TOKYO – Japan logged a goods trade deficit of 1.20 trillion yen ($11 billion) in 2018, government data showed Wednesday, the first red ink in three years as the cost of energy imports surged and exports to China fell on the back of Beijing’s months of tit-for-tat tariff war with Washington.
Imports rose 9.7 percent from a year earlier to 82.69 trillion yen, outpacing a 4.1 percent increase in exports to 81.49 trillion yen.
For December alone, exports marked their steepest fall since October 2016, down 3.8 percent to 7.02 trillion yen, and shipments to China, Japan’s largest trading partner, sank 7 percent from a year earlier amid slumping demand for devices from Chinese makers of mobile phones, semiconductors and liquid crystal displays.
Exports have been a major component of the Japanese economy’s current expansion cycle, which is likely to be the longest since the end of World War II.
But demand has waned in recent months amid a trade war between the United States and China. Nidec Corp., a maker of electric motors, last week warned investors that it expects a fall in profit for the year ending in March due to a fall in orders from China due to the trade tensions.
Kazuma Maeda, an analyst at Barclays Securities Japan, warned that looking forward “the fading boost to China-bound exports of capital goods driven by ‘Made in China 2025’ could prove a drag on exports.”
Made in China 2025, President Xi Jinping’s blueprint for growing the country’s technology industry, has been the source of U.S. President Donald Trump’s ire and could be revised in bilateral trade talks.
A string of natural disasters in the summer, including a powerful typhoon that temporarily shut down Osaka’s main airport, may have also played a part in slowing imports.
Meanwhile, imports of energy-related items such as liquefied natural gas and kerosene were pushed up by an increase in global oil prices, with crude oil imports surging 24.5 percent to 8.91 trillion yen last year.
By region, Japan ran a deficit of 3.28 trillion yen against China. The margin of red ink shrank for the third consecutive year, however, as exports grew to a record high on demand for equipment used to manufacture semiconductors.
Against all of Asia, Japan saw a surplus of 5.54 trillion yen.
Japan had a surplus of 6.45 trillion yen against the United States, a smaller margin than the previous year amid falling automobile exports and a rise in aircraft imports.
With Europe, Japan logged a deficit of 487.5 billion yen with imports of medicine from Ireland contributing.
For December, Japan logged a goods trade deficit of 55.3 billion yen, according to a preliminary report by the Finance Ministry. Imports grew 1.9 percent to 7.08 trillion yen.
The figures were compiled on a customs-cleared basis.