Japan pays companies at least $536 million to leave China as the trade war grows worse. The government of Japan announced July 18, 2020 that it would begin paying companies to their factories out of China. The government did specify a preference for the factories to be moved back to Japan. However, they also provided a list of other South Asian countries including Thailand, Myanmar, and Vietnam. The reason Japan pays companies to leave China is as a means to break dependence on Chinese line. The Japanese government’s decision pay companies to the China is the result of growing tension between the two countries. While US China trade war is part of these tensions the issues three dates the current economic conflict.
Brake Dependence on China
The reason Japan pays companies $536 million to lead China is to avoid further dependence on Chinese factories. Specifically, Japan is paying the $536 million to 57 Japanese phone companies including several that produce face masks. These 57 Japanese owned companies will move their facilities out of China back to Japan. This was announced as part of the statement given by Japan’s Ministry of Economy, Trade, and Industry on Friday July 17, 2020. Japan announcements may seem Sutter but they have been planning for this move since April 2020. Indeed, the Japanese government at that time earmarked a total of 243 billion yen, just over $2 billion, for this. Japan expects to pay ¥70 billion out of that some of this first round as Japan pays to leave China.
Though China has been one of Japan’s largest economic trade partners tensions between the two countries rise over the decade. The issue apparently first 2012 there were anti-Japanese riot in China. Tensions between China and Japan only increase since despite the Japanese’s government’s best efforts. The issue appears to have reached the point of no return in the last year over territorial disputes. Which is a factor for why Japan pays companies to leave China.
However, the primary motivator was China’s action during the early days of the coronavirus pandemic. When the Chinese government stop all shipment of medical supplies leaving the country. This resulted in Japan and several other countries experiencing major shortages on vital medical supplies. This is what finally prompted the Japan pays companies to leave China and break dependence on Chinese chains. Though Japan is the first it most certainly will not be the last to do so.