Japan's trade with China reached record levels in the first six months of this year, official figures released in Tokyo showed.

The data comes six months after China joined the World Trade Organisation (WTO), and began dismantling restrictions on foreign trade and investment, and stepped up efforts to seek investment by foreign firms.

The 3.4% growth in trade, to a record $45.1bn, was driven by exports, as Chinese consumers snapped up Japanese-built cars, the data, from the Japan External Trade Organisation (Jetro), said.

Exports to China were 20.4% higher in yen terms, and 20.0% by volume, in the January to June period than a year before, Jetro said.

While imports from China slid by 0.8%, in dollar terms, Jetro predicted overall trade levels would continue to soar.

"For the entire year, it is highly probable that total Sino-Japanese trade will reach $90bn (�59bn) for the first time," it added.

Production shift

Cars exports were projected to carry on rising during the second half of 2002 as China complied with international trade agreements to slash its tariffs on foreign cars.

China has pledged to cut customs duty on cars from 80-100% to 25% by 2006.

Although the import data presented a mixed picture, levels of machinery and equipment trade purchased from China were expected to remain buoyant.

"For the 2002 calendar year, machinery and equipment is expected to be the top annual import category for the first time," Jetro said.

The rise was attributed largely to the trend among Japanese manufacturers to shift production to China to exploit lower labour costs.

Modernisation

The changing nature of imports, with tech equipment such as photocopiers stealing ground from traditional items such as textiles, was seen as symbolic of China's modernisation.

Sales of office appliances such as computer peripherals and copiers rose by 59.5%, and sales of communications equipment such as mobile phones almost doubled.

It was the third year in row that trade between the two countries had set a new record in the January to June period.

China is Japan's second biggest trading partner, after the United States.