday with the yen tumbling in recent weeks on speculation that an under-pressure BoJ will take some kind of policy action.
Last week, the bank's quarterly Tankan survey showed confidence among Japanese manufacturers hit a near three-year low in the final months of 2012, adding to concerns about the already weak economy, still struggling to cement a recovery after last year's quake-tsunami disaster.
All but two of Japan's 50 nuclear reactors remain offline after the atomic crisis at Fukushima, which has seen Japan's energy bills soar as it turned to pricey fossil-fuel alternatives to plug the gap.
Japan's economy contracted in the July-September quarter and possibly in the previous three months. If confirmed that would mean it is in recession.
Wednesday's data showed Japan's trade deficit last month expanded nearly 38 percent to 953.4 billion yen ($11.3 billion) from a year-earlier deficit of 691.2 billion yen.
Global Trade News
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