UPDATE 2-Japan exports jump; little China tightening impact

(For more stories on the Japanese economy, click [ID:nECONJP])

* Strong export data contrasts with govt concern about outlook

* Exports may keep growing as global economy recovers

* Toyota recall woes raise concerns
(Adds details)

By Rie Ishiguro

TOKYO, Feb 24 (BestGrowthStock) – Japanese exports rose more than
expected in January from a year earlier, allaying concerns that
China’s moves to rein in lending may choke off demand there and
put a brake on Japan’s economic recovery.

Imports also rose from a year earlier for the first time in
more than a year as the world’s second-largest economy shook off
the malaise of the global financial crisis.

The 40.9 percent annual jump in exports in January may be
encouraging for the government, which has expressed concern that
the rapid recovery in shipments to Asia may slow down.

Toyota Motor Corp’s (7203.T: ) recall of more than 8.5 million
vehicles worldwide is also a worry, a Ministry of Finance
official said after Toyota’s president apologised in written
testimony to be delivered to the U.S. Congress. [ID:nTOE61M048]

“Japan’s exports will continue to be strong as domestic
demand in Asia isn’t showing signs of falling off,” said Yoshiki
Shinke, senior economist at Dai-Ichi Life Research Institute in
Tokyo.

“The U.S. jobs market will rebound eventually, which will
also help. China’s monetary tightening isn’t aggressive enough to
slow Japan’s exports. Japan’s economy will continue to grow.”

January’s jump in exports was the third-biggest on record, as
shipments to China logged their biggest rise since August 1985
and those to the United States climbed for the first time in 29
months, finance ministry data showed. [JPEXPY=ECI]

The rise also beat economists’ median forecast for a 38.4
percent gain.

For a graphic of Japan’s exports by destination, click:

http://link.reuters.com/gup52j

Still, the positive signs likely won’t discourage the
government from pressuring the Bank of Japan to combat deflation
as Prime Minister Yukio Hatoyama’s cabinet eyes an upper house
election expected in July.

“The Japanese economy continues to be driven by exports as
domestic demand remains weak and companies are only cautiously
increasing raw material imports,” said Junko Nishioka, chief
economist at RBS Securities in Japan.

Recent oil prices, in fact, accounted for much of the upturn
in imports.

“Exports may not pull back sharply, but a slowdown is still
expected, meaning the government will continue to face the need
to stimulate the economy,” she said.

Exports to Asia, which account for more than half of Japan’s
total exports, jumped 68.1 percent from a year earlier, faster
than the 31.1 percent rise in the year to December.

Exports to China jumped 79.9 percent from a year earlier,
while those to the United States rose an annual 24.2 percent.

Gains in Japan’s exports to China were likely exaggerated as
the Lunar New Year last year was in January, whereas this year
the week-long holiday came in February, Shinke said. But he added
that excluding this factor, exports to China were still healthy.

March 10-year JGB futures (2JGBv1: ) rose 0.18 point at 139.59,
but investors were reacting more to weaker share prices and a
surge in U.S. Treasuries rather than Japan’s trade data.

Chinese authorities ordered banks to slow and in some cases
halt loan approvals in January. Beijing has also raised banks’
required reserves twice already this year to slow inflation and
prevent bubbles.

These tightening moves caused global stock markets to swoon,
but Japan’s trade data for January and a record rise in South
Korea’s exports to China the same month suggest Chinese demand
remains strong.

Japan’s trade balance came to a surplus of 85.2 billion yen
($944.4 million), against the median estimate for a 108.5 billion
yen deficit. [JPTBAL=ECI]

A rebound in exports has been a major driving force behind
Japan’s recovery since the second quarter of last year, with
shipments to Asia leading the way thanks to strong growth in the
region.

Economists forecast that growth will slow down early this
year as the boost from worldwide stimulus spending fades and as
the government cuts public works spending, though only a few
expect the economy to contract again in the near future.

Stock Today

(Editing by Hugh Lawson)

UPDATE 2-Japan exports jump; little China tightening impact