Growth of Japan's imports from China achieved only single digit growth in 2006, registering just 8.5% (year-on-year), compared to 15.8% in last year's survey. This reflects sluggish imports of audio/visual equipment (this category has accounted for the bulk of imports in recent years), as Japanese consumers increased their preference for flat-screen TVs over the traditional cathode-ray type. The slowdown can also be attributed to sluggish demand for office equipment (up just 2.0% over last year's figure), as demand for personal computers slipped (2006 was a trough year in the hardware upgrading cycle for many large corporations). Also, coal imports were down 18.8% over last year, as China prioritized domestic consumption over exports to meet China's growing energy demands. Moreover, Japan's introduction of the "Positive List System for Agricultural Chemical Residues in Foods" (entered into force May 2006) pushed imports of vegetables down (on a quantity basis), including raw shiitake mushrooms (down 27.0%) and string beans (down 34.0%). This reflects growing concern among Japanese consumers over food safety.
The US remained Japan's largest trade partner in 2006, accounting for 17.4% of Japan's total trade. China trailed close behind, however, at 17.2%, and is expected to overtake the US in 2007. The global economy is expected to continue expanding in 2007, and with it the volume of Japan-China trade, in particular exports (to China) of key product components. Moreover, Japan is expected to post robust growth in exports of luxury automobiles and digital home appliances in 2007, and Japan's total trade with China (both imports and exports) is expected to expand on the back of increasing competitiveness of Japanese firms.
