Japan’s economic position is getting help from neighboring China, which is driving up demand, and affecting related exchange traded funds (ETFs) and shares. 

The demand from China’s dynamic growth has helped Japan pull out of the deepest-post war slump in history, according to a government official. Large manufacturers such as Honda Motor Corp. and Komatsu Ltd. have benefited from the $545 billion stimulus plan, which took effect last quarter, report Toru Fujioka and Tatsuo Ito for Bloomberg.

Honda, Japan’s second-largest automaker, will build about 90,000 vehicles more than initially planned in response to higher-than-expected sales from emerging markets, including China.

Exports to China, which overtook the United States to become Japan’s largest overseas market this year, are offsetting weak domestic spending by consumers and companies in Japan. International Monetary Fund data imply that China is set to overtake Japan as the globe’s second-largest economy as soon as next year.

Meanwhile, China’s jump has hit a stumbling block as its economy faces down new worries. The country has had some trouble increasing domestic consumption, in particular, says Reuters.

  • iShares MSCI Japan Index (EWJ): up 7.1% year-to-date

For more stories about Japan, visit our Japan category.

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