Foreign and Military Affairs

Quake takes toll on Japan-China bilateral trade

By Lan Lan (China Daily)
Updated: 2011-04-17 08:44
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BOAO, Hainan - The Japanese earthquake has cast a shadow on the production by Japanese companies in China and the impact on bilateral trade will be reflected gradually in the coming months.

Some Japanese companies import a relatively large part of components from Japan for their Chinese production, and they suffer from the suspension of the supply chain after the earthquake, Yu Jianhua, assistant minister of commerce told China Daily at the Boao Forum for Asia.

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Earthquake hits Japan

"But there is no change in Japan's competitive edge in innovation and high technology and its leading market share, so the Japanese economy can quickly recover from the disaster," Yu said.

The earthquake, tsunami and nuclear crisis in Japan will have "short-term impact" on bilateral trade between China and Japan, he added.

China is Japan's biggest trade partner. Bilateral trade surged by 30.2 percent to more than $297 billion in 2010, according to figures from Chinese customs.

Timothy Bond, chief economist for Asia Pacific at Bank of America Merrill Lynch, said the earthquake's impact on Japanese trade with other nations will show more obviously "by the end of the second quarter and the beginning of the third quarter".

Bond said Japan is a major world supplier for electronic products and vehicles, so there is definitely a negative effect all over the world. But, he said, its impact on China would be "neutral" as Chinese companies source most components domestically.

Koyama Masahisa, a manager of Mitsubishi Corporation, said the volume of trade between China and Japan remains high after the earthquake, and Japan will import more raw materials and other products from China in its restructuring.

The source of the large amount of restructuring funds is a problem for the Japanese government, said economists and entrepreneurs.

Japanese companies will become increasingly worried about the uncertainties of Japanese economy, which has already suffered from long-term deflation and slow recovery before the disaster.

Paul Sheard, global chief economist and global head of Economic Research Nomura Securities International, said Japan needs a fiscal and monetary boost as its economy is struggling.

The restructuring should be financed by issuing bonds, and the Bank of Japan should ease and then tighten the monetary policy after two or three years when the economy gets back on track.

Qin Jize contributed to this story.