Last Updated on July 20, 2020, 7:22 PM AST by Anthony Morris
The Government of Japan would start paying its companies for moving their factories out of China and back to Japan or Southeast Asia, as a part of a new program to secure the supply chains and to reduce the dependence of the manufacturing sector in China.
The Ministry of Economy, Industry and Trade said on Friday that fifty-seven companies including Iris Ohyama Inc., privately-held facemask-maker and Sharp Corp. would receive a total of 57.4 billion yen in subsidies from the side of Government.
According to a separate announcement that another 30 firms would receive money to move their manufacturing to Myanmar, Vietnam, other Southeast Asian nations and Thailand, which did not provide the details regarding the amount of compensation.
The Government of Japan would pay a sum of 70 billion yen in this round. The payment comes from 243.5 billion yen that the Government kept aside in April to reduce the reliance on Chinese supply chains, with the money aimed at helping the Japanese companies shift their factories back to Japan or other nations.
As United States-China relations deteriorate and the trade war worsens, there have been increasing discussions in the US and other countries regarding how to “decouple” economies and firms from China.
The decision is similar to a Taiwanese policy of 2019, which was aimed at bringing investment back to Taiwan from China. No other country has enacted a concrete policy for encouraging the shift of factories so far.
China is Japan’s biggest trading partner under normal conditions, and Japanese companies have massive investments there.
The outbreak of the coronavirus pandemic has damaged those economic ties as well as China’s image in Japan. The Government of Japan, under Prime Minister Shinzo Abe, has been trying to improve relations with China for years after the anti-Japan riots in 2012.
However, the fallout from the current COVID-19 pandemic and the ongoing territorial dispute over the oil fields and islands in the East China Sea have undercut these efforts.
Anthony Morris covers stories related to politics and regional developments. His in-depth reporting about governance and reforms makes him stand out in regional journalism, with a deep analysis of political trends and their impact on Caribbean communities.
