China has replaced the US as Japan's biggest trade partner in spite of their troubled relationship on other fronts over the past few years. Led by strong sales of electronic components to the mainland, bilateral trade surged to 25.4 trillion yen (HK$1.67 trillion) last year - 267 billion yen more than Japan's trade with the United States, Japan's Ministry of Finance said yesterday. With Hong Kong included, Japan's trade with China already surpassed that with the US in 2004. But now the mainland alone has become Japan's biggest trade partner for the first time since the second world war. This is more remarkable given the strained relations over the past few years, as the countries bicker over a wide range of issues, including wartime history and natural resources. Ties between the two began to thaw only recently after Japanese Prime Minister Shinzo Abe visited Beijing last October, followed by Premier Wen Jiabao's trip to Tokyo earlier this month. Figures released yesterday are the latest sign of a deepening economic interdependence between two of Asia's major powers. Japan's exports to China have increased 21.2 per cent year-on-year, spearheaded by strong sales of semiconductors. Imports from China, on the other hand, also increased by 13 per cent as Japanese bought more garments from the mainland. Thanks to this booming trade relationship with China, Japan's trade surplus surged to nine trillion yen in 2006, up 16 per cent from the previous year. Denis Kwan, a Hong Kong business consultant who specialises in the hi-tech industry, said he was not surprised by the figures and expected the trend to continue. 'This is the result of globalisation. Many Japanese manufacturers have transferred their assembly lines to China. They export semi-conductors or other components to the mainland, where these parts are assembled into the final products and then sold to other markets, or even back to Japan,' he said. 'China is also emerging as a major consumer market for Japanese firms. The two countries' economies have become increasingly reliant on each other.' Such interdependence is set to deepen as the two nations start to mend relations. Mr Wen and Mr Abe earlier agreed to establish a high-level economic dialogue to promote economic ties. Energy conservation and environmental protection have been singled out as key areas for co-operation. For Japanese companies such as Sanyo, which sees its future in green technology, getting access to the mainland market will be crucial. Zhang Wei , a Chinese sales representative at Sanyo's Clean Energy product planning department in Tokyo, said Japan needed the mainland market to establish global energy-saving standards. 'For an emerging industry like energy-saving, establishing a set of global standards is the key to success. Japan faces competition from Europe and the US,' Mr Wei said. 'They need to team up with China because their domestic market is just not big enough.'