The Japan External Trade Organization has released its latest trade figures, which paint a grim picture for foreign trade by the world's second largest economy. Year to date imports have dropped by 31.9% to $252.9 billion, while exports have plunged 36.8% to $252.2 billion. Most stunning is the disclosure on trade flows with the United States: exports to the US have dropped by 43.5% to $40.5 billion, resulting in Japan's largest positive trade balance. Another development is that China has now replaced the US as Japan's primary trade destination. However that is not saying much: trade with China has declined for the 8th consecutive month. The last fact is among the primary reasons why the Chinese Central Bank has blown a credit bubble of epic proportions in order to mitigate the unprecedented collapse in Chinese trade with its traditional trade partners.
To make up for the estimated 20% decline in Chinese exports, and in order to "maintain" the artifical minimum 8% growth of the economy, the Chinese bank has to redirect consumption to internal sources of demand, which can only be achieved by providing virtually free credit. The problem with that is that practically all of mainland China has taken the free cash and invested it in the stock market. The eventual collapse of this fake liquidity transfer will be one for the ages.
In the meantime, JETRO's notes the following on Japanese-Chinese trade relations.
Overview of Japan-China trade in the first half of 2009
Japan’s trade with China posted negative growth (year-on-year) for
eight consecutive months, from November 2008 to June 2009. The decline
was attributed to China’s economic slowdown and a drop in external
In the first quarter of 2009, imports and exports were down across
the board due to weakened economies in Japan and China, as well as a
build-up of inventories in China as external demand fell off.
The second quarter, however, saw an increase in exports of some
machinery-related products, fueled by increased infrastructure
investment in China due to the government’s 4-trillion-yuan
(approximately 56 trillion yen) economic stimulus package. A recovery
was also seen in exports of parts and materials used in production of
finished goods for sale in China, reflecting growing demand in the
country for home appliances in part due to the government’s consumption
promotion measures such as the “Home Appliances to the Countryside”
subsidy program. In addition, imports of some home appliances and food
products showed signs of recovery in the quarter.
The drop in Japan’s trade with China (with falls in both imports
and exports) was smaller than that for the nation’s overall trade. As a
result, the share of Japan-China trade rose to 20.4% of Japan’s total
trade, the highest level ever (on a semi-annual basis). Japan’s exports
to China also set a record (also on a semi-annual basis), making the
country Japan’s largest export destination and eclipsing the US for the
And here is the summary for year-to-date exports and imports as presented by JETRO.