Japan’s China Row May Spur GDP Fall This Quarter, JPMorgan Says

[gpit]

Japan’s China Row May Spur GDP Fall This Quarter, JPMorgan Says

By Andy Sharp - Oct 7, 2012 6:00 AM ET


Japan’s territorial spat with China may cause the Japanese economy to contract this quarter and hasten a current account slide as exports decline and Chinese tourism to Japan drops off, according to a JPMorgan report.

The dispute will knock 0.8 percentage point off Japan’s gross domestic product in the October-December period, JPMorgan Securities Japan Co. economists Masaaki Kanno and Masamichi Adachi wrote in an e-mailed note yesterday. They now estimate fourth-quarter GDP will contract 0.8 percent from the previous quarter, compared with a previous estimate of no growth.

The squabble over islands claimed by Asia’s two largest economies imperils a $340 billion trade relationship ahead of China’s power transition and a possible general election in Japan this year. Carmakers are hardest hit, with Mazda Motor Corp. (7261) deliveries in China last month falling 35 percent.

“As its global role has increased, China has become much more important in Japan’s international trade,” Kanno and Adachi wrote. “While there remains a lot of uncertainty ahead and the risk of the dispute escalating cannot be ruled out, we assume that it will diminish in two quarters under the new governments in both countries.”

JPMorgan joins Morgan Stanley and BNP Paribas AS in predicting Japan’s economy will shrink for two consecutive quarters through the end of December.

The worst diplomatic crisis between the two countries since 2005 may also accelerate a deterioration in Japan’s current account surplus, the JPMorgan economists said, predicting the excess could disappear before the end of 2014. This compares with its estimate in January that the nation would begin posting a deficit in the first quarter of 2015.

Exports Fall

Japan’s exports fell 5.8 percent in August from a year earlier, the third straight monthly decline, with shipments to China, its largest trading partner, dropping 9.9 percent and those to the European Union slumping 22.9 percent.

Mitsubishi Motors Corp. (7211) on Oct. 5 reported Chinese sales slumped 63 percent in September from a year earlier, while the Yomiuri newspaper said on the same day, without citing where it received its information, that Toyota Motor Corp.’s deliveries in China fell 50 percent from August.

The dispute has caused cancellations of 40,000 seats on All Nippon Airways (9202) flights between the two countries, the airline said last month. JPMorgan said it is assuming a 70 percent decline in the number of Chinese tourists visiting Japan this quarter, compared with the average first-quarter figures in 2011 and 2012, lowering receipts by 67 billion yen ($852 million), or 38 percent of the expected decline in exports.

China’s economy may also be adversely affected, as the unrest may prompt Japanese companies to accelerate the diversification of investment and trade in Asia away from the nation, the JPMorgan economists said. More than 5,000 affiliates of Japanese companies operated on the mainland as of the end of March 2011, employing 1.6 million people, according to a Japanese trade ministry report.

To contact the reporter on this story: Andy Sharp in Tokyo at asharp5@bloomberg.net

To contact the editor responsible for this story: Jim McDonald at jmcdonald8@bloomberg.net

Japan

 

[ahfatzia]

Should there be any wonder. Don't forget there are tens of millions oversea Chinese drive Toyotas or Hondas as well, one can imagine what it'll do the Japanese car makers if some of them 'decide' they like to buy some other brands.



(Reuters) - Toyota Motor Corp's China sales fell about 40 percent in September from the year before, while those of rivals such as Hyundai and BMW jumped, underscoring how badly Japanese brands have been hit by a territorial row between the two countries.

A prolonged sales hit of this scale could threaten profit forecasts at Toyota, Nissan Motor Co and others as China, the world's biggest car market, makes up a bigger portion of their global sales.

The dramatic fall-off in demand for Japanese vehicles has been an unexpected boon for other foreign brands, with South Korea's Hyundai Motor Co saying on Friday its China sales climbed 15 percent to 84,188 vehicles last month.

As demand evaporates, Toyota, Nissan, Honda Motor Co and others have been forced to cut back production in recent weeks in a slowing, but still promising Chinese market.

Japanese car makers have been the most visible losers, although there have been signs of the tensions affecting other sectors, with All Nippon Airways Co Ltd (ANA) saying late last month it had seen a wave of cancellations on Japan-China routes.

Semiconductor maker Rohm Co Ltd forecast a decline in orders for the second half of the fiscal year ending March, citing significant weakness from automakers.

"The second half is not looking very good, it all depends on how much impact the events in China will have," said Hidemi Takasu, managing director of R&D at Rohm, on the sidelines of the CEATEC technology trade show near Tokyo.

The exodus from Japanese cars has in turn helped other foreign brands. Among premium brands, Volkswagen's Audi boosted sales by 20 percent in September, BMW by 55 percent and Daimler's Mercedes-Benz by 10 percent.

Toyota China sales tumble as islands row hits Japan Inc | Reuters

 

[Viet]

I think the Sino-Japan relation is reaching the freeze point. And there is no sign that thing is going to change soon. For Japan, the pain is increasing. If they need consolation, they are always welcome in Vietnam.

 

[Jade]

What about the effect on Chinese economy?

 

[Srinivas]

Chinese economy is also taking a hit, again these people only take CCP sponsored stats.

 

[rcrmj]

What about the effect on Chinese economy?

it has effects```but not as serious as Japan having now```for example, Japan was always top 3 tourists destinations for Chinese tourists```however during the past 'golden week' 8 days national Holidays```Japan wasnt even at top 20 destinations, and lost hunderds of millions from Chinese costumers```that was just a week lose from one industry for Japan```

 

[Jade]

it has effects```but not as serious as Japan having now```for example, Japan was always top 3 tourists destinations for Chinese tourists```however during the past 'golden week' 8 days national Holidays```Japan wasnt even at top 20 destinations, and lost hunderds of millions from Chinese costumers```that was just a week lose from one industry for Japan```

Good for India, now Japanese investment will come to India. So, in the long run China is the sufferer. After all, China needs capital inflow, while Japan has capital surplus.

The below post explains the extent of loss China is going to bear

http://www.defence.pk/forums/china-far-east/211924-china-burning.html

 

[ChinaToday]

Good for India, now Japanese investment will come to India. So, in the long run China is the sufferer. After all, China needs capital inflow, while Japan has capital surplus.

The below post explains the extent of loss China is going to bear

http://www.defence.pk/forums/china-far-east/211924-china-burning.html

Wishful thinking you seem to forget japs have more respect for vietnam indonesia and philipines than india if anything they will invest in those countries rather than india

 

[Kyusuibu Honbu]

Wishful thinking you seem to forget japs have more respect for vietnam indonesia and philipines than india if anything they will invest in those countries rather than india

Speaking on behalf of Japan now

India tops Japan's FDI destination survey

 

[UKBengali]

This goes to show just how much power China has over other Asian countries now.

Perfect Chinese plan to dominate Asia without any need for military force.

 

[Viet]

This goes to show just how much power China has over other Asian countries now.
Perfect Chinese plan to dominate Asia without any need for military force.

Congratulation! you receive from me a certificate as a new cheerleader!

 

[Jade]

Wishful thinking you seem to forget japs have more respect for vietnam indonesia and philipines than india if anything they will invest in those countries rather than india

Investments have no respect, they are made based on returns, risks and opportunities.

 

[Jade]

first``Indians are dead poor, so your Indian tourists wont make their tourism industry any happier``second``India's society is a factor driven primitive one, so even Japan is willing to divert their investment to India, but your joke industrial capability wont bring any profits or skilled labouir that Japenese enterprises are looking for

what makes you think that China needs capital inflow more than anything? we are going through transaction stage from efficiency driven economy to innovation driven economy so capital investment on high tech sector is the key along with unleashing the real middle class purchasing power (not the fake Indian self-claimed 'middle-class')


yeah sure``an Indian knows better CCP than Chinese themselves```lol, a cow has much better logic than you

sure``at least they dont boast, lying and lazy as Indians``so they can get the things done

With only $5000 per capita, China is not rich either. And you are not an innovative economy, but low end manufacturing hub that supplies toys to the world.

Believe me, CPC may want you to believe you that you are rich, but in reality you are poorer than Maldives. So you require capital inflow to enhance your living standards

 

[gpit]

I think the Sino-Japan relation is reaching the freeze point. And there is no sign that thing is going to change soon. For Japan, the pain is increasing. If they need consolation, they are always welcome in Vietnam.

If you want to attract foreign capital, first you have to educate your people. You need a lot educated labors. Your education system is miserable, and you wiped out your history by abolishing Chinese. Do you know why Sino-Japan business is so hot? One reason is the proximate of their languages, history and cultures. This is one of many reasons why the Indians tried very hard in an attempt to break into Japanese market but failed, the Chinese succeed. Your abandonment of Chinese chops off your vital tool to attract the Japanese.

Second, the most important thing in doing business is to be honesty. Honest is the key to establish a long lasting business relationship. Your Vietnamese leaders are trust-worthless. LOL! If they can even deny what they said in state level, they can easily negate any business contracts.

Given your bad track record in being honesty, such as denying PM Van's formal diplomatic notes, the Japanese must be full of hesitations, if not completely scared to sh!t.

 

[ahfatzia]

While the Japanese companies are on a downward spiral in China, company sales from elsewhere are picking up as:


General Motors sees new China sales record in Sept.

SHANGHAI -- General Motors' China sales hit a record in September, the U.S. auto giant said Monday, amid a territorial row between Beijing and Tokyo that has reportedly hit the business of Japanese competitors.

GM's sales in the world's biggest car market reached 244,266 vehicles in September, rising 1.7 percent from the same month last year and jumping 10.5 percent from August, it said in a statement.

For the first nine months of the year, the company and its ventures sold nearly 2.1 million vehicles in China, up 10 percent from a year earlier.

Analysts said GM likely benefited from the territorial row between Japan and China which saw tens of thousands of Chinese protest in cities across the country, some urging a boycott of Japanese products.

“The Sino-Japan dispute ... has affected Chinese consumers' purchasing choices to some extent,” Haitong Securities analyst Zhang Qi told AFP.

“This has caused a negative impact for certain Japanese products, but in the meantime driven demand for other foreign car brands including those from the United States and Germany.”

Sales of Toyota cars in China plunged by 50 percent in September from August amid the anti-Japan backlash over disputed islands, Japan's Yomiuri newspaper said last week.

A festering row over the Senkaku islands in the East China Sea — controlled by Japan but claimed by China, which knows them as the Diaoyu Islands — has affected Japanese automakers operating in the country.

General Motors sees new China sales record in Sept. - The China Post