In a significant shift in global trade dynamics, the United States has overtaken China as Japan’s largest export destination for the first time in four years. This development in 2023 underscores a broader movement toward the decoupling of China from Japan and Western economies.
The growing cohesion among Western nations, coupled with Japan and the United States forming a strategic counterbalance to the Chinese Communist Party (CCP), is reshaping the international economic landscape and presenting challenges to China’s global economic position.
A recent analysis by Nikkei News highlighted this change, noting that Japan’s export focus has increasingly leaned toward the economically robust United States since 2003, whereas its trade with the economically struggling China has seen a noticeable decline.
The latest trade statistics from Japan’s Ministry of Finance, dated Jan. 24, 2023, reveal a nuanced picture of Japan’s trade performance. The country’s exports reached a record high of ¥100.8865 trillion (about US$756.65 billion), marking a 2.8 percent increase from the previous year and surpassing the ¥100 trillion (about $750 billion) threshold for the first time.
Conversely, imports saw a 7 percent reduction, totaling ¥110.1779 trillion (about $826 billion). This led to a trade deficit of ¥9.2913 trillion (about $69.68 billion), but it also represented a significant improvement, with the deficit shrinking by 54.3 percent compared to 2022.
A closer examination of the data shows that Japan’s exports to the United States surged to ¥20.2668 trillion (about $152 billion), an 11 percent increase year over year. In contrast, exports to China dropped to ¥17.7646 trillion (about $133.23 billion), a 6.5 percent decline from the previous year, with notable decreases in steel and auto parts exports by 24.9 percent and 24 percent, respectively. European Union countries also saw an increase in Japanese exports, totaling ¥10.374 trillion ($77.8 billion), up by 10.9 percent.
A key driver of this export growth to the United States has been the automotive sector, with exports rising by 35.5 percent year over year, to ¥5.8439 trillion (about $43.83 billion). This includes approximately 1.5 million units, marking a 16.1 percent increase and contributing significantly to the overall growth.
Despite these numbers still trailing behind the pre-pandemic level of 1.74 million units in 2019, the stabilization of the COVID-19 pandemic in the United States in 2023, a resurgence in consumption, and the easing of global supply-chain issues have enabled major Japanese automakers like Toyota Motor Corporation to bounce back from production setbacks caused by component shortages.
Furthermore, Japan’s foreign markets have witnessed a growing demand for hybrid vehicles (HV), with luxury brands such as Lexus and the Toyota RAV4 experiencing strong sales in the United States. In addition, the depreciation of the Japanese yen has further boosted exports, adding another layer to Japan’s evolving trade landscape amid changing global economic relations.
Impact of Global Realignments on China’s Economic Prospects
The pandemic years have marked a pivotal shift in Beijing’s economic and political stance, skewing significantly to left-wing authoritarianism. This shift, in conjunction with a global pushback against the CCP, has precipitated a comprehensive downturn in China’s economy and trade. The quickening pace at which Western economies are distancing themselves from the CCP has notably altered the global economic canvas.Wang He, a China affairs expert, told The Epoch Times that the unexpectedly swift decoupling between Western societies and China highlights two main manifestations: a significant reduction in both China’s import and export trade, which has plummeted to its lowest in recent history. Historically, trade with Western developed nations constituted over half of China’s total trade volume. This figure has since dwindled to approximately 30 percent, marking substantial trade declines with Japan, the United States, the European Union, South Korea, and Taiwan, among other advanced Western economies.
“In the past, China’s economic exchanges with Japan positioned it as Tokyo’s principal trading partner, wielding considerable influence over Japan’s economy. However, a notable shift occurred in 2022, paralleling China’s decoupling from the West and the deepening integration among Western nations. This shift is evident in the enhanced trade dynamics between Japan and the United States, as well as with Taiwan and South Korea, reshaping the global economic landscape,” Mr. Wang elucidated.
He further observed that as Western countries move away from the China, the bond among Western developed economies has strengthened, with increased mutual investments and trade amplifying the United States’s role as a global economic hub. The U.S. import share from China has regressed to 2003 levels, dwindling to a mere 13 percent, according to U.S. data.
“This coordinated strategic alignment between the United States and Japan has rapidly evolved, significantly agitating the CCP,” remarked Mr. Wang.
China faces mounting challenges, including escalating local government debt crises, deteriorating economic conditions, foreign capital flight, declining productivity, dropping imports and exports, and increasing unemployment rates. It is broadly anticipated that China’s economic recovery in 2024 will be arduous, with prospects likely to deteriorate further.
Challenges Persist in Sino-Japanese Economic Ties
The complexities of China-Japan economic relations have deepened following Japan’s decision, sanctioned by the International Atomic Energy Agency, to release treated nuclear wastewater in September of last year.
Further compounding the situation, data from Hakodate Customs in Hokkaido revealed a complete halt in September’s seafood exports (including processed products) to China. Contrastingly, exports to the United States, particularly of scallops, surged to ¥1.68 billion (approximately $11 million), marking a significant 1,273-fold increase from the previous year.
In a move symbolic of bilateral solidarity, Rahm Emanuel, the U.S. ambassador to Japan, affirmed the commitment of Japan and the United States to jointly address the CCP’s economic coercion tactics. This partnership was further exemplified on Oct. 30, when the U.S. military entered a long-term agreement to purchase Japanese scallops, ensuring a diversified application of the seafood across military cafeterias, ships, and even retail outlets on military bases.
In mid-January, amidst enduring economic impasses, a substantial Japanese economic delegation, comprising around 200 business leaders and CEOs, embarked on a visit to Beijing. This marked the first such delegation to China since the onset of the pandemic in 2019, signaling a crucial attempt to mend economic relations.
The delegation’s agenda was ambitious, seeking not only the removal of the seafood import ban but also greater clarity on the CCP’s “Anti-Espionage Law” enforcement, and the reinstatement of visa-free travel provisions. Despite engaging in discussions with high-ranking CCP officials, including Premier Li Qiang and Commerce Minister Wang Wentao, the delegation’s specific concerns received no direct acknowledgment or resolution.
Complicating matters further, the CCP’s Ministry of Defense issued criticisms of Japan’s defense policies, notably its collaborations with Australia, South Korea, and the United States.
Independent commentator Zhuge Mingyang highlighted the inherent contradictions within the CCP’s leadership approach, noting the challenge of centralized control without the requisite expertise and reliable personnel, which he argues has led to disarray in both domestic and international affairs.
These developments underscore the multifaceted challenges facing Sino-Japanese economic relations, with environmental concerns, diplomatic tensions, and strategic realignments all playing pivotal roles in shaping the future trajectory of their interactions.
