China regains top spot for Japanese exports from US
But neither nation may prove long-term driver for Japan
IORI KAWATE, Nikkei staff writer
TOKYO -- China overtook the U.S. as the top destination for Japan's exports in May, regaining the lead for the first time in 33 months thanks to economic stimulus and brisk demand for electronic smartphone parts, Japanese Ministry of Finance statistics released Monday show.
Japan's exports worldwide climbed 14.9% to 5.85 trillion yen ($52.5 billion), but rising resource prices precipitated the country's first trade deficit in four months, at 203.4 billion yen.
Exports to China soared 23.9% to 1.11 trillion yen, with notable growth in liquid crystal devices and chipmaking equipment reflecting the rising global demand for smartphones. Steel, motors and metal processing machinery also saw increases. Japan has benefited from Beijing's push to buttress the economy in preparation for the Communist Party's National Congress this autumn.
U.S.-bound exports rose 11.6% to 1.08 trillion yen, led by automobiles and autoparts. But the increase appears to owe much to a recovery from a year-earlier drop in shipments following the Kumamoto earthquakes.
China first outstripped the U.S. as Japan's top export destination around 2008 collapse of Lehman Brothers and held on to its position until the second half of 2012. Beijing's 4 trillion yuan ($586 billion at 2008 rates) stimulus plan following the global financial crisis lifted demand as well as Japanese exports.
China may seem to have become Japan's export driver, but the staying power of the world's No. 2 economy remains unclear. Many think China will take bolder steps to overhaul its economy, including deeper cuts to excess capacity, once the National Congress concludes in the fall. Chinese imports likely would turn sluggish should Beijing reduce its stimulus.
Nor can Japan necessarily rely on higher demand from the U.S., where new-car sales have decelerated since this year.
"More Japanese companies are increasing local production and limiting exports out of an awareness of the Trump administration's emphasis on trade friction," said Yasunari Ueno, chief market economist at Mizuho Securities.
Japan's economic recovery could face headwinds if neither the U.S. nor China can become an export driver.
The Organization for Economic Cooperation and Development's composite leading indicators point to a lull in the global economic recovery in the second half of this year, said Takeshi Minami, chief economist at Norinchukin Research Institute. Without China or the U.S. driving export growth, Japan's third-longest postwar economic recovery may struggle to maintain momentum.