Although China is the world’s number one exporter with global shipments valued almost 3.5 times higher than those for fourth-place Japan, that doesn’t mean that Japan is devoid of competitive advantages doing business with its bigger international trade rival.
Sure, China maintains many profitable relationships encompassing a wide range of goods that it ships to its Japanese customers due to an abundance of resources and generally lower wage costs. Less well-known is the fact that Japan still enjoys significant trade product strengths that result in counterbalancing positive cashflows from China, albeit from a smaller set of products.
China Top 10
Chinese Product Advantages Versus Japan
Below are the top 10 goods for which China enjoyed a higher dollar value from its exports to Japan after subtracting what it spent on Japanese imports for those same types of products. Technically, a country’s exports minus imports is known as “net exports” which can be a positive amount (indicating a surplus) or a negative number (indicating a deficit).
- Computers, optical readers: US$8.8 billion surplus win for China
- Phone system devices: $7 billion
- Jerseys, pullovers (knit or crochet): $2.9 billion
- Women’s clothing (not knit or crochet): $2.4 billion
- T-shirts, vests (knit or crochet): $2.3 billion
- Air conditioners: $1.9 billion
- Men’s suits, trousers (not knit or crochet): $1.8 billion
- Insulated wire/cable: $1.8 billion
- Cases, handbags, wallets: $1.7 billion
- TV receivers/monitors/projectors: $1.4 billion
Among these, computers and optical readers (up 1.6%) increased their net revenues for China from export sales to Japan by the highest percentages from 2012 to 2014.
Japan Top 10
Japanese Product Advantages Versus China
Essential electronics components, integrated circuits and microassemblies represent the number one export for which Japan shows the strongest sales advantage compared to similar product exports from China to Japan. In second place are automobiles, representing more sophisticated transportation commodities that benefit from strong demand from the blossoming Chinese middle class.
- Integrated circuits/microassemblies: US$10.7 billion surplus win for Japan
- Cars: $8.6 billion
- Liquid crystal/laser/optical tools: $5 billion
- Automobile parts/accessories: $4.4 billion
- Cyclic hydrocarbons: $3.6 billion
- Machinery for making semi-conductors: $3.2 billion
- Lower-voltage switches, fuses: $2.8 billion
- Miscellaneous machinery: $2.6 billion
- Electrical capacitators: $2.5 billion
- Metal-working machinery: $2.3 billion
The fastest-growing Japanese product win versus China is machinery for making semi-conductors, posting a 38.2% surplus gain in 2014 compared to 2012.
Japan’s edge over Chinese cars in terms of exports improved in value by 23.9% from 2012 to 2014.
The Winner Is
Final Scorecard for Trade War: China Versus Japan
Spearheaded by electronics components and automotive products, Japan earned an overall $13.4 billion surplus in its international trade with China during 2014.
From a more granular perspective, the Harmonized Tariff Schedule has 97 product categories at the two-digit summary level. China held positive balances in 59 of those 97 categories (60.8%) for a $52.8 billion subtotal, led by the following:
- Knit or crochet clothing, accessories: $10.1 billion surplus win for China
- Clothing (not knit or crochet): $8.7 billion
- Furniture, lighting , signs: $4.9 billion
- Meat/seafood preparations: $2.9 billion
- Other textiles, worn clothing: $2.8 billion
- Footwear: $2.7 billion
- Toys, games: $2.1 billion
- Leather, animal gut articles: $2 billion
- Vegetable/fruit preparations: $1.8 billion
- Fish: $1.8 billion
These 10 product categories account for 75.4% of the total value of Chinese product-specific surpluses trading with Japan.
Japan dominated the remaining 38 product categories subtotaling $66.2 billion in surplus, led by the following:
- Vehicles : $11.8 billion surplus win for Japan
- Optical, technical, medical apparatus: $11.4 billion
- Iron, steel: $6.2 billion
- Plastics, plastic articles: $5.6 billion
- Organic chemicals: $5.5 billion
- Electronic equipment: $4.8 billion
- Machinery: $4.4 billion
- Copper: $3.4 billion
- Other chemical goods: $2 billion
- Glass: $1.4 billion
The above categories represent 85.2% of the total value of Japanese product-specific trade surpluses gained at China’s expense.
See also Japan’s Top 10 Exports, Highest Value Japanese Export Products, China Major Product Supply Advantages and China’s Top Import Partners
Research Sources:
The World Factbook, Country Profiles, Central Intelligence Agency. Accessed on January 10, 2016
International Trade Centre, Trade Map. Accessed on January 10, 2016
Investopedia, Net Exports Definition. Accessed on January 10, 2016
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