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Japan allocates funds to Manufacturers to Shift Production out of China

Japan’s initiative to shift production out of China as COVID-19 continues to disrupt factories – allocating 220 billion yen ($2 billion) budget.

Japan, being one of the most urbanized and modernized countries in the world, is giving a solution to shift production out of China. Japan allocated $2.2 billion to fund manufacturers to manufacture supplies as the pandemic continues to disrupt the economy.

According to details, the budget includes 220 billion yen ($2 billion) for companies shifting production in Japan and 23.5 billion yen for those searching to move production to other countries.

“There will be something of a shift,” said Shinichi Seki, an economist at the Japan Research Institute. “Having this in the budget will definitely provide an impetus,” he added. He also said that the Japanese companies manufacturing goods in China were already considering moving out. But according to Seki, companies like car makers are most likely to remain.

The move of Japan coincides with what should have been a celebration of friendlier ties between Japan and China. China is said to be the biggest trading partner of Japan under normal circumstances. But the pandemic has shattered China’s factories, affecting Japanese manufacturers who rely on imports from China.

Chinese President Xi Jinping’s visit to Japan was also postponed because of the pandemic. Pres. Jinping’s visit to Japan was said to be his first visit to the country.

Because of the unexpected condition brought by COVID-19, Japan has decided not to rely too much on China and that made the country do the said move.

According to a survey made in February by Tokyo Shoko Research Ltd. found 37% of more than 2,600 companies that responded were transforming procurement to places other than China. 

“We are doing our best to resume economic development,” said Foreign Ministry spokesman Zhao Lijian, when asked about the move. “In this process, we hope other countries will act like China and take proper measures to ensure the world economy will be impacted as little as possible and ensure that supply chains are impacted as little as possible,” Lijian added.

It remains to be seen how the move made affects Prime Minister Shinzo Abe’s effort to rebuild the country’s relationship on China.