Japan’s Imports From China Plunge Amid Coronavirus Shock

(Bloomberg) --

Japanese trade figures for February showed a continued slide in exports and a sharp plunge in Chinese imports as the coronavirus slammed supply chains, choking off the flow of components feeding Japan’s factories and products for Japan’s stores.

Imports dropped 14% from a year earlier, with shipments from China falling by almost half, Ministry of Finance data showed Wednesday. Overall exports declined 1% compared with economists’ forecast for a 4.2% decline.

The sharp drop in imports from China clouds the outlook for Japanese manufacturers of everything from cars to electronics. It also dims prospects for exports, which have already slid for 15 months straight, the longest streak of falls since the 1980s.

Key Insights

• The sharp drop in imports from China underscores the severe hit Japanese manufacturers are likely to take from the virus, according to economist Takeshi Minami at Norinchukin Research Institute. “The import figures are stunning,” he said. “I’m increasingly convinced that Japan is in a recession.”
• The export slide is likely to continue in months ahead as the virus’s spread has widened dramatically since February, becoming a pandemic that’s locked down many of Japan’s biggest markets.
• The trade outlook has worsened considerably with the virus’s spread from China to Europe and the U.S. in recent weeks. President Donald Trump says America may be fighting the outbreak until summer or later. Governments in Europe are shutting schools and putting tight restrictions on movement and commerce.
• For Japan’s exporters, recent appreciation in the yen is an added concern. The currency at one point last week jumped to its highest level against the dollar since 2016.

What Bloomberg’s Economist Says

“Japan’s economy is under siege from all sides -- a technical recession in 1Q is almost certain, with a contraction for the whole year expected even in the most optimistic scenario.The coronavirus outbreak is slowing growth in Japan’s main trade partners, while a strong yen risks eroding exporters’ competitiveness.”

--Yuki Masujima, economist

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• Imports from China slid 47% led by plunging shipments of electronic parts and components and clothing.
• The trade balance was a 1.11 trillion yen surplus. Analysts expected a surplus of 930 billion yen.
• Exports to China fell 0.4%. Shipments to the U.S. dropped 2.6%, while those to Europe declined 7.7%.

©2020 Bloomberg L.P.