Trading Game
Korea enjoyed a record trade surplus while Japan suffered from a continuously high trade deficit last year since the departure of the Abe government, despite the rapidly weakening yen.
Last year, Japan’s trade balance indicated a record deficit of US$117.6 billion, despite its price competitiveness from a low yen, according to the “Comparison of Korea-Japan Trade Since the Recent Low Yen,” a report made on the 17th by an industry researcher.
Korea, initially worried about possible export losses from the low yen, contrarily achieved the biggest trade surplus in history. This was different from the case where the Korean trade surplus shrank from US$29.4 billion to US$14.6 billion between the low yen period of 2004 to 2007.
As for the shift in Korea-Japan trade patterns, the researcher cited a few factors such as the enhanced competitiveness of Korean products, weakened competitiveness of Japan’s manufacturing, and China’s boycotting of Japanese products stemming from anti-Japanese sentiments.
The repercussions from the low yen have been downplayed due to the improved export competitiveness of Korean mainstream industries such as semiconductors, cell phones, and displays, coupled with weakened Japanese competitiveness. Last year, Japan’s semiconductor exports fell by 13.0 percent, while Korean exports jumped 12.7 percent. Automobile exports (including parts) saw a 7.4 percent loss in Japan, while its neighbor saw a 3.9 percent gain.
While Japan’s price competitiveness has been strengthened due to the low yen, dollar-based export total sank by 10.5 percent, attributable to the fact that Japanese companies focused on enlarging their profits rather than lowering the product unit costs, reducing exports due to the downfall of manufacturing competitiveness, cited the analysis.
Also, it is estimated that Korean products obtained side-benefits from the Chinese market, derived from widespread boycotting against Japanese products in light of anti-Japanese sentiments following the recent territorial dispute.