Japanese trade surplus surges in December

Japanese trade surplus in December rose 41.2 percent from a year earlier to 1.12 trillion yen (10.6 billion dollars), posting the sixth straight month of gains despite a surging yen, the finance ministry said Monday.
Exports for the month rose 8.5 percent from a year earlier to an all-time record 4.95 trillion yen led by booming shipments of cellphone parts, semiconductors and flat-panel displays, especially to other Asian countries, the ministry said.
The gains in export value came despite a 13.1 percent gain in the value of the yen in December from a year earlier to 108.63 yen to the dollar, which reduces yen-based overseas income, it said.
Export volumes rose 12.6 percent in December from a year earlier.
"It is natural that export values will be reduced by a strong yen, but we are not yet certain that there will be a negative effect on actual export volumes," said ministry official Hiroshi Hada.
He said the upbeat trend for Japan's exports could continue into 2004 "as long as the situation in China does not change."
Imports in December rose 1.6 percent to 3.83 trillion yen, led by increased purchases of personal computers and memory chips, the official said. Import volumes rose 9.2 percent.
Analysts said the yen's strength was actually boosting the trade surplus in the short term by making imports cheaper.
"There is a time lag before prices on exports are raised" to account for the per unit drop in overseas income in yen terms, said Shinko Research Institute economist Nobuhiko Kuramochi.
Monday's trade figures also showed the growing importance of China as a production base for Japan's exports abroad.
"Asia, or more specifically, China, is increasingly becoming a region hub for trade flows, while shipments to the other major regions are trending generally flat," said J.P. Morgan economist Ryo Hino in a research note.
The trade deficit with China shrank 38.3 percent, helped by the 32.4 surge in exports, marked by rising shipments of electronic parts, to 663.9 billion yen, while imports from China rose 13.2 percent to 779.4 billion yen.
The trade balance with the United States meanwhile fell 11.2 percent to 558.8 billion yen, as exports fell 7.8 percent to 1.11 trillion yen and imports dropped 4.1 percent to 555.8 billion yen.