As aftershocks continue to hit Japan, the impact of the disaster is being felt in China. Panic about radiation caused a run on salt, leaving many Chinese families with enough to last the rest of their lives. Low levels of radioactive substances have been found in vegetables along coastal cities, causing some concern among mainland citizens.
While these incidents make the headlines, the real economic impact on China is worthy of more careful analysis.
With a total trading volume of about US$300 billion, Japan is China's third-largest trading partner behind the United States and European Union. It is China's largest source of imports and the fifth-largest market for exports. However, since the manufacturing sector does not have a big presence in the quake- and tsunami-affected northeastern area of Japan (it represents only about 8 per cent of Japan's gross domestic product), the disaster's impact on Sino-Japanese trade is relatively limited.
There is a distinct line dividing China and Japan with regard to the global manufacturing system, with Japan occupying high-end upstream sectors and exporting parts and components for assembly in China. Its largest export items to China are vehicle components, IT parts and high-end steel products.
In the wake of the disaster, Dongfeng Nissan, a mainland joint venture with Nissan, has had to ration production schedules for the next few months, as it is running low on inventories of engines, automatic transmissions and electronic control units that are manufactured in Japan. Flash memory, digital cameras and some other IT products that use components from Japan are seeing price increases due to low inventories.
