China's trade deficit with Japan continues its downward trend as Japan's trade profit with China surges, according to the latest report on Sino-Japan trade published by the Ministry of Commerce.

China's economic ties with Japan have long been in favor of China. However, the rapid development of China's economy is leading to greater gains for Japan.

Two-way trade was worth 45.97 billion U.S. dollars in the first three months of 2006, a rise of 11.6 percent year on year. But the growth rate was below the 12 percent increase in the same period last year, according to the report.

During the January-March period, China's exports to Japan grew 9.2 percent, down 13.6 percent year on year.

Sino-Japan trade accounted for 13 percent of Japan's total trade in 2005, a drop of 11 percent compared with 24 percent in 1994.

Jin Bosong, an expert on Sino-Japan trade issues who was involved in the report, said that sharp downslide in the growth rate of Sino-Japan trade highlights China's growing importance as a huge market for Japan.

China overtook the US to become Japan's biggest trading partner in 2004, accelerating Japan's economic rebound, said Jin.

The report estimates that trade with China has led to an increase of about one percent in Japan's economic rebound. Analysis by Japanese economic researchers similarly showed that Japan's investment and processing trade in China contributes 0.8 percent to Japan's economic boost.

China's huge labor market will also ease Japan' s shortfall in its workforce later this decade, Jin added.