Japan has seen its worst trade deficit for October in over 30 years, renewing September’s record, with dropping exports to China due to the territorial dispute, and easing demand from debt-stricken Europe.

The government data showed that a 549 billion yen ($6.7 billion) visible trade deficit in October far exceeded the 360 billion yen shortfall expected by economists surveyed by Dow Jones Newswires and the Nikkei. This year, Japan posted trade deficits every month except February and June.

Overall, exports fell 6.5% year on year in October to 5.15 trillion yen. Total exports to China were down 11.6% year on year, compared with a 14.1% drop in September due to the growing anti-Japanese sentiment. Exports of automobiles to China were down 82% year on year, and exports of car parts were off 28.1%. The shortfall in car exports to China was the largest since October 2001, according to Japan’s Ministry of Finance.

The territorial dispute with China that sparked anti-Japanese riots in September re-emerged after the Japanese government bought a group of islands that China also claims.

Meanwhile, exports to the European Union dropped 20.1% year on year according to the data. But exports to the US were up 3.1%, supported by a rise in supplies of cars, engines and car parts. 

Weaker exports have hit Japanese corporate majors such as Sharp, Panasonic, and Nissan, which heavily rely on foreign trade. Panasonic forecast a $9.5bln loss this year, 30 times bigger than analyst estimates, while Hitachi Construction Machinery Co. and Nissan Motor Co. cut their full-year profit forecasts.

Experts say Japan’s economy would experience its fifth technical recession in 15 years as it is expecting a fall in October-December, after dropping by 3.5% in Q3, which is below analysts’ expectations.

On Tuesday the Bank of Japan announced it has no plans for further stimulus measures, but experts suppose that weak figures would force them to change their mind. "With weak trade data, and likely a weak result to the BOJ's December Tankan survey, the BOJ could very probably ease in December," said Daiwa Securities senior economist Maiko Noguchi.

• A Permanent Economic Emergency