Japan: Trade Deficit: Update Nov. 24, 2023

 

Japan logs trade deficit of $6.3 billion in August

Article Source: https://mainichi.jp/english/articles/20230920/p2g/00m/0bu/010000c

Article:

TOKYO (Kyodo) -- Japan posted a trade deficit of 930.48 billion yen ($6.3 billion) in August, hit by a continued fall in exports amid weakening overseas demand and Chinese trade restrictions, Finance Ministry data showed Wednesday.

It was the second straight month of red ink for Japan as exports fell again in August, down 0.8 percent from a year earlier at 7.99 trillion yen, despite robust auto shipments to the United States. Imports fell 17.8 percent to 8.92 trillion yen, a year after energy imports surged.

Ideas:

The Japanese government seems to take trade deficits seriously as maybe trade is about 20 percent of Japan's GDP. while in the US the trade is about 10 percent of GDP.

Japan, like almost every country, now depends heavily on China for its trade. The challenge of course is now China is having serious economic challenges and they might not be solved easily anytime soon.

Car exports, however, are the the main economic export driver for the Japanese economy related to exports. But the challenges is other exports. For example, South Korea relies heavily on about 25 key exports, and it might be the same, that Japan relies heavily on a few key exports, instead of expanding its export base, as a way to prevent trade deficits.

Article:

Slowing overseas demand, particularly from major trading partner China, is raising concern about the global economic outlook, a month after Japanese exports fell for the first time in over two years.

Increased exports, particularly of cars to the United States, had helped the Japanese economy to report strong growth despite concern that monetary tightening in other major economies would hurt the global economy.

Ideas:

While car exports to the US remain strong, it might be the same for China, the rest of Asia, or even the EU.

The global economy, like any economy, is made up of many different countries and export countries need to make sure their export base is not just one or two countries but many different countries as countries can have down periods which might affect the importing and exporting of products.

In this case maybe, like all countries, Japan has become too reliant on China, as China's economy is having some serious challenges at this time, and how knows exactly when China's economy can get back to normal.

Article:

Japan's exports to China dropped 11.0 percent to 1.44 trillion yen while imports decreased 12.1 percent to 1.93 trillion yen, leading to a 493.09 billion yen trade deficit.

China imposed an import ban on Japanese seafood in late August, after the operator of the crippled Fukushima Daiichi nuclear power plant began releasing treated radioactive water into the Pacific Ocean.

Ideas:

Its unfortunate that China imposed a ban or Japanese seafood, but Chinese tourists to Japan say they are not worried about eating Japanese seafood while they are in Japan for their vacation.

Imports may have decreased 12.1 percent but maybe likely that's not because of Japanese seafood as there are probably other logistics challenges in China causing a decrease in Japanese imports.

The Chinese economy, at this time, might be going to a transition phase which is affecting both imports and exports from Japan and other countries too.

Again, Japan, and other countries need to expand their exports to as many countries and not rely on just the US or China for its exports growth.

Article:

Japan has urged China to take action based on scientific data, saying that while the treated water includes tritium, its concentration is below global safety standards.

Food exports to China tumbled 41.2 percent from a year earlier, according to the ministry, which has yet to release further breakdowns of the data. Chinese customs data showed its seafood imports from Japan dived 67.6 percent in August from a year earlier.

Ideas:

Again, even a 67.6 percent drop in Japanese food exports to China, might not have caused at 12.1 decrease in exports to China, as there might have been other kinds of exports too that were affected.

There seems to be two differing date points here, 41.2 and 67.6 that seems to pointing to the same time period. 

But to be fair one is talking about seafood exports and other other is just food exports, so maybe there were other kinds of food export to China there were affected.

But, it seems food exports, both Japanese seafood and other kinds of Japanese food products, such as maybe ramen, had decreases for whatever reason.

Article:

Japan's trade surplus with the United States came to 650.60 billion yen after exports grew 5.1 percent to 1.62 trillion yen, a record for August, while imports fell 9.5 percent to 967.39 billion yen.

Ideas:

Exports to the US are still relatively strong at 5.1 percent, and of course Japanese cars were the main economic driver for exports to the US.

Imports, based on value, Japanese imports  might have decreased because of a drop in global energy prices, but most likely the volume of imports from the US remained strong.

But regardless of value or volume, Japan is a resource-poor country and has to import much of what it needs. 

The Japan, if they don't have a lot yet, need to have better trade agreements with the US that will reduce the cost and price of imports from the US.

Have a nice day and be safe!