Japan to pay firms to leave China as part of corona stimulus
Japan announced it will spend $2.2 billion to help its manufacturers shift production out of China. The measure is part of the massive $989 billion financial stimulus that the government announced on April 7 to combat the economic impact of the coronavirus pandemic.
220 billion yen $2 billion of the package is intended for companies shifting production back to Japan and 23.5 billion yen is for those seeking to move production to other countries.
China is Japan’s biggest trading partner. However, imports from China have slumped by almost half in February due to the lockdowns.
The Japanese government’s panel on future investment had last month discussed the need for manufacturing of high-added value products to be shifted back to Japan, and for production of other goods to be diversified across Southeast Asia.
According to Tokyo Shoko Research, about a thousand Japanese companies were diversifying procurement to places other than China amid the pandemic.
Even before the outbreak, many Japanese companies were already considering closing their businesses in China, as they feared falling victim to the trade war between Washington and Beijing.
On Tuesday, Japan declared a state of emergency in Tokyo and six other prefectures in an attempt to stem a sharp rise in coronavirus cases in major cities.
Last week, it was announced the Tokyo Olympic Games would start on July 23 next year, after being postponed for a year because of the pandemic, with most of the expenses borne by Japanese taxpayers.