Japan’s customs-cleared trade with China exceeded its trade with the United States for the first time in fiscal 2004, underlining the interdependence between the two economies, Finance Ministry statistics showed Thursday.

Trade with China, including Hong Kong, totaled 22.71 trillion yen, or about 20 percent of Japan’s total trade of 112.09 trillion yen for the full fiscal year, according to the ministry data. Japan’s 20.6 trillion yen in trade with the U.S. accounted for 18 percent of all trade.

Exports to China rose 16.1 percent from a year earlier to a record 8.09 trillion yen. Imports from China rose 17.9 percent to a record 10.63 trillion yen.

As a result, Japan logged a record trade deficit with China, up 24 percent year on year to 2.54 trillion yen. Its surplus with the U.S. rose 7.6 percent to 7.12 trillion yen.

Japan’s total trade surplus for the full fiscal year rose 1.3 percent from the previous year to 11.35 trillion yen for the third consecutive year of growth. Exports rose 10.1 percent to 61.72 trillion yen and imports rose 12.3 percent to 50.37 trillion yen.

Thursday’s data was released at a sensitive time in Japan-China relations, following weeks of anti-Japan demonstrations in various Chinese cities. The same day, editorials in China’s state-run media shifted focus away from Japan’s wartime crimes to the benefits of current Sino-Japanese ties, including the vast number of jobs created for Chinese workers. Japanese leaders also were quick to point out the economic stakes.

“The data reflect how important ties between our two countries are; we must deal with the current problems,” Chief Cabinet Secretary Hiroyuki Hosoda told a regular morning news conference.

Economists sum up Sino-Japanese ties in the phrase, “economically hot, politically cold.” Trade with China has risen as more Japanese companies move production facilities to China to cut costs. Processed products are then exported, either back to Japan from China and Hong Kong or out to the U.S. and other destinations.

In contrast, recent territorial spats and objections over Japan’s views of its wartime history have sent relations to an all-time low since diplomatic ties were forged in 1972.

Thursday’s report also shows that Japan’s exports to the European Union hit a record 9.48 trillion yen in fiscal 2004, up 5.9 percent.

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