Japan's trade deficit expanded in September with its exports to both the EU and China diving sharply in the month compared to a year earlier, official data from Japan showed Monday, underscoring the impact of the euro-zone debt crisis and a row over disputed islands between Japan and China.
Japan's trade deficit reached 558.6 billion Japanese yen ($7 billion), the third straight month of trade deficits, preliminary data from Japan's Ministry of Finance on Monday showed.
Exports dropped by 10.3 percent in the month from a year earlier, marking four months of decline in a row.
Exports to the EU tumbled 21.1 percent year-on-year in September while shipments to the US rose only 0.9 percent year-on-year in the month, a sharp decline from a 10.3 percent growth in August.
Exports to China dropped 14.1 percent year-on-year in September to 953.8 billion Japanese yen ($12 billion), accelerating from a 9.9 percent drop in August. September's decline was the largest since January.
"Japan's exports to the EU may improve in the next two or three months because consumption in Europe will pick up after Europeans come back from summer holidays overseas," Zhao Yongsheng, a visiting scholar with the Institute of European Studies of Chinese Academy of Social Sciences, told the Global Times.
"But Japan's trade with China remains a concern because Japan's 'nationalization' of China's Diaoyu Islands triggered a boycott of Japanese products by Chinese residents. With a host of private businessmen joining the protest against Japan, the trend of Japanese goods being removed from shelves still continues," Zhao said.
"Although weak demand due to China's economic slowdown has contributed to the decline of Japan's exports to China, anti-Japanese sentiment caused by the row over the disputed islands is also taking a heavy toll," Bai Ming, a researcher at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times.
Protests against Japan's illegal "purchase" of the Diaoyu Islands erupted in mid-September and some Japanese companies in China including Toyota, Nissan and Canon were forced to temporarily suspended production as some protests turned violent.
"There will be a time lag between Chinese protests and their impact on Japan's trade with China. Some of this impact has already been reflected in September's Japan trade figures and the dragging impact on Japan's exports to China will be even bigger in the next two or three months," Bai said.
China's Ministry of Commerce (MOFCOM) said earlier that Japan must take full responsibility for any impact on economic and trade ties between the two nations resulting from Japan's illegal "nationalization" of the Diaoyu Islands.
MOFCOM spokesman Shen Danyang Friday urged Japan to correct its actions in order to ensure healthy economic and trade relations between the two countries.
Monday's data also showed Japan's exports of motors used in heavy machinery to China dropped 48.7 percent year-on -year in September while car exports to China dropped 44.5 percent.
"If exports of Japanese cars to China were zero, it would cause Japan's GDP to decline by 0.8 percent," Ryutaro Kono, chief economist at BNP Paribas Securities (Japan), was quoted by Japan's Nikkei newspaper as saying Monday.
"Although the impact of the Chinese national holidays makes it difficult to extract the pure impact of such tensions, the possible impact on goods such as manufacturing parts require careful monitoring in the months to come," said a Tokyo-based economist with a European investment bank who declined to be named.
China is Japan's largest trade partner while Japan is China's fourth largest trade partner.
Data from China's customs on October 13 showed that China's exports to Japan grew 2.2 percent year-on-year in September while imports plummeted 9.6 percent.