Japan has earmarked ¥243.5 billion of its record economic support package to help manufacturers shift production out of China as the coronavirus pandemic disrupts supply chains between the major trading partners.
The extra budget, compiled to offset the devastating effects of the pandemic, includes ¥220 billion for companies shifting production back to Japan and ¥23.5 billion for those seeking to move production to other countries, according to details posted online.
The move coincides with what should have been a celebration of friendlier ties between the two countries. Chinese President Xi Jinping was supposed to make a state visit to Japan this month, but the summit, which would have been the first of its kind in a decade, was postponed a month ago as the virus began to spread through Japan. No new date has been set.
China is Japan’s biggest trading partner under normal circumstances, but Chinese imports sank by nearly half in February as the contagion shuttered its all-important factories, starving Japanese manufacturers of parts.
That has renewed talk of reducing Japan’s reliance on China as a manufacturing base. The government’s panel on future investment last month discussed the idea of shifting manufacturing of high-added-value products back to Japan, and for production of other goods to be spread across Southeast Asia.
Should other countries follow?
AC