Angela Merkel, Germany's Chancellor, left, speaks as Shinzo Abe, Japan's prime minister, looks on during a news conference in Tokyo, Japan, on Monday, March 9, 2015.
Photographer: Kiyoshi Ota
As if Japan didn't have enough economic problems to overcome, officials in Tokyo have identified another worrying trend: lagging export growth to China.
Rapid gains in German shipments to China have caught their attention, with exports from the European powerhouse doubling in value since 2008 and reaching 74.5 billion euros ($82.5 billion) last year.
Japanese sales to China, the nation's biggest trading partner, crept up by just 3.3 percent over the same period. Japan still holds a solid lead though, with to 13.4 trillion yen ($109 billion) worth of shipments to China in 2014.
To be sure, part of the weakness in these Japanese export figures is because companies from Toyota Motor Corp to air-conditioner maker Daikin Industries Ltd. have beenbuilding factories in growing markets like China. While the profits from these plants are brought home, it means less industrial production in Japan.
That's not to say that German companies aren't operating in China too. Heavyweights from Volkswagen AG to Siemens AG also have plants there.
Still, total exports account for about 15 percent of Japan's gross domestic product, compared with around 40 percent for Germany, according to a report by the statistics bureau in Tokyo.
All this has implications for job creation in the manufacturing sector.
Germany made changes years ago that Japan is only getting to now, such as reducing corporate taxes and increasing flexibility in the labor market, according to Hiromi Oki, chief economist at the Institute for International Trade and Investment in Tokyo.
"Germany pursued structural reforms aggressively rather than being defensive,'' said Oki.
It seems to be paying off. German companies are outperforming Japanese rivals in boosting the volume of exports to China and the prices they charge, on everything from textiles to precision tools, according to a study by Japan's economy and trade ministry.
Currency markets have also had an impact, but there is no clear winner between Japan and Germany on this score. The euro's 25 percent decline since 2008 has no doubt helped Germany exporters, especially as the yen appreciated through 2011 in the wake of the global financial crisis. But the Japanese currency has been on much more rapid downward course since then, having slumped more than 30 percent since Prime Minister Shinzo Abe came to power in December 2012.
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