Japan posts China trade deficit
Japan posts China trade deficit
Japan has a lower export revenue than import spending to the EU and China which led to the fall of their GDP by 0.9% - GDP=C+G+I+(X-M) a fall in X will lead to a fall in GDP, ceteris paribus - and as exports to their top export destination, China, decreases by a total of 12% , Japan, one of the world’s top economies, will have another consecutive quarter of falling GDP, leading them into a recession. We can see a deflationary gap forming and a decrease in real output from Yf to Y1 as aggregate demand decreases due to the negative net trade component resulting from export revenues exceeding import expenditure. To increase aggregate demand again the Japanese government could use either an expansionary fiscal or a monetary policy.
The large trade deficit Japan is having with China is largely due to their dispute over the group of islands in the East China Sea. It is also the most likely cause for the reduced shipment of machinery and cars to China which led to the decrease of export volumes by a total of 6 %. As China has reduced its demand for Japanese goods, meaning exports to China are decreasing, their imports from there have increased by 4% due to the inelastic demand (PED < 1) for the iPhone 5, which is assembled in China. The pressing current account deficit with China has encouraged Japanese to consider a trade agreement in the hope solving Japans deficit problems. Negotiations for a trilateral free trade agreement between China, Japan and South Korea have been launched, which will benefit all three countries greatly. This trilateral trade agreement is a type of free trade area, meaning there will be a reduction in trade barriers, such as for example lower tariffs and will therefore encourage more trade as well, while not affecting China, Japan or South Korea’s trade with other countries. The main benefit the three Asian powers will be enjoying is lower tariffs, smoothing trade amongst them. Japan’s cars market will
Japan has a lower export revenue than import spending to the EU and China which led to the fall of their GDP by 0.9% - GDP=C+G+I+(X-M) a fall in X will lead to a fall in GDP, ceteris paribus - and as exports to their top export destination, China, decreases by a total of 12% , Japan, one of the world’s top economies, will have another consecutive quarter of falling GDP, leading them into a recession. We can see a deflationary gap forming and a decrease in real output from Yf to Y1 as aggregate demand decreases due to the negative net trade component resulting from export revenues exceeding import expenditure. To increase aggregate demand again the Japanese government could use either an expansionary fiscal or a monetary policy.
The large trade deficit Japan is having with China is largely due to their dispute over the group of islands in the East China Sea. It is also the most likely cause for the reduced shipment of machinery and cars to China which led to the decrease of export volumes by a total of 6 %. As China has reduced its demand for Japanese goods, meaning exports to China are decreasing, their imports from there have increased by 4% due to the inelastic demand (PED < 1) for the iPhone 5, which is assembled in China. The pressing current account deficit with China has encouraged Japanese to consider a trade agreement in the hope solving Japans deficit problems. Negotiations for a trilateral free trade agreement between China, Japan and South Korea have been launched, which will benefit all three countries greatly. This trilateral trade agreement is a type of free trade area, meaning there will be a reduction in trade barriers, such as for example lower tariffs and will therefore encourage more trade as well, while not affecting China, Japan or South Korea’s trade with other countries. The main benefit the three Asian powers will be enjoying is lower tariffs, smoothing trade amongst them. Japan’s cars market will