January 24 2008.

Japan's trade surplus jumped 37% to 10,824.9 billion yen in 2007, the first year-on-year increase in three years, according to preliminary data released Thursday by the Ministry of Finance.

The upturn in the figure highlights the fact that surging demand for Japanese goods from the European Union and other parts of Asia more than offset a drop in exports to the U.S.

Exports rose 11.6% to 83,940.7 billion yen, while imports increased 8.6% to 73,115.7 billion yen, both all-time highs. Import growth is attributed mainly to soaring crude oil prices, which averaged 69 dollars per barrel, a new record and up 7.9% from a year earlier, even though the volume of crude imports declined for the second straight year.

Exports to the EU and Asia continued to gather steam, posting double-digit increases on robust demand in the regions for cars and steel, respectively. Facing a softening U.S. economy due to fallout from the subprime loan crisis, many Japanese companies appear to have shifted the focus of their business elsewhere.

Trade value -- the total of imports and exports -- with China, excluding Hong Kong, came to 27,867.6 billion yen, with exports expanding 19% and imports climbing 9%, setting record highs in both categories for the ninth consecutive year.

The upsurge in exports was led by semiconductors and other electronic parts. Exports to China, including Hong Kong, stood at 17,413.7 billion yen, surpassing those to the U.S. for the first time. Japan logged a trade deficit of 2,185.9 billion yen with China, though it succeeded in narrowing it for the second straight year.

The trade surplus with the U.S. fell 5.1% to 8,563.7 billion yen, shrinking for the first time in four years. Shipments to America edged 0.2% lower as demand for construction and mining machinery plunged more than 30%. Imports from the U.S. rose 5.4% on the back of an increase in crop imports due to surging raw materials costs worldwide.

In December, the trade surplus sank 20.9% from the same time last year, the second straight month of decline. The trade surplus with the U.S. dropped 10.4% to 764.4 billion yen from a year earlier due to a drop in exports of motorcycles and automotive parts.

Source: The Nikkei Thursday evening edition