Dogged by a global economic slump that started early last year, Japan's merchandise trade surplus in 2001 plunged 38.3 percent from the previous year to 6.61 trillion yen, marking the biggest percentage fall in 31 years, the Finance Ministry said Thursday.

The fall also reflected an increase in imports from China, according to the ministry's preliminary report.

The 38.3 percent slide marks the third consecutive yearly decline and the biggest fall since a 54.8 percent drop was registered in 1970.

In December alone, the surplus -- exports minus imports -- shrank 18.4 percent from a year before to 667.2 billion yen, the 18th consecutive month of decline, according to monthly statistics.

For the year, exports were down 5.1 percent to 49.11 trillion yen, marking the first drop in two years. A ministry official cited a contraction in global demand triggered by a recession in the information technology sector.

Exports of electronic parts, including semiconductors, fell 20.3 percent from a year earlier, while computer exports decreased 8.8 percent.

In contrast, imports were up for a second year in a row, posting a 3.6 percent rise to a record 42.4 trillion yen, reflecting the migration of Japanese manufacturers' factories to other parts of Asia where production costs are lower, the official said.

Another consequence of the migration was a decline in Japan's surplus with the rest of Asia, which shrank 58 percent to 1.76 trillion yen in 2001.

Imports of textiles, led by those from China, rose 9.6 percent from the previous term. The ongoing IT recession saw imports of electronic parts fall by 10.7 percent from a year earlier.

During 2001, the yen averaged 120.95 against the dollar -- an 11.2 percent depreciation compared with an average of 107.36 logged in 2000 , the official said.

On a regional basis, the politically sensitive trade surplus with the United States fell for the first time in five years, marking a 6.8 percent drop to 7.63 trillion yen, the official said.

U.S.-bound exports of electronic parts posted a 34.3 percent drop due to the IT-sector slowdown; those of communications equipment were down 32.2 percent from the previous term.

Imports from China were up 18.3 percent from a year before to 7.02 trillion yen in 2001, bringing Japan's trade deficit with China to a record 3.26 trillion yen, the official said.

The effects of the global economic downturn were evident in Japan's trade with Taiwan, South Korea and Hong Kong. Both exports and imports with these economies fell from a year earlier.

With the European Union, Japan's trade surplus throughout 2001 registered a record 29.1 percent year-on-year drop to 2.4 trillion yen. , marking the third consecutive year of decline.

Dollars used most

The dollar remains the most frequently used currency when Japan imports and exports, followed by the yen, according to data released Thursday by the Finance Ministry.

The U.S. currency accounted for 52.6 percent of the value of July-December 2001 Japanese exports, followed by the yen at 35.6 percent and the euro at 7.4 percent.

There are no changes in the trend, a ministry official said.

The dollar also accounted for 69.6 percent of imports, followed by the yen at 23.6 percent and the euro at 2.5 percent.

But in Japanese trade with other parts of Asia, the yen remained the dominant currency, with 50.1 percent of Japan's exports and 74.5 percent of imports conducted in it.

Japanese exports to the United States were mostly conducted in dollars, accounting for 87.7 percent of export value, followed by the yen at 12.2 percent.

The euro was most frequently used in Japanese exports to the European Union at 45 percent.