Here's proof that Japan's trade relations with China are finally normalizing
Decline in exports to China has narrowed to -6.8%.
According to DBS, Japan’s trade relations with China are normalizing. The year-on-year decline in Japan’s exports to China has narrowed to -6.8% in August from a persistently large -15% in Sep12-Jul13 (measured in USD terms).
Here's more from DBS:
Meanwhile, the number of Chinese tourists visiting Japan has also risen notably from the bottom, with the year-on-year rate improving to -14.5% in August from -30% in the preceding ten months.
One year has passed since the political tensions between the two countries (surrounding island disputes) increased last autumn, which spurred anti-Japan protests in China. The gradual easing of the anti-Japan sentiment has resulted in pent up demand amongst Chinese consumers on Japanese goods/services.
Meanwhile, the yuan has appreciated 15% versus the yen so far this year, which strengthened Chinese consumers’ purchasing power on Japanese products/services.
Release of pent up demand, a strong CNY versus the JPY, and a cyclical improvement in China’s macro conditions should help Japan’s exports to China in the coming months. Based on the current pace of growth, exports to China will fully revert to the 2012 peak levels by the end of this year.
The recovery of Japan’s market share in China is relatively slow. For Japanese automobiles and electronics products that were hit hard by last year’s protests, the occupation rate in China’s import market has remained low at 13.7% and 9.5% respectively as of August, far lower than the normal levels of 20% and 13%.
The Chinese consumers and producers who have switched to homogeneous substitutes of Japanese products may not fully come back. While Japanese exporters would quickly recoup losses in China’s market in absolute terms, regaining market shares and restoring competitiveness still have a long way to go.