Japan announces incentives for companies to move production out of China

Japan has joined other countries around the world in creating an economic stimulus package to avoid one of the biggest financial disasters in modern times. However, part of the package included 220 billion yen (£1.6 bn) to encourage companies to shift production away from China and back to Japan. Should other nations follow the lead of the Japanese?

The blockbuster announcement came in the same month that Chinese President Xi Jinping was due to visit the Land of the Rising Sun, for the first time in over a decade. The visit was postponed due to the COVID-19 pandemic. Many countries, including a number of Japanese politicians, have criticised China for concealing the scale of the coronavirus outbreak and not taking swift action in time to prevent the spread.

Uncertain trade future between Japan and China

Although Beijing may consider this an aggressive move, China is still Japan’s biggest trading partner. With Chinese factories being shut in February to minimise the spread of the disease, exports to Japan slumped by almost 50%. This disrupted supply chain drastically affected Japanese manufacturing and eventually led to the government’s attempts to minimise its future reliance on China.

With a lingering cloud that is the US-China trade war still hovering, there is a chance that other countries will consider joining Japan in reducing their dependence on Chinese goods. Rumours coming out of Number 10 alleged that Boris Johnson was furious China because scientists have told the Prime Minister that they could have 40 times the number of coronavirus cases they claim.