Home > Statistics > Japan Statistical Yearbook > Chapter 15 Foreign Trade, Balance of Payments and International Cooperation > Explanations
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This chapter covers exports and imports, foreign investment in Japan and Japan's investment overseas, the balance of payments, and international cooperation.
The section of exports and imports contains statistics on quantity and value of exports and imports; and indices of foreign trade. Data are derived from the "The Summary Report on Trade of Japan" by the Japan Tariff Association.
The section of foreign investment in Japan and Japan's investment overseas contains statistics on the introduction of foreign capital and Japan's investment overseas. The source of data is statistics compiled by the Bank of Japan and posted on the both websites of the Ministry of Finance and of the Bank of Japan.
The section of balance of payments contains statistics on foreign exchange rates, balance of payments, gold and foreign exchange reserves, and the international investment position of Japan. Data are obtained from "Bank of Japan Statistics", "Financial and Economic Statistics Monthly", "Balance of Payments Quarterly" and "Balance of Payments" by the Bank of Japan, and "Balance of Payments and International Invest Position", "International Reserves / Foreign Currency Liquidity" by the Ministry of Finance.
The section of international cooperation contains statistics on economic cooperation and international cultural exchange. Data are supplied by "White Paper on Official Development Assistance (ODA)" by the Ministry of Foreign Affairs and statistics released at the website of the said Foundation. For students received from overseas, see "22 Education" too.
Foreign Trade Statistics originated from the "Exports and Imports at Every Open Ports", first compiled in 1869. Its compilation was transferred to the Ministry of Finance in 1871 and has stayed there up to date. The statistics, also called customs clearance statistics, are tabulated monthly based on export declarations, re-export declarations, import declarations, applications for approval of entrance of foreign goods into bonded warehouse or bonded manufacturing warehouse, etc. submitted by exporters and importers when export or import goods pass through the customs houses. In the compilation of the statistics, the following goods are treated as exclusion items: small-sum goods, value of which is not more than 200,000 yen, trade samples, goods smuggled, gifts and donations, ship's and aircraft's stores, personal effects of travellers, goods for entertainment, goods relating to the United States Forces stationed in Japan and to the UN forces and containers for repeated-use, etc.
These statistics are counted, for exports, as of the day when the ship or aircraft carrying goods departed from the port, and, for imports, as of the day when the import was licensed or approved. Export prices are based on f.o.b., and import prices, on c.i.f. Names of countries refer to countries (places) of destination for exports, and countries (places) of origin of imported goods. If these are unknown, loading countries (places) of imported goods are shown. Conversion into Japanese yen is based on the exchange rates published weekly by the superintendent of customs (weekly average of effective market rates two weeks before the week to which the declaration day of export or import belongs).
The indices are derived from the Foreign Trade Statistics mentioned above. They consist of value indices, unit value indices, quantum indices and indices of terms of trade based on unit value indices. All of them are compiled every month by the Ministry of Finance. The present indices adopt 2005 as their base period. Value indices are computed by simple average, taking the total value of exports or imports in the base period as 100. Unit value indices are computed by the Fisher-type formula, and the quantum indices are obtained by dividing the value indices by the unit value indices. As regards the export and import price indices, see "17 Prices".
Basic laws in Japan concerning foreign exchange control consisted of the Foreign Exchange and Foreign Trade Act ("Foreign Exchange Act") and the Foreign Investment Act. The above two laws prohibited, in principle, overseas transactions, but the transactions were allowed or approved pursuant to the related ordinances, etc. by which the prohibition was lifted. With the development of Japanese economy and of internationalization, the foreign exchange control and related regulations underwent a gradual relaxation, but the legislation system of the "prohibition in principle" remained intact. However, when the Foreign Investment Act was abolished and its contents were absorbed into the Foreign Exchange Act in 1980, the principle for overseas transactions was changed to "free in principle". And, by the 1998 revision of the act, the regulation of prior permission / notification was abolished in general, and the conditions of overseas transaction were improved in order to promote free and speedy transactions.
The introduction of foreign capital refers to foreign investment in Japan, when viewed from foreign investors who supply capital, whereas overseas investment refers to investments in foreign countries made by Japanese residents. Investments are broadly classified into direct investments and portfolio investment, according to their type. Direct investment refers to the acquisition of equities for the purpose of management participation, the lending of capital or the establishment of subsidiaries or branch offices. On the other hand, portfolio investments refer to investment in securities made through securities markets for earning capital gains or investment returns. Data on the introduction of foreign capital and overseas investment are published by the Ministry of Finance. The release of "Foreign Direct Investment" and "Securities Investment at Home and Abroad" (both by the Ministry of Finance) was discontinued by the end of 2004, and beginning January 2005, the data are included in the Balance of Payment.
This position relates to the balance of external assets and liabilities of Japan at a given time, and is compiled annually as of December 31 by the Bank of Japan, to whom the Minister of Finance delegated authority. In contrast to the balance of international payments which shows external transactions during a given period from the side of flow, the balance of external assets and liabilities clarifies them from the side of stock as the result of the flow. It is calculated by accumulating the balance of payments, with necessary adjustments made.
Foreign exchange rates refer to exchange rates between the currency of a country and the currencies of the rest of the world. In Japan, the basic foreign exchange rates are determined by the Minister of Finance. Since the introduction of the floating rate system in 1973, difference between the basic rate and the effective market rate became significant. And so, in December 1977, it was decided that the basic rates are to be revised twice a year based on the half-year average of effective market rates. From January 2010 on, the basic rates are published every month based on the monthly average of effective market rates two months before. In contrast, an arbitrated rate of currency A to currency B is calculated from the rate of A to C and the rate of B to C, where C is an intermediary currency.
Inter-bank rates or market rates refer to rates traded between authorized foreign exchange banks. On the other hand, rates for customers refer to those applied to transactions between banks and customers, consisting of selling rates, i.e., the bank's selling rates to customers, and buying rates, i.e., the bank's buying rates from customers.
Balance of payments is a statistical statement designed to provide a systematic report of all the international economic transactions based on the principles of book-keeping by double entry. It is compiled by the Bank of Japan, with the authority delegate by the Minister of Finance, and with the method of calculation and the form of presentation consistent to the Manual of the International Monetary Fund (IMF) concerning the balance of payments statistics. Economic transactions refer to all the transactions of goods and services between residents and non-residents of Japan as well as the increase or decrease of Japanese assets and liabilities in foreign countries. It does not matter whether it is onerous or free of charge, nor if it is settled by yen or a foreign currency. The Balance of Payments Statistics of Japan based on the IMF manual were started in 1966, replacing the former foreign exchange statistics. But they became inadequate to show the international transactions properly as a result of significant evolution of global economic conditions. Following the issuance of the fifth edition of the Balance of Payment Manual of the International Monetary Fund in 1993, the Balance of Payment Statistics of Japan were considerably revised for January 1996 and on, for the first time in 30 years. The main items of the revised Balance of Payments Statistics are the balance of current account (including the account of trade of goods and services, the income account and the current transfer account), and the capital and financial account.
Trade balance This item covers both exports and imports of movable goods with change of ownership between residents and nonresidents. Goods are measured at market value on the f.o.b. basis. It includes transactions of general merchandise, goods for processing, repairs on goods, procured goods in ports by carriers, and nonmonetary gold.
Service account This item includes "transportation", "travel" and "other service".
Income account This item covers transactions between residents and non-residents concerning the employee compensation and the investment income. The employee compensation includes wages, salaries and other benefits earned by non-residents who work in Japan and by residents who work abroad, both on a temporary basis. The investment income covers receipts and payments of income associated, respectively, with residents' external financial assets and nonresidents' liabilities.
Current transfer account The "transfer" is an offset item in the double account system to counterbalance the compensation-free transactions of real assets (goods and services) and monetary assets, that is, a one-way transfer of economic entity. The "transfer" is divided into the "current transfer" which is recorded as a payment of the receiving country and the "capital transfer" which contribute to the capital formation. The former is recorded in the current account and the latter is recorded in the capital and financial account.
The current transfer covers all the transfers, other than capital transfers, including the transfer of money and services between individuals or governments as well as the contributions to international organizations.
This account consists of the financial account and the capital account. In accordance with the principles of the Balance of Payment Statistics, a change of appraisement values that do not reflect actual transactions, such as those due to the variations of exchange rate and the revised valuation of assets, are not included here.
Financial account The financial account is divided into direct investment account, portfolio investment account, financial derivatives and other investment account. The direct investment covers all transactions (investments) between direct investors and direct investment enterprises. These include acquisition of equity capital, reinvested earnings, and lending / borrowing of funds.
The portfolio investment covers transactions in equity and debt securities (excluding those included in "direct investment" and "changes in reserve assets").
The financial derivatives cover realized profit or loss on options, futures and forward agreements, warrants, and currency swaps.
Capital account The capital account includes capital transfers and acquisitions / disposals of non-produced, nonfinancial assets. The capital transfer cover <1> transfer of funds pertaining to the acquisition / disposal of fixed assets, <2> transfer of ownership of fixed assets, and, <4> forgiveness of debt by creditors. Source data are based on reports on payments / receipts and reports submitted by government agencies. The acquisition / disposal of non-produced, nonfinancial assets covers transactions involving intangible, nonfinancial assets (patents, copyrights, trademarks, transferable contracts) to be used for production of goods and services, and the purchase and sale of land by embassies or international organizations.
These reserves refer to foreign currency assets (external assets with liquidity) held by the monetary authorities of a country as reserves for external payment. In Japan, the statistics are published monthly by the Ministry of Finance. Foreign currency assets are composed of gold, foreign currencies, reserve position in IMF and special drawing rights (SDR). It should be noted that the increase or decrease in the gold and foreign exchange reserves accounts for a major part of the public sector in the balance of monetary movements with regard to the balance of payments.
Data are based on "White Paper on Official Development Assistance (ODA)" by the Ministry of Foreign Affairs. Exchange of information and views and adjustment of policies are made by the Development Assistance Committee (DAC) consisting of 23 member countries of the Organisation for Economic Co-operation and Development (OECD) and European Union (EU) to promote economic assistance to be extended to developing countries. The flows of funds are shown classified into official development assistance, other official flows and private flows.
This assistanceODA refers to the assistance which is <1> rendered by the government or government-affiliated agencies, <2> given for the purpose of promoting economic and social development and improving welfare of developing countries, and <3> conveys a grant element (G. E. : indicator of "softness" of assistance conditions) of at least 25 percent. The ODA is broadly divided into bilateral ODA and multilateral ODA. Then, the bilateral ODA is further divided into bilateral grants and ODA Loans, and the bilateral grants comprise grant aid and technical cooperation. Multilateral ODA refers to the indirect assistance to developing countries in the form of contributions and subscriptions to multilateral institutions.
Meant by this is official assistance other than official development assistance, which aims at promoting exports. Included are securities transactions issued on the domestic market by the International Bank for Reconstruction and Development (World Bank), etc.
Private flows refer to private transactions, and mainly consist of private export credits and direct investments. Private export credits relate to those allowing deferred payment for purchase which Japanese exporters make to importers of developing countries.
The Japan Foundation was established in 1972 as a special public corporation under the jurisdiction of the Ministry of Foreign Affairs and became an independent administrative institution in 2003 in order to promote foreign countries' understanding of Japan and to cultivate international mutual appreciation. The Foundation conducts its own cultural exchange projects, and, at the same time, is allowed to render monetary assistance in a certain area to other bodies and institutions.
