Japan's trade surplus last month rose 1.8 percent from a year earlier to ?1.14 trillion (US$11.08 billion) led by robust demand for steel and plastic products in Asia, the government said yesterday.
For the whole of last year, the surplus hit a five-year high on the back of brisk exports to Asia, with China including Hong Kong replacing the US as Japan's largest trade partner for the first time in recent history.
Last month's surplus, the first rise in two months, was slightly better than the consensus forecast for ?1.13 trillion. Exports grew 8.8 percent to ?5.396 trillion in the month and imports expanded ?10.9 percent to Y4.254 trillion, the finance ministry said.
"The trade surplus rose as exports grew steadily thanks to strong demand in Asia," said a finance ministry official.
Japan's quality steel products drew strong demand from South Korean shipyards and Chinese carmakers, he said.
Overall steel exports last month rose 29.1 percent while exports of plastic and chemical products gained 35.4 percent with car parts up 13.1 percent.
The ministry said Japan's trade surplus rose 17.9 percent last year to ?12.01 trillion, the highest since 1999, when it totaled ?12.28 trillion.
Last year exports were up 12.2 percent to a record ?61.18 trillion and imports increased 10.8 percent to a record ?49.17 trillion.
"The surplus grew on strong exports of IT products in the first half and on robust steel exports in the second half," said UFJ Institute senior economist Tomomichi Akuta.
Asia-bound exports, which account for some 50 percent of Japan's total shipments, remained solid throughout last year, the ministry official said.
"Our exports to Asia are the backbone of Japan's economic growth and we expect them to continue growing this year," he said.
Some economists, however, said the trade surplus may not continue growing steadily in the face of high commodity and energy prices on imports, coupled with the drag of a possible sharp drop in the dollar on exports.
"Due to the combination of soaring base material prices and a slowdown of exports of electronics devices, net exports are not likely to make any positive contribution to Japan's gross domestic product growth in the near term," said Daiwa Institute of Research senior economist Junichi Makino said.
The finance ministry said China, including Hong Kong, became Japan's biggest trading partner last year for the first time since World War II, surpassing the US.
Japan's trade with China, including Hong Kong, totaled ?22.2 trillion last year, outpacing the ?20.5 trillion with the US. With China alone, Japan had a trade deficit of ?2.20 trillion, up 5 percent for the year, as exports rose 20.5 percent to ?7.99 trillion and imports rose 16.8 percent to ?10.19 trillion.
"As China's economy continues to grow, we will see a further expansion of trade between the two countries," the ministry official said.
Last month Japan's trade surplus with Asia slipped 2.3 percent to ?706.9 billion as exports rose 7.5 percent to ?2.63 trillion and imports expanded 11.7 percent to ?1.92 trillion.
The surplus with the EU rose 29.2 percent to ?344.9 billion as exports increased 11 percent to ?866.8 billion and imports edged up 1.6 percent to ?522 billion.
The surplus with the US rose 18.9 percent to ?663.8 billion last month as exports gained 6.0 percent to ?1.18 trillion while imports fell 6.8 percent to ?518.8 billion.