Business
UPDATED: 09:09, July 15, 2004
Role exchanges in Sino-Japan economic interdependence
As important trade partners to each other, China and Japan have developed increasingly inter-dependent relationship between them. But there is no equal footing for either side against different backdrops in the history.
For a long period after the bilateral diplomatic relations was normalized, the economic ties with Japan carried much more weight for China than the economic ties with China for Japan in terms of the national overall strategy on foreign economic relationship.
However, fundamental changes are taking place now as China's economy keeps rising and strengthening and its economic ties with the rest of the world are growing in a comprehensive way.
The basic trend is: as far as the position in economic development and economic ties with the rest of the world is concerned, the economic relationship with Japan is losing ground on Chinese side while the economic relationship with China is evidently gaining ground in Japanese side. Demotion of Japan's position in China's economic ties with other countries This can be proved by the following three evidences:
Firstly, trade with Japan has kept declining in China's overall foreign trade. It is true that the recent years has seen remarkable expansion of China's trade with Japan with a new record created each year. Sino-Japan trade reached 133.57 billion USD in 2003 and is expected to top 150 billion USD in 2004.
However, this pace still lags behind the growth of China's overall foreign trade, leaving a downward curve for China's trade with Japan in its whole foreign trade. Sino-Japan trade climbed to as high as 23.6 percent of China's foreign trade in 1985 and stood at a high level of 20.5 percent even in 1995. But it decreased to 17.5 percent in 2000 and then was further down to 15.7 percent in 2003. Only 13.6 percent of Chinese exports were shipped to Japan that year, following US and EU.
Secondly, the similar story has happened in Japanese capital in the inflow of foreign investment into China. According to the statistics made by Japan, foreign direct investment from that country in 2000, 2001, 2002 and 2003 soared up by 32.3 percent, 43.6 percent, 22.2 percent and 65 percent respectively. Meanwhile, China absorbed FDI faster than that. As a result, Japanese capital did not secure its proportion in the total FDI flowing into China. Only 7.9 percent of foreign capital actually used by China was from Japan in 2002, compared with 14.4 percent in 1990.
Thirdly, Japan slashed its government aids to China. Yen loans, as a pillar in this package, amounted to 214.4 billion yen in 2000. But the sharp reduction after that squeezed the figure to 96.7 billion yen, only 45.1 percent of that in 2000.
Promotion of China in Japan's foreign economic relationship
This also can be confirmed by the rising ingredient of trade with China in Japan's foreign trade. Export to China accounted for 2.1 percent in Japan's total export and rose to 6.3 percent in 2000. It increased by nearly 6 percent in the three years since then and amounted to 12.2 percent.
In 1995, 10.7 percent of Japan's import was from China. The figure rose to 14.5 percent in 2000 and 19.7 percent in 2003. Chinese mainland has become the biggest seller of Japan's imports since 2002.
Although Chinese mainland does not deliver as much value to Japan as US does, exports from the whole China, if Taiwan and Hong Kong are all included, outtake those from US. The more important thing is that China's deficit and Japan's surplus in the bilateral trade is widening. Trade with China constitutes an increasingly important source of trade surplus for Japan. China's statistics shows that China was on the surplus side of 2.16 billion USD in 2001 but on the deficit side of 5.03 billion USD in 2002. China's trade deficit with Japan jumped to 14.73 billion USD in 2003. Data from China's customs recorded the country's trade deficit with Japan reaching 7.66 billion USD for the first four months of the year. If things go this way, the amount is expected to exceed 20 billion USD for the whole year.
What's more, China has become the favorite destination of Japan's direct investment in overseas market by Japanese businesses which seek to improve their operation and profitability. In 2003, Corporate Japan made investment overseas 9.2 percent less than the previous year. That contrasted sharply with the 65 percent increase of its investment in China, which brought another 3.9 percent share of China market in Japan's total investment overseas.
More "China factor" added to Japan's economic recovery
The changes on the interdependence between China and Japan are also represented by Japan's reliance on China in its economic development. It is evident that Japan's economic recovery now is much attributed to its export to China.
According to the official benchmark of Japan, its economy has been in its upturn since 2002 for the fourteenth economic cycle after World War II. Among many factors contributing to this, demand from outside, especially exports, has served as the most important stimulus. And the fact is its soaring export is mainly boosted by its remarkably rising sales to China.
The Cabinet Office of Japan estimated that in 2002 Japan's GDP grew 1.2 percent with 0.4 percent from domestic demand and 0.8 percent from outside boost. This means 66.7 percent of the growth was powered by outside demand. Its export to China especially has played a leading role in Japan's overall export taking its economy out of depression.
In 2002, US remained the largest buyer of Japanese products with a share of 28.5 percent. But as US economic recovery and its market demand was neither encouraging enough, shipment from Japan to US dropped by 2.6 percent instead of any progress forward. This led to a US 0.8 minus percent contribution to Japan's export growth.
In China's case, although it is the second largest importer of Japanese products with a share of 9.6 percent, the robust Chinese economy and market demand pushed Japan's export to China up by 28.2 percent. 2.2 percent out of the 2.6 percent growth of Japan's total export was from China, creating a contribution of 84.6 percent. The share would be even higher if its exports transferred to Chinese mainland from Hong Kong was taken into account.
In a word, the rapid upward movement of export to China is a powerhouse for Japan's overall export growth and its economic rebound.
By People's Daily Online
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