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| "Sorry mate, but Japan Inc. is coming home." |
Nowadays, though, those attractions have waned. Labor isn't as cheap in China anymore, and the number of Chinese entering the global consumer class isn't rising at the same rate as before. So, it was perhaps inevitable that--China fearmongering notwithstanding--multinational corporations would seek to repatriate their production facilities so they can make their wares nearer home. Perhaps no other country has a more active program for doing so than Japan, which has allocated significant amounts of public funds for this very purpose:
Japan has earmarked ¥243.5 billion [about USD 2.3 billion] of its record economic support package to help manufacturers shift production out of China as the coronavirus pandemic disrupts supply chains between the major trading partners. The extra budget, compiled to offset the devastating effects of the pandemic, includes ¥220 billion for companies shifting production back to Japan and ¥23.5 billion for those seeking to move production to other countries, according to details posted online.Again demonstrating this move as being more about business than politics, Japan-China relations are actually improving nowadays, but that's not been a barrier to Japan, Inc. seeking to repatriate MNC production:
The move coincides with what should have been a celebration of friendlier ties between the two countries. Chinese President Xi Jinping was supposed to make a state visit to Japan this month, but the summit, which would have been the first of its kind in a decade, was postponed a month ago as the virus began to spread through Japan. No new date has been set.
Amid the coronavirus pandemic, Japanese Prime Minister Shinzo Abe has proposed building an economy that is less dependent on one country, China, so that the nation can better avoid supply chain disruptions. The call touched off a heated debate in the Chinese political world.Japan's largest producers' organizations are leading this reshoring drive:
In Zhongnanhai, the area in central Beijing where leaders of the Chinese Communist Party and the state government have their offices, "there are now serious concerns over foreign companies withdrawing from China," a Chinese economic source said. "What has particularly been talked about is the clause in Japan's emergency economic package that encourages (and funds) the re-establishment of supply chains."
Had the pandemic not struck, Chinese President Xi Jinping's maiden state visit to Japan would have been wrapped up by now with Xi proudly declaring a "new era" of Sino-Japanese relations. He would have cheered on Abe as Japan prepared for the next big event, the 2020 Olympics.
At the table were influential business leaders such as Hiroaki Nakanishi, chairman of the Japan Business Federation, the country's biggest business lobby better known as Keidanren. "Due to the coronavirus, fewer products are coming from China to Japan," Abe said. "People are worried about our supply chains."After the aforementioned production repatriation fund was announced on April 7, Chinese leadership called an emergency meeting to discuss its implications for PRC production going forward:
Of the products that rely heavily on a single country for manufacturing, "we should try to relocate high added value items to Japan," the leader said. "And for everything else, we should diversify to countries like those in ASEAN."
The next day, April 8, China's Politburo Standing Committee, the party's top decision-making body, held a meeting in Beijing. Speaking at the meeting, President Xi said that "as the pandemic continues its global spread, the world economy faces a mounting downside risk." He added, "Unstable and uncertain factors are notably increasing."It's just another way the virus is changing the world of global commerce. Slowly but surely, de-Chinafication is unfolding outside of today's news headlines.
Xi, who doubles as the party's general secretary, stressed the need to stick to "bottom-line thinking" -- which means assuming the worst -- and called for "preparedness in mind and work to cope with prolonged external environment changes." The seven-member Politburo Standing Committee usually meets once a week, and it is rare for the holding and content of these meetings to be reported.
