Concerns over Chinese slowdown after imports from Japan slump by a fifth
JAPAN logged a record trade deficit with China in January as exports dropped by a fifth, underscoring concerns about how sharply China is slowing and its ability to buffer a frail global economy against European turmoil.
The 20.1 per cent annual slump in exports to China, Japan’s main export market, condemned Tokyo to a record monthly trade deficit, stark evidence of the pain from a firm yen, the global slowdown and fuel imports to make up for idled nuclear plants.
Japan’s shortfall with China was 587.9bn yen (£4.6bn), 40 per cent of the total trade deficit for January, Japanese finance ministry data showed.
While the drop in exports was exacerbated by an early Lunar New Year holiday hitting shipments of steel and other manufacturing inputs, it was still the fourth straight month the Japanese exports to China have fallen in annual terms.
“Chinese authorities may already be worrying about weakening demand,” said Mari Iwashita, chief market economist at SMBC Nikko Securities, pointing to Saturday’s policy easing with a 50 basis point cut in banks’ reserve requirement ratio, the amount of cash banks must hold in reserves.
The Chinese Lunar New Year holiday, which fell in late January this year but in early February last year, pushed down what was already declining demand in China.