Japan's 2010 net external assets drop 6 pct

The value of Japan's net external assets dropped 6 percent to 251.5 trillion yen (about 3.1 trillion U.S. dollars) at the end of 2010 from a year earlier as overseas assets were devalued by a strong yen, the Ministry of Finance said on Tuesday.

The strength of the yen severely hampered Japan's export-led economic drive, making Japanese products less competitive abroad and costing firms reliant on overseas markets dearly as the value of commercial yields and foreign investments were diminished when repatriated.

The finance ministry noted that it was the first decline in Japan's net overseas assets in two years in 2010.

However despite Japan's net external assets rising to a record 3.085 trillion U.S. dollars at the end of 2010, a rise of 7 percent in dollar terms from a year earlier, making Japan the world's largest net external asset holder for the 20th year, Japan may relinquish this position when comparable data becomes available from China, ministry officials said at a press briefing on Tuesday.

China, whose net external assets stood at 167.728 trillion yen at the end of 2009, was second to Japan at the time and if the world's second-largest economy increases its holdings by more than 50 percent for 2010 will overtake Japan and underscore a shift in economic power as China's economy continues to grow vigorously and its global influence continues to extend to organizations such as the World Bank and the International Monetary Fund.

Data from the foreign ministry showed that at the end of 2010 Japan's overseas investment assets totaled 563.526 trillion yen, a rise of 8.7 trillion yen from a year earlier, with liabilities standing at 312.031 trillion, an increase of 23.4 trillion yen from a year earlier.

Investments in foreign bonds and gains made from overseas stock holdings helped boost Japan's overseas investment assets, but the strength of the yen weighed heavily, cutting the overall value by some 41.332 trillion yen, the ministry said.

According to the finance ministry Japan's overall assets overseas were the second-highest on record, a testament to the nation's strong credit position in the face of burgeoning public debt at double the nation's GDP and the highest in the industrialized world.

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