The Japanese finance ministry
announced by way of press release on Thursday that the nation’s largest trading
partner is no longer the United States, but China.
With Chinese trade totalling $220
billion in the year up to the end of March, China has overtaken the US for the
first time since the war.
The boost in trade between the old
foes seems to be due in large part to the outsourcing of manufacturing from
Japan to China to take advantage of the much reduced labour costs.
The United States still runs a
very close second, with the trade figure being around $212 billion.
The data represents a record high
for the two countries, with Japan’s trade surplus expanding over 70 percent
from last year, according to the report.
Increased exports to their
neighbours combined with a slightly weaker yen boosted the surplus, which
reached 1.652 trillion yen in January.
“Import trade from China is
certainly much more attractive with the yen dropping, it makes the goods
substantially more affordable,” said Michael Lane, Global Co-Head of the
Investment Management Division at Shizuoka Capital Wealth Management. “The
results released in the current report have totally eclipsed those previously
forecast.”
Koichi Nose, a spokesman for the
finance ministry said that the pattern of “expanding trade with our respected
neighbours will continue into next year”
Nose added that the figures “show
the extent to which many Japanese companies have shifted their work bases over
to China.”
Cheap labour costs are not the
only reason many Japanese firms want to move production to China, which is
catching up Japan as the world’s second largest economy. Another huge bonus of
being based in China is that no exportation is necessary in order to take
advantage of the massive domestic Chinese demand for goods.
Michael Lane added that there is
“a potentially game changing market developing next door, and Japan needs to
invest heavily in order to maximize profits.”
