Beijing predicts fast recovery for Japan's economy

PUBLISHED : Wednesday, 23 March, 2011, 12:00am
UPDATED : Wednesday, 23 March, 2011, 12:00am

The earthquake in Japan will affect Sino-Japanese trade in the short term only, according to China's Commerce Ministry.

The Japanese economy would recover quickly and the impact would be limited, it said.

'The disaster-hit northeastern part of Japan accounts for a substantial proportion of Japan's GDP, about 8 per cent,' ministry spokesman Yao Jian said in Beijing yesterday.

China was Japan's biggest trading partner and export destination last year. Bilateral trade totalled US$303.06 billion, according to ministry data.

In the near term, Japan's exports to China of electronic, chemical, steel and other products would decline, while China's exports to Japan of garments and agriculture products would drop, Yao said.

'At the same time, this area [hit by the quake] has a concentration of several electronics, automobile and petrochemical industries. These products contribute quite a lot to China's trade volumes. So in the short term, there will be an impact on bilateral trade,' he said.

Then 'Japan's economy will bounce back quickly'.

Japanese companies in Jiangsu and the cities of Tianjin and Dalian said the quake had affected supplies of electronic components, car parts and steel products, Yao said, without naming any company.

There are a large number of Japanese companies and Sino-Japanese joint ventures scattered across China, and many mainland companies source production materials from Japan.

Yao said stock levels of components should be enough to continue normal production until supply chains returned to normal.

He added: 'Japanese companies in China can also find producers domestically for supplies to bolster production.'

Regarding Chinese imports of Japanese food, Yao said the government had tightened checks after Japan found higher than normal radiation levels in some food products. But he noted that China imported very little food from Japan. China bought US$593 million worth of agricultural products from Japan last year, accounting for just 0.33 per cent of Japan's exports to China.

Yao also said the panic buying of salt on the mainland had stopped and the market had returned to normal after a series of measures imposed by the government.

It followed rumours that salt supplies would be contaminated by radiation from the Fukushima nuclear plant, and that iodised salt could offer protection against radiation.

On the situation in Libya, Yao said the evacuation of Chinese workers would affect mainland investments - China has 50 large projects worth US$18.8 billion in Libya.

He said Beijing was still evaluating its losses in Libya.

Yao also said the government had noted slower growth in household consumption in the first two months of this year and said he believed higher inflation and a tighter monetary policy were to blame.

The mainland's retail sales in the first two months rose 15.8 per cent from a year earlier to 2.9 trillion yuan (HK$3.45 trillion). But factoring in inflation, sales growth was 4.1 percentage points lower than last year, official data showed.

Yao said the warmer weather had brought with it an increase in farm produce supplies, which would lead to a steady drop in food prices soon.