Japan Wary of U.S.-China Trade Row Becoming Risk to Economy

Tokyo, July 23 (Jiji Press)--A Japanese government report expressed a sense of caution on Tuesday over the prolonged U.S.-China trade war and a slowdown in the Chinese economy becoming risks to the Japanese economy. The annual report highlighted the need to pay attention to the effects that future developments in the Chinese economy may have on production and exports, including of information-related equipment and machine tools, both of which are becoming increasingly dependent on China. The fiscal 2019 edition of the Annual Report on the Japanese Economy and Public Finance was submitted by economic revitalization minister Toshimitsu Motegi to a cabinet meeting on the same day. According to the report, the rate of dependence on China's final demand reflected in production value in 2015 stood at 14.4 pct for the information and communications equipment sector and 10.2 pct for electrical machinery, including semiconductors, with both doubling from the levels of 2005. The rate for chipmaking equipment and other general machinery also doubled, to 9.7 pct. Of some 2 trillion dollars in industrial goods exports by China in 2015, 34.6 billion dollars was added value created by Japan through exports of parts to the neighboring country, the report said. If the United States imposes additional tariffs on Chinese products, the move may have a negative effect on Japan through the supply chain due to an expected drop in exports from China, the report warned. It, however, noted that the Japanese economy itself is expected to continue recovering moderately, led by domestic demand. Learning lessons from a last-minute rise and subsequent fall in consumption that occurred before and after Japan raised the consumption tax rate from 5 pct to 8 pct in April 2014, the report stressed that it is important for the government to level off consumption around the time of a planned consumption tax increase from 8 pct to 10 pct in October. END