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Japan Offers Huge Subsidies to Companies Willing to Quit China

Japan Offers Huge Subsidies to Companies Willing to Quit China

The South China Morning Post: “Japan has offered a group of 87 companies subsidies totalling US$653 million to expand production at home and in Southeast Asia.”

https://www.youtube.com/watch?v=D378CAjaFq4

Japan is offering financial incentives to its companies willing to divest from China. Tokyo has “offered a group of 87 companies subsidies totaling US$653 million to expand production at home and in Southeast Asia,” Hong Kong newspaper the South China Morning Post reported on Wednesday. China is getting increasingly worried “as Japan bankrolls exodus of firms,” the daily added. 

The move is significant since Japan is China’s second biggest trading partner after the United States, importing $169 billion worth of Chinese goods in 2019. 

The Japanese initiative comes amid incursions by Chinese navy near a group of Japan-controlled islands in recent weeks. “The repeated activities are extremely serious,” a Japanese government spokesman said on July 22. “We will respond to the Chinese side calmly based on our resolute stance.” Beijing has undertaken several such armed incursions against its Asian neighbors in recent months.

Besides blatant military aggression, China has weaponized its growing economic clout, threatening countries with sanctions and boycotts in the wake of the Wuhan coronavirus pandemic. 

The South China Morning Post reported Tokyo’s initiative to decouple its economy from China: 

Japan’s decision to offer an initial group of 87 companies subsidies totaling US$653 million to expand production at home and in Southeast Asia has sparked debate whether the world’s third largest economy is trying to gradually decouple from China.

The coronavirus pandemic has wreaked havoc on global supply chains, with the crisis underlining what many companies and countries have known for some time: they are too reliant on China.

China is Japan’s largest trading partner, and Japan is China’s second largest trading partner, and while not all of the enterprises involved in the initial wave have operations in China, the move by the Japanese government has sparked concerns in China. (…)

Using the subsidy, 57 of the companies will open more factories in Japan, while the remaining 30 plan to expand production in Southeast Asian countries, including Vietnam, Myanmar and Thailand.

Around 70 per cent of the companies are small and medium-sized enterprises, with over two thirds involved in medical supply manufacturing.

A second list of companies to be offered subsidies is also being drawn up, with a similar composition to the first, according to Japanese officials.

A survey by Teikoku Databank, a leading Japanese credit research house, showed that there were 13,685 Japanese firms in China at the end of May 2019, down from 13,934 in the previous survey conducted in 2016. At the peak in 2012, there were 14,394 Japanese firms with operations in China.

Given its geographic proximity, Japan is well aware of the threat posed by Communist China. Japan was among the first countries, besides the U.S., to ban Huawei and other Chinese companies from its 5G network, the next generation of mobile technology. The U.S. has repeatedly warned its allies against compromising their security by allowing Chinese state-owned players in their 5G roll-out in light of its application in defense systems and mobile communications. 
 
Japanese companies is positioning themselves to challenge China’s dominance in 5G, the next generation of wireless and mobile networks, Asian news outlets report. The United Kingdom has already sought Japan’s help after banning Huawei and other Chinese companies from its 5G roll-out. 
 
The moves towards decoupling the Japanese economy from Communist China coincide with similar developments in the United States. President Donald Trump has suggested decoupling the U.S. economy from China in the wake of the Wuhan coronavirus pandemic. Washington “certainly does maintain a policy option, under various conditions, of a complete decoupling from China,” he tweeted in June. 
 
The U.S. Commerce Department has suggested strategies including tax incentives and re-shoring subsidies to bring back American companies home, news reports say. The Trump administration is also encouraging U.S. allies to remove China’s involvement in their critical infrastructure and technologies. 
 
‘Secretary Pompeo Urges Cutting Ties With Chinese Tech Companies’

 

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Comments

2smartforlibs | August 7, 2020 at 7:05 am

Seems China is becoming a paper dragon

    DSHornet in reply to 2smartforlibs. | August 7, 2020 at 8:37 am

    It’s a bit premature to think that way. Even with the trickle of business losses from China so far, they’ll be sure to address that to their advantage and to the detriment of the rest of the world. Remember, nothing matters to them more than spreading their brand of communism world wide. Everything else is secondary.
    .

      China doesn’t give a rat’s ass about ‘communism’. Their form of cancer is simple Orwellian fascism and hegemony.

      ‘Communists’ in America are looking to hop on the gravy train.

    JusticeDelivered in reply to 2smartforlibs. | August 7, 2020 at 5:32 pm

    Most certainly their egos have gotten in the way of common sense. We, the world, need to cut China’s cash flow to near zero.

Japan might have to import foreign workers to run the translocated companies as well.

    UnCivilServant in reply to rhhardin. | August 7, 2020 at 12:43 pm

    It’s japan, they just need to unbox some more robots.

      notamemberofanyorganizedpolicital in reply to UnCivilServant. | August 7, 2020 at 1:12 pm

      Same here

      Wal-Mart is already using many robots on the sales floor.

      That really makes hard to tell them apart from the zombie communist progressive shoppers on the crowd…..

China is also betting on a Biden win in November. If so, they win.

    clintack in reply to Whitewall. | August 7, 2020 at 8:25 am

    Betting on, but not counting on. They’ve hedged that bet with *lots* of investment in other politicians, universities, media companies, and the like.

    We’d be stronger as a nation if we split our country in two: the pelosi state would be fascist basket case, and the Trump state would STILL rival Russia and China – without the drag of the parasites within our country.

As long as the US is using China to produce so much of its high-tech electronics, automotive, and aviation parts, the Chinese government will always have full access to our intellectual property.

For example, if iPhones are manufactured in China, then the Chinese have everything they need to produce copycat phones. As long as we depend on China for many of our pharmaceuticals, they can easily manipulate pricing, quality, and availability.

We need to bring more of our manufacturing (especially high-tech) back onshore. I don’t know how to do that. Many firms (like Apple) structure their businesses so that they aren’t subject to most of US taxes. So the tax laws can’t be used to encourage them to come back. https://itep.org/fact-sheet-apple-and-tax-avoidance/

I’m sorry to be negative, but Trump’s failure to kick out Chinese “students” and shut down work visas for Chinese nationals ensures that China will continue to be a growing threat.

China’s system will not produce innovation. It needs to steal from the West, and that means the US. As a bonus, US universities would have to admit more Americans and lose some Chinese welfare.

Ultimately, China can be whittled down pretty easily, so long as politicians aren’t entirely corrupt or stupid.

Then after shutting out Chinese nationals, the US should encourage Japan, Taiwan, and S. Korea to go nuclear and try to make that happen. The logic is parallel to that for supporting gun ownership.

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