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Japan records goods trade deficit in July on weak exports to China

Japan records goods trade deficit in July on weak exports to China

Japan logged a goods trade deficit of ¥249.6 billion in July, weighed down by a decrease in exports to China amid Beijing’s ongoing trade conflict with Washington, government data showed Monday.

The trade deficit followed a revised ¥589.6 billion surplus in June, according to a preliminary report by the Finance Ministry.

In the reporting month, exports fell 1.6 percent from a year earlier to ¥6.64 trillion, down for the eighth consecutive month, and imports were down 1.2 percent to ¥6.89 trillion, declining for the third straight month, the ministry said.

With China, imports rose 2.8 percent from a year before. But exports, including auto components and semiconductor manufacturing equipment, tumbled 9.3 percent, leaving the world’s third-largest economy with a deficit of ¥383.8 billion against its biggest trading partner.

Also, against the whole of Asia, including China, Japan’s trade surplus plunged 64.6 percent to ¥188.6 billion with its exports to the region falling 8.3 percent.

From July 4, Japan’s government required individual licenses for exports to South Korea of three key materials used to manufacture semiconductors and display panels, citing national security concerns.

A Finance Ministry official explained that it is difficult to tell how the tighter export controls affected Japan’s exports to South Korea because the data has no categories measuring the items’ trade value.

But Masato Koike, an economist at the Dai-ichi Life Research Institute, said the trade policy review appeared to have “not a small” impact, given the fact that Japan’s semiconductor-related shipments to the Asian region were lackluster.

“A sense of uncertainty about the future has increased further due to such factors as the U.S.-China and Japan-South Korea affairs,” Koike said, adding that Tokyo’s weak exports are likely to continue for the time being.

Among other partners, Japan’s trade surplus with the United States surged 15.6 percent from a year earlier to ¥579.4 billion, marking the fifth consecutive monthly gain, amid strong demand for semiconductor manufacturing equipment and excavators.

With the European Union, Japan ran a trade deficit of ¥67.9 billion, down for the first time in two months.