Japan-China Trade: Performance and Prospects

This article adopts quantitative measurements to assess the performance of commodity trade between Japan and China in 1975-85. Sino-Japanese trade is found to have been characterised by a high degree of interdependence. Due to markedly different resource endowments trade complementarity between the two countries was very strong and increased over time. Japanese exports increasingly focused on machinery and transport equipment, while crude petroleum constituted by far China's single most important export commodity. In value terms, two-way trade grew five-fold during the period under discussion. Japan maintained her long-held position as China's single largest trading partner, and China became Japan's second largest market. The analysis suggests that a high level of complementarity between the economies of industrially advanced Japan and developing China, historical and cultural ties, and geographical proximity will continue to provide the ideal environment for bilateral trade to thrive.