TOKYO, Dec 12: China is on target to replace the United States this year as the largest exporter of goods to Japan, a move expected to prompt Tokyo to increase calls for a stronger yuan, economists said on Thursday.

Finance ministry data from January to October showed China’s Japan-bound exports were set to exceed those by the United States for the first time since 1961, when the ministry began including data from China.

Exports from China to Japan, excluding those from Hong Kong, totalled 6.31 trillion yen ($50.9 billion) during the first 10 months of the year, according to the ministry’s statistics.

This surpassed the 6.04 trillion yen in exports from the United States, Japan’s largest trade partner.

Exports from China rose nine per cent from the same period last year, according to the statistics, with demand for machinery powering the growth.

China exported 2.09 trillion yen’s worth of machinery to Japan, including computers, television sets and video machines, eclipsing 1.65 trillion yen in textiles, which had long been the top export item to Japan.

“Major Japanese companies have been shifting production bases to China, resulting in more exports of personal computers and other products to Japan,” said Koji Hiiragi, an economist at UFJ Institute Ltd.

“Companies make products where labour costs are low and bring them back to their homeland... this is a global trend.”

Japanese consumers used to believe China-made products were cheap but low-quality, however this view was changing gradually, Hiiragi said.

“There are lots of (cooperative) moves going on among Chinese and Japanese firms,” he said, citing as an example a production and sales alliance between consumer electronics maker Sanyo Electric Co. Ltd. of Japan and Haier Group Co. of China.

The ministry’s statistics also showed Japan’s trade deficit with China came to a cumulative 2.29 trillion yen during the first 10 months of this year.

Hiiragi said if the trend continued, it was “likely to become a political issue... and prompt Japanese lawmakers to step up calls for a higher yuan”.

Japanese politicians have already started to make similar comments.

“China might also benefit if it makes the yuan’s value higher,” Finance Minister Masajuro Shiokawa told an upper-house committee meeting this month. —AFP