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Japan to Pay Manufacturing Companies to Leave China

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Japan is to set aside public funds to encourage manufacturing companies in China to relocate anywhere that isn’t China.

Approximately $2.2Bn set aside to sweeten the deal as warmer relations with China before the global pandemic soured in recent weeks, as several countries take drastic measures to stifle the spread of the deadly Covid-19.

The pandemic identified weaknesses in Japan’s supply chain, prompting Japan to earmark 220 billion yen or roughly $2Bn to help companies relocate back home, in Japan.

Around another $200m–or 23.5 billion yen–has been safeguarded for companies to relocate in a third country, to bypass manufacturing in China–due to their reputation taking a major hit over their response in approaching the coronavirus outbreak.

According to South China Morning Post, Xi Jingping’s groundbreaking first-in-a-decade visit for a summit in Japan over more amicable relations was postponed following the outbreak.

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Prior to the coronavirus pandemic, China was Japan’s biggest trading partner. However, in February, imports from China dropped by more than a half as production ground to a screeching halt.

Japanese manufacturers were left stranded as essential parts failed to reach important factories.

Japan will take a more local approach to future economic downturns, easing their reliance on Chinese imports, and enticing manufacturers to return–something which Western countries have openly considered as many businesses were forced to close because of the  recent crisis.

The Washington Examiner reported on Chinese Foreign Ministry’s spokesman Zhao Lijian’s words at a Wednesday briefing in Beijing: “We are doing our best to resume economic development.”

He added: “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.”

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