THE foreign trade of Japan has only recently succeeded in recovering from the extreme contraction which it suffered following World War II. Now considerable attention is being given everywhere to the question of its future development. There are misgivings in certain quarters as to the quality of Japanese exported goods, and there also may be some concern that Japan will revert to dumping practices, or that she may be creating undue complications by exercising export and import controls not called for by the realities of current commercial transactions. It is my hope that an understanding of the actual economic conditions which form the basis of Japanese trade, and of the trade policies now being followed by the Japanese Government, will show that such misgivings are groundless.
In terms of value, Japan's trade has shown a remarkable recovery since the end of the war. The total value of exports and imports in 1950 was more than four times higher than in 1946, reaching $820,000,000 for exports and $970,000,000 for imports (including United States aid to Japan). This rise is still continuing at a steady rate. The transition from a buyer's market to a seller's market, brought about by the Korean war, has given further impetus to the rise in exports ever since the latter half of 1950. Some difficulties have been experienced in purchasing critical raw materials, however, which indicates that further expansion in the volume of trade is imperative before Japan can attain economic self-sufficiency.
The problem of how to expand the volume of trade is accompanied by a no less important problem of how to attain equilibrium in the balance of payments. Before the war, Japan's adverse balance of payments in visible trade was offset by a favorable balance in invisible trade. For example, in 1933, the receipts in invisibles, of which services for shipping and insurance comprised 70 percent, came to about 50 percent of the receipts from visibles. After the war, the almost complete disappearance of a merchant fleet and the restrictions upon overseas activities made
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