For the first time since World War II, the United States is no longer Japan's biggest trading partner. Preliminary figures released by the Japanese finance ministry show that, for 2004, China accounted for about 20 percent of Japan's trade last year, compared with slightly more than 18.5 percent with the United States. Peter Morgan, the chief economist for the international bank HSBC, sees the numbers as a win-win situation for all three countries. That is because Japan also exports goods to China, which Japanese-owned factories use to make products sold in the United States. "There's a very high correlation between Chinese imports and Chinese exports and also a very high correlation between Japanese exports to China and Chinese exports overall and, particularly, Chinese exports to the U.S.," said Mr. Morgan. "This is not a kind of simple zero-sum game." According to the finance ministry, Japan's worldwide trade surplus grew for the third year in a row last year by just under 18 percent. Exports increased by more than 12 percent while imports grew nearly 11 percent. Japan made more cars, trucks and buses last year compared with 2003. The Japan Automobile Manufacturers Association reports that total production grew 2.2 percent. Domestic sales, however, were up only four-tenths of a percent. Exports grew by more than four percent, with increased sales in Europe and Central and South America. Shipments to Asia and North America dropped. Strong demand for new television models, as well as DVD recorders and car navigation systems helped spur a global surge in Japanese audio-visual equipment sales in 2004. An industry group reports shipments jumped more than 13 percent on strong demand for flat-screen televisions. Despite the boom, one industry giant is asking workers in its consumer electronics division to take early retirement. Matsushita Electric says it needs to cut about one thousand jobs. Matsushita, best known for its Panasonic brand, says it expects to show increased sales and profit for the current fiscal year, which ends in March, but it must restructure to survive tough competition in the industry.