Posted by Izabella Kaminska, FT Alphaville
For those wondering about the wider implications of Japan’s earthquake crisis, don’t go too far. Consider how it will impact China — the country’s top trading partner.
BNP Paribas took a closer look at the effects of ruptured trade flows between the two countries on Monday. Their findings suggest that this — if anything — could be the Achilles heel in the recovery that everyone is looking for, since — as we all know — the world economy is so dependent on Chinese growth for staving off recession.
In 2010, for example, merchandise trade between the two countries amounted to no less than $267.9bn, even though Japan accounts for only 7.7 per cent of Chinese exports (or 9 per cent if you include transport export through Hong Kong).
But the crucial issue, say the analysts, is that Japan is China’s biggest supplier of imports (some 13 per cent) dominated by autos, machinery, electronics and components critical to China’s industrial production, exports and infrastructure.
As they note:
Japanese auto companies accounted for about 22% of China sales and its components exports, such as engines and transmissions are widely used in local auto production. Japan also supplies critical components for China’s semi-conductors, displays, generators, railway equipment, chemicals, and precision machine-tools widely used in China’s electronics, machinery, railway, and power sectors industries.
As consequence of the earthquake, nuclear calamity, and sustained power outages over next few weeks or even months, we should see a profound impact on China’s export to Japan in Q2 and a slow down of exports to the global market due to disruption of integrated supply chains…
Read on: FT Alphaville » China’s Japan syndrome.
