By Tetsushi Kajimoto
TOKYO (Reuters) – Japan’s exports grew the most in more than two years in February, rebounding from a Lunar New Year slowdown in January, as a widening trade surplus with the United States potentially raises tensions in the face of rising U.S. protectionism.
Annual export growth of 11.3 percent topped a 10.6 percent increase expected by economists in a Reuters poll and followed a 1.3 percent rise in January, marking the biggest gain since January 2015, Ministry of Finance data showed on Wednesday.
Exports to the United States rose 0.4 percent in February from a year ago, largely from bigger shipments of cars and auto parts.
Any rise in Japan’s trade surplus with the United States could be a cause of concern for Japanese policymakers, given that U.S. President Donald Trump has singled out Japan, China and Germany for their high net exports into the U.S. market.
“Japanese policymakers must be sensitive about trade surplus with the United States. The trade surplus is not at an alarming level, but is historically very low. However, such a logical argument may not get across to Trump,” said Tomoyuki Ota, head of the economic research department at Mizuho Research Institute.
“The fact that the trade surplus with the United States has been driven by rising car exports may cause Trump to pile pressure on Japanese carmakers to boost investment in America.”
Japan and the United States will start a high-level economic dialogue in mid-April, with Tokyo seeking ways to avoid trade friction on issues such as car exports by proposing an agenda focused on investment in U.S. infrastructure.
Japan’s trade surplus with the United States rose an annual 1.5 percent to 611.3 billion yen ($5.48 billion), posting the first increase since November although it had dropped a revised 26.5 percent in January.
EXPORT-LED RECOVERY
The trade data highlighted an economic recovery led by overseas demand although the rebound from a Lunar New Year slowdown in China and other parts of Asia in January played a large part.
Exports to China, Japan’s largest trading partner, rose 28.2 percent year-on-year in February, accelerating from a 3.1 percent gain in the previous month.
Demand for auto parts from China and for electronics components from Hong Kong contributed to export growth in February.This performance helped Japan log a surplus of 111.8 billion yen with China – its first in five years.
Analysts said February’s 8.3 percent growth in the volume of exports, and average export volume growth of around 4 percent in January and February, was a positive sign for Japan’s export-reliant economy in the current quarter.
(Reporting by Tetsushi Kajimoto; Editing by Chris Gallagher and Eric Meijer)
