Last week, Japan president announced a $1 trillion relief package to fight against pandemic coronavirus. Out of these, Japanese manufacturers got a hefty reserve of $2.2 billion. Under this stimulus package, Japan is encouraging its manufacturers to move from China. They should set up their units back in Japan.
Japan is providing incentives in both cases. Whether you bring a production unit in Japan or any other country, however, they need to shift their production unit from China.
Currently, China is among Japan’s top trading partners. There was a considerable fall in imports from China due to the closure of factories. It led Japanese manufacturers to stop production.
The move came when these two major economies were in the process of firming a strong trade relationship. Xi Jinping, the Chinese President, was about tour Japan in February. In a decade, it was the first step to enhance their business relationship. However, visit canceled due to pandemic coronavirus. Until now, no announcement on a new date for the meeting has come.
This step from the Japanese government will reduce Japan’s dependency on China. A panel of Japan’s government last year highlighted the same issue. Their suggestions were to increase in-house production for high benefit products. They should benefit Japanese manufacturers. For other goods, they can diversify imports from other countries.
Japan is not the only nation reducing dependency on China. Major other economies like the U.S, Italy, France, etc. are also looking for alternatives.