Japan has kept aside $ 2.2 billion of its stimulus package to help manufacturers in the country move their production out of China. The move was necessitated by the global coronavirus pandemic that has disturbed the supply chains between partners of international commerce.
Tokyo has included in the stimulus package 220 billion yen ($ 2 billion) for companies willing to move production back to Japan and 23.5 billion yen for firms that wish to shift their bases to other countries.
This is but hardly an anti-China move by Japan, as the Sino-Japanese ties were all set to improve with the scheduled Tokyo visit of President of Xi Jinping in early April, which did not happen due to the global pandemic. The meeting was postponed last month.
In February, China’s exports to its north-eastern neighbour reduced to half as Wuhan of the Chinese province of Hubei emerged as the epicentre of what was then being referred to as a mere outbreak. Otherwise, China is Japan’s biggest trading partner. Japanese manufacturers, depending on Chinese exports of necessary components to them, now have no choice.
But this could just be short term for Japan, which is welcoming manufacturers of high-added value products back home. Further, Tokyo is asking the producers of other goods to get scattered across south-east Asia. Shinichi Seki, an economist at the Japan Research Institute, said, “There will be something of a shift.” He said that some Japanese producers in China were already contemplating moving out.
“Having this in the budget will definitely provide an impetus,” the Japan Research Institute economist said. Only companies that are producing for the Chinese domestic market will likely stay in China, he said, giving the example of carmakers.
Japan exports a much bigger share of parts and semi-finished goods to China than to other big industrial nations. A study by Tokyo Shoko Research Ltd in February discovered that 37% of the 2,600 plus companies that participated in the survey were moving procurement out of China amid the pandemic.
Japanese Prime Minister Shinzo Abe’s persistent efforts to better relations with China will continue, according to sources. “We are doing our best to resume economic development,” China’s foreign ministry spokesman Zhao Lijian had told reporters yesterday in Beijing. “In this process, we hope other countries will act like China and take proper measures to ensure the world economy will be impacted as little as possible and to ensure that supply chains are impacted as little as possible,” Zhao hoped.
Japan-China relations: Good trade, bad faith
The bilateral commerce apart, Japan-China relations are generally described by observers as frigid. It’s Japan that tries to break the proverbial ice — for example, by way of sending across aid material like masks and protective gear when China first admitted there was this coronavirus outbreak in Wuhan. With one consignment, Japan had sent verses from ancient Chinese poetry. China, as a nation obsessed with history, appreciated it but couldn’t do more as it still recalls with graphic details the annexation of Chinese territories by Japan during the Second World War.
Maybe the Chinese announcement that Avigan, Japan’s Fujifilm Holdings Corp-produced anti-viral, was an effective treatment for the COVID felt good to the Japanese people. But the authority in Japan itself has not approved of the drug.
People in Japan curse China for misleading it and the world about the outbreak. They also question Abe for not blocking visitors from China early when the virus first made news internationally.
Japan and China do not converge on military issues either. A dispute over the man-made islands in the East China Sea had brought the two countries to the brink of military conflict in 2012-13.
COVID did not stop ships of China from continuing their patrols around the islands that Japan rules. As early as yesterday, Japan reported that four Chinese ships had entered its territorial waters.