The Change Mariner

China Now Driving Japanese Exports

The Herald (UK):

The latest upturn in Japan's economic fortunes is once more export led, despite a currency that is 10% stronger today than it was a year ago. However, the primary driver behind today's soaring demand for Japanese goods is not the United States, as it was then. This time the stimulus is much closer to home. This time Japan's principal ally in economic recovery is mainland neighbour and old enemy, China.

There was a time, during Japan's last boom, when China's economic advance was viewed with deep suspicion by government strategists in Tokyo. There were grim predictions of the hollowing out of Japan's manufacturing super-structure as lower-cost Chinese producers followed the lead of South Korea and Taiwan and knocked Japan off its perch.

However, despite old enmities and a Chinese currency, the renminbi, which remains pegged to the US dollar and is just as big a barrier to trade as the greenback itself, surging demand for Japanese goods from China has completely changed the terms of debate and buried, for now, those old fears. As the pace of Chinese development continues at break-neck speed, demand for Japanese raw materials like steel, commodities like memory chips, and for capital goods, in sectors from construction to process engineering, is soaring.