The Japanese government is going to provide incentives to its companies to move their manufacturing units and officials out of China. They will pay them to come back to Japan or move towards Southeast Asia as a part of a new program. The program aims to reduce manufacturing dependency on China and secure supply chains.
According to the ministry of economy, trade, and industry, Fifty-Seven Japanese companies will receive a sum amounting to Rs. 57.4 billion yen or dollar 536 million as subsidies from the Japanese government. This list includes privately-held face mask maker Iris Ohyama Inc. and Sharp Corp. Apart from this, another thirty companies will also be beneficiaries to varying amounts of money for moving manufacturing to Myanmar, Thailand, Vietnam, and other southeast Asian nations.
In this round, the Nikkie newspaper reported that the government will allocate funds amounting to 70 billion yen coming from a fund of 243.5 billion yen which was earmarked in April with the aim of decreasing dependence on Chinese supply chains.
The deterioration of US-China relations and the possibilities of a much worse trade war have led to increasing discussions in the US and other countries about how to reduce dependence on China. This decision by Japan is kind of similar to a policy by Taiwan implemented in 2019. This policy was introduced with the aim to bring back investments from China. Other than this, no country has enacted a strong policy against China as of now.
Japanese government: China is Japan’s biggest trading partner and Japanese companies have invested in large amounts there. But with the outbreak of coronavirus pandemic, China has gradually lost its reputation in Japan leading to damage in the economic ties. Prime Minister Shinzo abe has been taking up several steps to work on the Japan-China relationship for years after anti-Japan riots organised in 2012.