For the first time since the end of World War II, Japan has a new leading trading partner.

China dethroned the United States in 2004 largely as a result of burgeoning production by Japanese companies in China, data released Wednesday showed.

Two-way trade with China and Hong Kong amounted to 22.2 trillion yen, accounting for 20.1 percent of Japan's overall trade in 2004, according to a preliminary report of Finance Ministry trade statistics.

Trade with the United States came to 20.48 trillion yen, representing 18.6 percent of total trade, down from 20.5 percent in 2003.

Imports from the United States fell from the previous year in part because of Japan's ban on U.S. beef imports.

Exports to China and Hong Kong rose 17.2 percent year on year to 11.83 trillion yen, while imports also rose 16.7 percent to 10.37 trillion yen. Many exports to Hong Kong eventually wind up in mainland China.

Japanese manufacturers, which are aggressively relocating production to China, now send equipment, components and other material to China and ship back finished products.

Japan's exports to China include sophisticated items that cannot be sourced locally, such as machine tools and surface-treated steel sheets for automobiles.

Japan logged a trade surplus of 1.46 trillion yen with China as exports expanded 80 percent from 2001, far outpacing the increase in imports. Only a few years ago, the gaping trade deficit with China was a key source of concern for Japan.

Japan, however, lost its title as China's leading trading partner, a position it held for years.

In 2004, both the European Union and the United States traded more with China, according to Chinese statistics.

China's overall trade shot up 35.7 percent year on year to $1.15 trillion in 2004, leapfrogging Japan in the global rankings to take third after the United States and Germany.

In 2004, Japan posted a trade surplus of 12.01 trillion yen with the rest of the world, up 17.9 percent from a year earlier and marking the third consecutive yearly rise.

Exports hit a record 61.18 trillion yen, up 12.2 percent from a year earlier, while imports also registered an all-time high of 49.17 trillion yen, up 10.8 percent.

Trade with the rest of Asia sharply expanded as both exports and imports climbed to a record high.

Exports, led by steel products, chipmaking equipment and electronics parts, reached 29.64 trillion yen, up 17.1 percent from the previous year.

Imports, mainly electronics components, grew 12.6 percent last year to 22.21 trillion yen.

Japanese manufacturers are exporting high value-added products to other Asian countries and importing general-use products, officials said.(IHT/Asahi: January 27,2005)