Tokyo: – The Japanese, Shinzo Abe government announced a special financial package for the companies thinking of exiting from China because of loss of production. Abe government clarified that financial assistance up to $2.2 billion will be available for Companies bringing the manufacturing to Japan or shifting them to some country other than China. This Japanese decision could prove to be a major jolt for China.
The Chinese industry is closed since the last two months owing to the lockdown, given the Coronavirus pandemic. This lockdown has hit the Japanese companies having huge investments in China. Japanese companies from Auto, electronics and many other sectors had setup huge manufacturing facilities in China. But the production in these companies was stopped due to the Coronavirus pandemic and these companies are preparing to withdraw from China.
As per the survey conducted by the study group ‘Tokyo Shoko Research Limited’, In February, 37 out of 2,700 companies in China have taken the decision to leave China and started movements to shift their manufacturing to other countries. A few of these companies had requested assistance from the Japanese government for this purpose. The Japanese government seems to have responded to the request.
Two days ago, Japanese Prime Minister Shinzo Abe declared an emergency, to contain the spread of the Coronavirus pandemic. He also announced a package of $990 billion (108 trillion Yen) for the anti-Coronavirus crusade. Now the Abe government has made an announcement of the assistance of up to $2.2 billion (243.5 billion Yen) for the companies wanting to leave China. This information has been posted on the Japanese government website.
The Abe government is willing to assist with $2.2 billion to companies ready to shift their manufacturing from China to Japan. Whereas, companies moving their manufacturing from China to any other countries will be provided financial assistance of $200 million (23.5 billion yen).
In other words, Japan is encouraging Japanese companies to leave China. Till date, Japan, a fierce trade adversary of Chia, had never taken such a decision. But now the situation has changed and the atmosphere is heating up against China, who is held responsible for the spread of Coronavirus pandemic. There is an anti-China sentiment felt in nearly all the countries in the world. This is directly affected Chinese trade cooperation with all the major countries in the world. Against this background, the decision taken by the Abe government will have severe political and financial repercussions. Other countries in the world could also take similar decisions.
The Chinese economy was already in crisis because of the trade war with the United States. Production in China has come to a standstill because of the Coronavirus pandemic and it is being said that this has set China back by several years. In this scenario, the decision taken by a major trading country like Japan could increase the pressure on the Chinese economy further. It is evident that the Chinese economy is in for such jolts, in the near future.