Mainland China overtook the US as Japan’s largest export destination for the first time last month, underlining the growing importance of Chinese demand to the world’s second-largest economy.
Exports to China, which have risen in each of the last 38 months, expanded by 16.8 per cent in July to their highest level since the Japanese government began compiling statistics in 1950.
At the same time, exports to the US declined by 11.5 per cent, marking the 11th consecutive monthly drop. Overall, shipments rose by 8.1 per cent by value, after falling in June for the first time since 2003, the finance ministry said.
Japan’s July trade surplus suffered an unexpectedly large decline of 86.6 per cent to Y91.1bn ($829m, €562m, £445m) because of an 18.2 per cent surge in imports by value. The market forecast was for a trade surplus in July of more than Y200bn. The fall, the fifth monthly decline in a row, reflected a near 70 per cent rise in the price of crude oil and a more than doubling of the price of coal.
Many analysts expect exports to fall again in coming months as the slowdown in western economies begins to have an impact on demand in emerging economies such as China.
“It is difficult to believe that Japan will be able to maintain the kind of growth in exports that it saw in July. I think there is a higher chance of a slowdown,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo.Given China’s growing dependence on the EU as an export destination, Chinese growth was likely to decelerate, leading in turn to a slowdown in Japanese exports to China, Mr Morita said.