BEIJING: Since Prime Minister Sanae Takaichi’s remark regarding a Taiwan contingency, the impact on the activities of Japanese companies operating in China has been limited.
There have been no reports of trouble such as large-scale boycotts of Japanese products in China, as seen in the aftermath of the collision between a Japan Coast Guard patrol vessel and a Chinese fishing boat off the Senkaku Islands in Okinawa Prefecture in 2010, or after the Japanese government nationalized the Senkaku Islands in 2012.
While Japan-China relations remain stalemated, the business operations of Japanese companies in China continue as usual.
Regarding this situation, Naoki Tsukioka, chief economist at Mizuho Research Institute, notes, “The Chinese government is taking care to ensure that deterioration of bilateral relations does not affect China’s real economy.”
For the Chinese economy, which continues to stagnate against the backdrop of a real estate slump, the severance of ties with the Japanese economy would be a heavy blow. It is believed that the Chinese government’s real intention is to avert the withdrawal of Japanese companies from China and a decline in Japanese investment in China.
Japan’s direct investment in China in 2024 stood at US$2.1 billion (approximately ¥329 billion), ranking fourth by country, according to the National Bureau of Statistics of China.
Many Japanese companies have expanded into China, in sectors ranging from manufacturing to retail, such as Fast Retailing Co., which operates the Uniqlo clothing store chain, and the company that operates the Sushiro conveyor-belt sushi restaurant chain.
If these companies were to pull out of the Chinese market, it would have a huge impact on job security and consumer spending in the country.
Some also theorise that, as Japanese products’ market share in sectors such as automobiles and electric appliances has declined, China may no longer regard Japan as an “enemy” in those fields.
However, concerns among Japanese firms remain. Tetsuro Homma, chairman of the Japanese Chamber of Commerce and Industry in China, an economic organisation comprising Japanese companies operating in China, said at a press conference in February, “The present state of things is that Japanese companies feel uncertain over their future investment.”
Homma said that it has become difficult for Japanese firms to meet with local government officials who hold authority over business permits and other matters across China.
Some pundits say that such officials have a tendency to “surmise” the wishes of the central government, which has adopted a tough diplomatic stance toward Japan. - The Yomiuri Shimbun
