Years-long political and territorial disputes between Japan and China have coexisted strangely with intense economic cooperation in the areas of production, technologies, and financing. & nbsp, This has prompted Japan to forge economic ties with China through a seikei bunri policy that separates politics from economics.
Japan has grown more worried about its economic reliance on China as a result of intensifying US-China strategic competition, China’s history of economic force, and its long-term goals to secure its unique” main interests.”
Principles for economic engagement with China are giving way to Fumio Kishida’s new” economic realist” diplomacy in The & nbsp, seikei bunri.
Concerns about the effect of politics on Japan’s economic security can be addressed through a variety of policy measures, such as reshoring, & nbsp, friend-sholing, and national technological advancement.
Concerns about Japan’s susceptibility to economic coercion and supply chain weaponization have grown in Tokyo as a result of the seikei bunri & nbsp drift away.
By carefully diversifying supply stores and reducing rely on China, political leaders in Japan have already committed sizable corporate and financial resources to improving economic security. & nbsp,
Initiatives include the deployment of additional budgets for financial protection, such as securing bases for advanced semiconductor production at home. To help supply chains and motivate their diversification, supplemental budgets have concentrated on encouraging private investment.
The jointly dependent economic relationship is still largely intact, deepening, and very complement despite the political and security challenges. China will always be the largest marketplace for goods and services in Japan. & nbsp,
Especially in the technology, electronics, and automobile industries, Chinese businesses have made significant investments in China. For Chinese businesses, China is also a significant source of inexpensive products and parts. Due to this function, Chinese products are now more competitive in international businesses and prices have remained low.
The complex and varied shared dependency that defines the Japan-China economic relationship would need to be untangled in order to detach it.
Based on an analysis of the difficulties brought on by China’s fall, Kishida prioritized financial security after taking business in October 2021. Kishida issued a warning that” East Asia could be the next Ukraine” in the aftermath of Russia’s invasion of Ukraine, which had an effect on inland strength and food safety.
Tokyo is encouraging reshoring by encouraging Chinese companies to either relocate their output from China back to Japan or look into new production facilities in Southeast Asia, India, and other nations. The government has implemented procedures, such as grants, tax breaks, and regulatory measures, to assist businesses that are thinking about reshoring.
Tokyo has also emphasized the significance of diversifying supply chains, especially for essential elements and aspects like rare earth aluminum. The Chinese government has made investments in other rare earth metal sources, such as recycling and building new mines abroad. Japan is even looking into how to replace rare earth metals with innovative materials.
Under the auspices of the” Free and Open Indo – Pacific,” Tokyo has encouraged cooperation to strengthen economic relations and objectives. This is demonstrated by the G7 Foreign Ministers’ statement from 18 April 2023, which emphasized that” resilient supply chains may be built in a clear, developed, secure, lasting, trustworthy and reliable manner.”
Japan has even emphasized the significance of bolstering home business. This includes the creation of new sectors and systems that are intended to strengthen Japan’s economic stability and lessen its exposure to China.
Semiconductors are a crucial part of Chinese firms. Despite being a big semiconductor maker, Japan still relies on exports of important components from different nations, such as China.
Tokyo has directly courted the Taiwan Semiconductor Manufacturing Company( TSMC ), among others, to move to Japan in order to reduce this vulnerability. Additionally, it has supported the creation of next-generation electronics and pushed its businesses up the value network to lessen their reliance on imports.
Japan and other nations are at risk of being weaponized by the rare earth supply chain because China still has a monopoly on the origin and export of these metals. This makes distinctive Chinese industries, such as electronics, cars, and clean energy, vulnerable to potential coercion.
Japan & nbsp lacks domestic sources of rare earth metals and is dependent on imports, just like it does with energy and other mineral resources. There aren’t many reliable suppliers besides China, and building new mining is difficult and expensive. New activities with Canada are still unprofitable from a financial standpoint.
In addition to metals extraction and processing, developing inland industries that can use the metals in products is necessary to develop alternative rare earth metal sources. Even though Japan has a thriving high-tech sector, creating new companies that use rare earth metals takes time and money, which may not be up to the market’s requirements.
It will be challenging to improve financial stability and develop resilience to economic coercion and other types of financial instability. To ensure that activities are carried out properly and effectively, Kishida and potential administrations will need to build new mine and running facilities for rare earth metals while adhering to a number of economic standards.
Careful planning, conversation, and cooperation with partners, such as local areas, environmental organizations and government agencies, may be needed when building new mine and processing facilities for rare earth metals. This procedure is being launched by the Kishida presidency in collaboration with Australia and African nations like Namibia.
Japan’s attempts to lessen its reliance on China are motivated by a desire to improve financial stability and lower its susceptibility to geopolitical risks and uncertainties. & nbsp,
The Kishida administration seeks to strike a balance between economic opportunities and Japanese national interests in an increasingly complex and uncertain global environment by moving away from the & nbsp, seikei bunri, principles.
At the International Christian University in Tokyo, Stephen Nagy teaches politics and international experiments. He is also a visiting fellow at the Japan Institute for International Affairs.
This article can be found in Vol. 15 No. 3 of the most recent version of East Asia Forum Quarterly, titled” Re-defining the ASEAN-Japan Relationship.”
This post, which was originally published by the East Asia Forum, has been republished with a Creative Commons license.