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ECONOMY

Japan-China economic ties stronger after 50 years

  • September 30, 2022
  • , Nikkei , p. 3
  • JMH Translation

Japan and China have strengthened their economic ties in the fifty years after the normalization of diplomatic relations. China’s economic growth accelerated when it joined the World Trade Organization (WTO) in 2001. China became a manufacturing center making use of its abundant labor force and is now a huge market that drives the world economy. More than 30,000 Japanese companies were in the Chinese market as of 2020, and the total trade volume between the two countries is 100 times that of 1972. The Chinese and the U.S. battle for economic hegemony is having an effect on Japan-China economic relations.

 

After Japanese companies helped modernize Chinese industry, China, with its abundant labor force, became the world’s manufacturing center. Now that China is the world’s second largest economy, Japanese companies see China as a major market. Japanese companies have sought sources of growth in response to the shift in the center of the global economy, which had been dominated by the U.S.

 

The shift in Japan’s imported goods reflects the relationship between the two countries. The trade volume between Japan and China in 2021 reached 38 trillion yen, a 113-fold increase in nominal value compared with that 50 years ago. Imports of semiconductors and smartphones have increased. According to the Ministry of Finance’s trade statistics, Japan’s 2021 trade deficit against China will be approximately 2.4 trillion yen. Chinese products are an indispensable part of today’s Japanese economy.

 

Japan Business Federation [Keidanren] Chair Tokura Masakazu told reporters on Sept. 29 that “economic relations between Japan and China should not be a binary choice between competition and cooperation” and that Japan should “engage with China from competitive and cooperative angles.” Striking a balance between economic security and cooperation amid the U.S-China rivalry will be an issue going forward in Japan-China economic relations. (Abridged)

 

    Changes in economic ties between Japan and China

 

          1972

       2021

Total trade volume

339.8 billion yen

38 trillion yen

Japan’s investment in China

2 billion dollars

10 billion dollars

China’s investment in Japan

1 million dollars

800 million dollars

Number of Chinese visitors to Japan

100,000 

9.59 million 

Source: MOF, Japan External Trade Organization (JETRO), Japan National Tourism Organization (JNTO)

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