Japan’s export growth slowed sharply in December as China-bound shipments fell for the first time in seven months, stoking fears of further slowdown in the global economy and external demand for Japanese shipments.
(Total) exports rose 11.5% year-on-year in December after a gain of 20% in November, marking the slowest growth since the start of 2022, dragged down by a fall-off in sales to China of cars, auto parts and chip-making machinery, Ministry of Finance (MOF) data showed on Thursday.
The weak data dashes policymakers’ hopes for an export-led recovery from the coronavirus pandemic, putting more pressure on the government to persuade Japanese firms to accelerate wage hikes to help boost domestic demand.
Exports to largest trading partner China fell 6.2% year-on-year in value and were down 24% in volume terms in December.
Exports to the United States in December rose 16.9% from a year ago, led by cars, mining equipment and aero-engine parts.
“The unexpected stalling of the Chinese economy came on top of slowdown in Europe and America. In the worst case, it may deal a blow to Japanese exports, which could in turn hit Japan’s factory output and capital expenditure,” said Atsushi Takeda, chief economist at ITOCHU Research Institute.
“Japan would then have no choice but turn to domestic demand to pick up the slack. In that sense, spring wage talks between labour and management holds the key to see whether private consumption will hold up to drive virtuous economic growth.”
Economic activity has been hampered in China by a wave of COVID-19 infections after the government began dismantling its stringent “zero-COVID” controls in December.
Although China’s latest wave is expected to have faded by spring, the world’s second-largest economy will take time to return to pre-pandemic levels and risks of further COVID waves remain, Mr. Takeda said.