Business / Economy

Japan's goods trade deficit grew in July on weak exports to China

Kyodo

Japan logged a goods trade deficit of ¥249.6 billion in July, weighed down by a decrease in exports to China amid Beijing’s ongoing trade conflict with Washington, according to government data released Monday.

The preliminary reading for July followed a revised ¥589.6 billion surplus for June, the Finance Ministry said.

Exports fell 1.6 percent in July from a year earlier to ¥6.64 trillion, down for the eighth consecutive month, and imports were down 1.2 percent to ¥6.89 trillion, declining for the third straight month, the ministry said.

For China alone, imports rose 2.8 percent from a year before. Exports, including auto components and semiconductor manufacturing equipment, tumbled 9.3 percent, leaving Japan with a deficit of ¥383.8 billion against its biggest trading partner.

For the whole of Asia, including China, Japan’s trade surplus plunged 64.6 percent to ¥188.6 billion, with exports to the region falling 8.3 percent.

Starting July 4, Japan required individual licenses for exports to South Korea of three key materials used to manufacture semiconductors and display panels, citing national security concerns.

A Finance Ministry official explained that it is difficult to tell how the tighter export controls affected exports to South Korea because the data isn’t precise enough.

But Masato Koike, an economist at the Dai-ichi Life Research Institute, said the trade policy change appeared to have “not a small” impact, given the fact that Japan’s semiconductor-related shipments to Asia were lackluster.

“A sense of uncertainty about the future has increased further due to such factors as the U.S.-China and Japan-South Korea affairs,” Koike said, adding that Japan’s weak exports are likely to continue for the time being.

Among other partners, the trade surplus with the United States surged 15.6 percent from a year earlier to ¥579.4 billion, marking the fifth consecutive monthly gain, amid strong demand for semiconductor manufacturing equipment and excavators.

With the European Union, Japan ran a trade deficit of ¥67.9 billion, down for the first time in two months.

The figures were compiled on a customs-cleared basis.