Japan’s merchandise trade surplus for the first half of 2005 shrank 26.4 percent from the previous year to 4.53 trillion, yen the Finance Ministry said Thursday.

This shrinkage was attributed primarily to record-high crude oil prices, which boosted the value of imports by 11 percent.

Exports rose 4.1 percent from the same period of 2004 to 30.82 trillion, yen amid strong steel sales to the rest of Asia and auto sales to the U.S., according to the ministry’s preliminary report.

This marks a seventh consecutive year-on-year increase for a six-month period. It was also the second-highest level ever logged for a half-year period, trailing only the July-December half of 2004, when exports came to 31.56 trillion yen.

But the January-June rise was offset by a 12.1 percent year-on-year rise in imports, which came to 26.29 trillion yen. This marked a sixth straight half-year period of increase.

Rising crude oil prices, also up for the sixth straight half-year period, led to a 30 percent rise in the value of imported crude oil and oil products.

The strength of exports is reassuring, said HSBC Securities (Japan) Ltd. economist Peter Morgan. “Exports are breaking out of a soft patch,” he said.

China, including Hong Kong, remained Japan’s largest trade partner. The sum of exports to and imports from China rose 9.1 percent year-on-year to 11.44 trillion yen during the January-June period. In comparison, trade with the U.S. rose 3 percent to 10.36 trillion yen. In 2004, China became Japan’s largest trade partner, passing the U.S. for the first time in the postwar era.

Japan’s trade with all of Asia rose 4.4 percent to a record 14.86 trillion, yen but the gains here, too, were largely canceled out by high oil prices. The value of imports rose 12.9 percent to 11.89 trillion, yen causing the trade surplus to fall 19.8 percent from the previous year to 2.97 trillion, yen a seventh consecutive decline.

The trade surplus is calculated as the value of exports minus the value of imports in a given period.

As for the single month of June, Japan’s trade surplus fell 23.5 percent from a year earlier to 873.1 billion, yen marking a third straight month of decline.

Exports rose 3.6 percent in value terms on a year-on-year basis, while imports increased 11 percent.

In its trade with Asia during the month, Japan posted a deficit of 234.5 billion yen with China including Hong Kong, up 105.3 percent year-on-year, the ministry said.

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