Since the 1990s, the Sino-Japanese trade balance has been in a dynamic change, but overall the Chinese side of the deficit situation. According to the statistics of the Chinese side, during the 17 years from 1990 to 2006, the Chinese side had a surplus of 9.91 billion U.S. dollars in 7 years and a deficit of 97.32 billion U.S. dollars in 10 years. Starting from 2002, China's trade deficit showed a trend of expanding year by year. 2006 China's trade deficit with Japan reached US$24.08 billion, and in 2007 it reached US$31.95 billion. The reason for the gradual imbalance between China and Japan's trade balance is that, on the one hand, with the development of the economy, China's imports of advanced equipment, raw materials and spare parts necessary for industrial production from Japan have increased rapidly; on the other hand, some Japanese enterprises in China have changed their production from being sold back to Japan to being exported to other countries, which has led to a decrease in the number of China's exports to Japan and an increase in the trade deficit.
China-Japan trade has its own advantages, but China is generally in a weak position. According to the Sino-Japanese intra-industry trade index measurement results show that since the 1990s, the Sino-Japanese intra-industry trade index in the fields of electromechanical products, optics, medical equipment, chemical products, etc. are more inclined to 1. This shows that in these industries, especially the electromechanical industry, the Sino-Japanese intra-industry trade is more and more active, and Sino-Japanese trade is moving towards the direction of horizontal, which is the result of the internationalization of production, and it is the result of the internationalization of capital, labor, technology and goods between China and Japan. This is the result of the internationalization of production and the acceleration of the flow of capital, labor, technology and goods between China and Japan. Of course, this horizontal division of labor still has obvious gradient characteristics: China's comparative advantage products are mainly labor-intensive and some capital-intensive products, while Japan's comparative advantage lies in technology-intensive products; China has a strong comparative advantage in the primary processing of products, while Japan's advantage lies in the deep processing of products and the depth of the development of science and technology; from the point of view of the position of the industrial chain, China is only involved in the assembly and processing of products, while Japan's advantage lies in the deep processing of products and the deep development of science and technology. In terms of its position in the industrial chain, China is only involved in the assembly and processing of products, while the design and development of products are basically still carried out by the parent company in Japan. This division of labor is reflected in the commodity structure: in the same category of commodities, Japan mainly exports to China various types of engines and parts, processing machine tools, digital program-controlled switches, integrated circuits and other high technology content of the core components of the products, while China mainly exports to Japan refrigerators, fans and other household appliances, as well as calculators, computer monitors, telephones and other processed and assembled finished products. Therefore, although the trade structure of China and Japan has improved greatly, each with comparative advantages, but China is still in a weaker position, the two sides in the industrial chain in the position has not changed fundamentally.
Japan is one of the main sources of foreign investment and technology introduction in China, and is also the country that provides the most government loans and free aid to China. Japanese enterprises have more abundant capital, and has rich experience in cross-border investment and participation in international competition, ability, these are precisely the most lack of Chinese enterprises and the most in need. Chinese enterprises have abundant labor force with high level of production skills, which can greatly reduce the production cost of enterprises. Therefore, through industrial cooperation, realizing complementary advantages and resource ****sharing is an effective way to improve the international competitiveness of enterprises of the two countries. In a period of time in the future, Japanese enterprises will still take China as the main object of overseas investment, and the field of investment will be expanded continuously. It is expected that from 2007 to 2010, Japanese direct investment in China will remain at an annual average of about 6.5 billion U.S. dollars.
So, the appreciation of the yuan relative to the yen, China's trade deficit with Japan will continue to increase, the balance of trade is becoming increasingly imbalanced, but on the other hand, there is also the introduction of Japan's advanced products and technology in China.