Japan sees 1st trade surplus on cheaper oil, China rebound

In the full year, Japan’s trade surplus with the U.S. fell nearly 5 per cent, to 6.8 trillion yen ($59 billion). Exports fell 7.1 per cent from the year before to 14.1 trillion yen ($124.6 billion) and imports dropped 7.3 per cent to 7.3 trillion yen ($64.4 billion), the report said.

Japan ran a 4.6 trillion yen ($41 billion) deficit with China, its largest trading partner, down by a quarter from a year earlier.

U.S. President Donald Trump’s decision to drop out of the Trans-Pacific Partnership trade pact, and his comments on imposing “border taxes” on some imports has added to uncertainties over U.S. trade policy.

“The sustainability of external demand remains the key for the Japan’s export recovery, because of emerging protectionism and uncertainties in the US trade policy, given President Donald Trump’s repeated concerns about Japan’s auto exports and trade surplus with the U.S.,” Harumi Taguchi, principal economist at IHS Global Insight, said in a note.

A Japanese government spokesman said Wednesday that Tokyo was discussing how to handle future trade negotiations such as the TPP and another Asian trade pact involving China, the Regional Comprehensive Economic Partnership.

Asked about reports Japan plans to set up a new agency to handle trade talks, Koichi Hagiuda said no decision had been made yet, but “there’s no denying that this is one of the options we’re considering.”

Past trade friction with the U.S. over auto exports had largely eased after Japanese automakers expanded investments in U.S. factories.

Japan’s vehicle exports to the U.S. rose a scant 0.6 per cent in 2016, measured in terms of Japanese yen, but the number of vehicles shipped rose 7.7 per cent to 1.75 million.

Globally, Japan’s vehicle exports fell 6 per cent by value and 0.7 per cent by volume, to 5.8 million units. Exports of most other products fell, suggesting only a tepid recovery in demand.

Japan’s trade balance slipped into deficit after the 2011 earthquake and tsunami triggered meltdowns at the Fukushima Dai-Ichi nuclear plant and the country’s reactors were shut down for safety checks.

To compensate, resource-poor Japan ramped up imports of oil, gas and coal for its conventional power generators. In 2016, imports from the Middle East, Japan’s main source of crude oil, dropped by nearly a third from the year before.

Elaine Kurtenbach, The Associated Press

by Canadian Press

Japan sees 1st trade surplus on cheaper oil, China rebound

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