Bilateral Trade and Trade Frictions between China and Japan, 1972–2012

Abstract

A specialist on Japan’s economic relations with China offers an overview of the two countries’ bilateral trade from 1972 to the present. The bilateral trade has evolved from inter-industry trade (in which China exported primary goods and Japan exported machinery) to intra-industry trade (in which both sides mainly exported machinery to the other). Compared with incidents of acute trade frictions involving Japan and the U.S. and China and the U.S., the trade relations between Japan and China have remained relatively calm, serving as a stabilizer for the broader relationship involving the two countries. Nonetheless, the author documents a recent intensification of trade frictions, as it becomes increasingly evident that China has caught up with (and now surpassed) Japan as an economic power. The analysis shows that, up to 1993, most of the trade disputes involved Japan’s exports to China, and were raised by the Chinese side. Since 1994, most trade disputes were over Japan’s imports from China, and were raised by the Japanese side. Journal of Economic Literature, Classification Numbers: F140, F510. 3 figures, 27 references.