South Korea's trade deficit with Japan hit a record high at 25.3 billion U.S. dollars in 2006, the South Korean Ministry of Commerce, Industry and Energy said.

According to a report by the ministry on the country's merchandise trade balance, the trade deficit with Japan rose 3.9 percent from 2005, when the deficit stood at 24.3 billion U.S. dollars. In 2004, the figure was 24.4 billion U.S. dollars.

In South Korea, local manufacturing firms are heavily dependent on Japanese parts for their finished goods, which requires more imports of Japanese parts and other goods.

The South Korean currency won's strength against the yen, which has increased in value against Japanese yen by about 31 percent since 2004, also made it more difficult for Korean exporters to expand their shares in the Japanese market. The strong won encouraged South Korea to import more industrial parts and materials from Japan.

The strong won also encouraged more South Koreans to travel to Japan last year. According to the Japanese Justice Ministry, 2.37 million South Koreans visited Japan in 2006, up 360,000 form 2005, while the Japanese tourists to South Korea decreased by 110,000 to 2.32 million in the same period. Such a momentum worsened South Korea's services trade balance with Japan.

According to the ministry, South Korea's trade surplus with China declined for the first time since 2001 to about 21 billion U. S. dollars last year due to decreasing demand for Korean-made steel and petrochemical products in China.

In 2005, South Korea's trade surplus with China stood at 23.3 billion U.S. dollars.

South Korea's trade surplus with the United State last year fell from 10.7 billion U.S. dollars in 2005 to 9.6 billion U.S. dollars in 2006, which is the first time for the figure to stood below the 10 billion-U.S. dollar mark.

Source: Xinhua