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China`s economic surge could boost Japan

China`s economic surge could boost Japan
 
Workers at a factory in Shandong province sort spinach destined for the Japanese market. Following the March 11 earthquake, trade relations between Japan and China will be further strengthened, according to economists. [Photo / China Daily]
 
Nation`s current trade deficit with its neighbor may be narrowed

BEIJING - China`s rapid economic growth and increasing domestic demand are stimulating imports from Japan, a factor that may play an important role in Japan`s economic recovery, according to research from the Chinese Academy of Social Sciences (CASS).

The research suggests that overseas demand will be one of the strongest drivers of Japan`s economic recovery. China is the country`s biggest trading partner and the largest export destination for its goods.

At present, China runs a trade deficit with Japan, but that may change during the coming months, because the island nation is likely to need more Chinese goods to aid post-disaster reconstruction, analysts said.

CASS predicted that in the wake of the 9.0-magnitude earthquake, which unleashed a 7-meter-high tsunami on March 11 and prompted a nuclear crisis, Japan`s economy is likely to grow at a rate of between 1 and 2 percent this year, a sharp decrease from its GDP growth of 3.9 percent in 2010, a 20-year high.
 
"Following the disaster, trade relations between Japan and China will be further strengthened," Zhou Shijian, a senior trade expert from Tsinghua University in Beijing, told China Daily. "There will be more opportunities for trade between the two countries," he said.

Talks on establishing a free- trade zone between China, Japan and South Korea may start next year, said Chinese Premier Wen Jiabao during his two-day working trip to Japan and South Korea on May 21 and 22.

Japan`s recent disaster has had a limited influence on its trade with China, according to the CASS research.

Japan`s efforts to rebuild its disaster-stricken areas may lead to an increase in its imports from China, said Zhou.

From 2002 to 2010, China had an accumulated trade deficit of $236.23 billion with Japan. In 2010, it increased to $55.6 billion, according to CASS.

Japan is likely to relocate its product component factories to other countries, including China. That may boost Japan`s imports and alter the trade deficit, Zhou added.

Zhang Xiaoji, senior researcher at the Development Research Center of the State Council, said that China`s trade deficit with Japan is not likely to widen in the short term.

"The aging population in Japan will result in a labor shortage and reduce industrial production, indicating a decrease in exports," he said.

On Tuesday, Moody`s Investors Service said that a downgrade of Japan`s sovereign debt rating is likely, once it has completed a three month review, which will consider the economic effects of the recent natural disasters and the nuclear crisis.
 
Date:2011-6-1 14:28:37     
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