Slumping Japan Exports to China Spark Global Downturn Concerns
TOKYO, In December, Japan’s export expansion decreased significantly as exports to China decreased for the first time in seven months, sparking concerns about an additional decline in the worldwide economy and demand for Japanese exports.
According to data from the Ministry of Finance, exports increased by 11.5% compared to the previous year, following a 20% increase in November, making it the slowest growth since the beginning of 2022, primarily due to decreased sales of cars, auto parts, and chip-making machinery to China.
The inadequate data undermines policymakers’ expectations for an export-driven recovery from the pandemic, increasing the government’s responsibility to encourage Japanese companies to increase wages faster to support domestic consumption.
Imports to China, Japan’s primary trading partner, decreased by 6.2% annually in value and declined by 24% in terms of quantity in December.
Imports to the United States in December increased 16.9% from the previous year, driven by automobiles, mining equipment, and aerospace components.
Economic activity has been impeded in China due to a resurgence of COVID-19 cases after the government loosened its “zero-COVID” measures in December.
According to Takeda, although the current outbreak of COVID-19 in China is predicted to decline by the spring, it will take a considerable time for the country’s economy to fully recover to pre-pandemic levels and there is still a risk of further outbreaks.
Additionally, the recent trade data revealed the difficulties faced by a country with limited resources, which heavily relies on importing essential goods such as oil, coal, and natural gas.
This led to a 20.6% increase in import value, resulting in cost-push inflation that could potentially harm consumer demand and increase the cost of living and doing business.
The increases in exports and imports were consistent with predictions made by economists in a Reuters survey. As a result, Japan experienced a trade deficit of 1.45 trillion yen ($11.29 billion) in December, marking 17 consecutive months of trade deficits.
For the entire year of 2022, Japan recorded a trade deficit of 19.97 trillion yen, the second consecutive year of deficits and the largest deficit since 1979.