Covid-19 impact: Japan announce $2 billion to shift production out of China

By Choekyi Lhamo

DHARAMSHALA, APR 10: Japan’s PM Shinzo Abe announced a Covid-19 stimulus package worth 1 trillion-dollar on Tuesday from which 2.2 billion dollars (220 billion yen) has been allotted for its multinational companies to shift production out of China. China has been Japan’s biggest trading partner but imports from China have already plunged by half in Feb due to the coronavirus lockdown.

Japan has allotted 220 billion yen for shifting production back to Japan, and 23.5 billion yen for firms seeking production in other countries. Japan’s government panel on future investment last month discussed manufacturing goods to be shifted back to Japan and other goods to be diversified across South East Asia. Moreover, US companies are also withdrawing businesses from China due to the pandemic outbreak.

The Coronavirus stimulus package is set to incentivize a medium for damage control in the economy as some experts have voiced concerns over China’s economic slowdown in the coming months. Japan’s efforts to soften the blow to its economy might strain their relations with China. Xi Jinping was scheduled to visit Japan earlier this month but it has since been postponed due to COVID-19.

The pandemic has led to renewed talks of Japan’s reliance on China as a manufacturing base. Japan, like majority of industry-driven countries, has been dependent on China for manufacturing products due to lower costs of labour and products. Tenzin Tsundue, a Tibetan writer and activist told Phayul, “China has strategically placed itself in the critical supply chain with all its trading partners and therefore China’s weaponizing of trade relationship works when China punishes certain countries in securing political dividends. Japan and the United States are trying to liberate themselves from such dependencies.”

Many politicians in Japan and the US have placed blame on China for failing to respond effectively, and for concealing the threat from other nations during the early days of the outbreak. The virus that has since spread across the world has put the global economy to a standstill.