By Gary Schaefer/AP
Japanese car exports to China have become the latest casualty of a trade war that has split Japanese industry and raised questions about Beijing’s willingness to play by global trading rules.
The deepening dispute, which began as a fight over cheap Chinese vegetables, has exposed the disparity of interests between Japan’s globally competitive export-oriented manufacturers and its inefficient — but politically powerful — farmers.
And it has put the Chinese government in the awkward position of having to defend its commitment to free trade at a time it is nearing the end of sensitive negotiations to achieve its long-standing goal of being admitted into the World Trade Organization.
The trade war made headlines again last week, when Toyota Motor Corp. and other major Japanese automakers said they were preparing to halt production of cars for export to China beginning next month.
The announcement followed Beijing’s decision last week to slap tariffs of 100 percent on imports of Japanese cars, mobile phones and air conditioners — in retaliation for duties imposed temporarily on Chinese mushrooms and other agricultural products in April.
Japanese automakers said that they were forced to stop shipments to China because orders had virtually disappeared.
“Almost all orders for vehicles scheduled to be produced in July for export to China were canceled by local buyers,” said Toyota spokeswoman Hisayo Ogawa. “We have no forecast for orders in August and beyond.”
Toyota, Japan’s largest automaker, shipped 11,046 vehicles to China last year. That was less than 1 percent of its total exports. But all Japanese automakers are counting on the long-term potential of the Chinese market, and industry executives have urged both countries to settle their differences quickly.
Tokyo and Beijing, meanwhile, have accused each other of playing unfair. China’s chief trade negotiator Long Yongtu called the Japanese tariffs “nothing but trade protectionism.” Japanese Trade Minister Takeo Hiranuma said China’s riposte was incompatible with trade agreements between the two countries as well as with WTO rules.
On June 28, Beijing again demanded that Japan abolish its new agricultural tariffs.
“China has demanded that Japan immediately lift its unjust restrictions on imports of three Chinese farm products,” China’s state-run Xinhua news agency said.
Despite the animosity, analysts say that the impact of the trade war has been relatively small. That’s in part because Japanese companies that sell in China increasingly make their products there as well.
“The monetary impact is not that large,” said Ron Bevacqua, an economist at Commerz Securities in Tokyo. “It’s the threat that this could go on which is more important.”
Analysts estimate the damage to Japan at $700 million, while the bill for China is put at around $100 million. Trade between the two countries was 9.2 trillion yen (about $74 billion) last year, according to Japan’s Finance Ministry.
Tokyo’s approval of so-called safeguards against Chinese agricultural imports rankled Beijing because it seemed likely to encourage calls for help from other Japanese sectors suffering from competition.
Farmers are among the most stalwart supporters of Japan’s long-governing Liberal Democratic Party. After aggressive lobbying by the farmers, the government agreed to the temporary duties despite grumbling by consumers.
Textile manufacturers were seen as next in line to petition for safeguards. But analysts say that the current spat will make the Japanese government extremely wary of extending further protection to beleaguered industries.
Another reason a climb-down is expected is that the timing of the spat was awkward for both governments.
Japan faces criticism from its Asian neighbors for approving a controversial history textbook, while China wants to avoid any bumps on the final stretch of its 14-year drive to join the WTO. |
