Japan Paying Companies To Leave China

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Friday, August 14, 2020


U.S.-China relations are at their lowest point in decades. 

This is largely due to a downward spiral that began with trade spats dating back to the first tariffs the President imposed on China. During the peak of COVID-19, this conflict escalated as both countries blamed each other for the Coronavirus outbreak. The Chinese national security law for Hong Kong, and the question of Uighur minorities in China, have further complicated China’s fragile relationship with the United States.

Recently, the U.S. has ordered the closing of China’s consulate at Houston over allegations of industrial espionage. In retaliation, China requested the closure of the American Consulate at Chengdu. All these incidents add to why experts believe a second Cold War is imminent.

Both the U.S. and China are economic powerhouses. A cold war can divide our world along the lines of economic dependence. Nations that depend on America more on one side and the nations tied to China forming another. Some of these nations might not agree with who they’re made to side with, but they’re left with no choice because they rely on their benefactors.

Japan will not be forced into such a situation, however. After the pandemic exposed its overreliance on its neighbor, the Japanese government has decided to pay 87 companies to exit China, its largest trading partner. 57 companies will be receiving a total of 535 million USD to open factories in Japan. While 30 others will earn money to shift production to Vietnam, Myanmar, Thailand, and other Southeast Asian nations. 

Japan’s METI (Ministry of Economy, Trade, and Industry) didn’t explicitly state that the move was to shift production from China. But, in March, Prime Minister Shinzo Abe said he wanted to bring manufacturing home and diversify into ASEAN countries to cut reliance on a single country.

Sino-American relations still bear overtones reminiscent of the Cold War. That’s why this decision might have also been taken to ensure that Japan isn’t caught in a tug of war between the U.S. and China. One country being dependent on another causes problems. It gives the other country control over the other nation’s economy and political life. 

A country’s economic sphere and other spheres of life are not separate.

In our individual lives, our desires, needs, and attitude towards money are, to some extent, affected by our financial status. On a macro scale, it’s the same with countries. The state of the economy affects a dependent nation’s politics. This allows dependence to be weaponized in case of a conflict. The country others depend on can threaten to suddenly cut ties and put its dependents in turmoil should they not comply with their wishes. The dependents will then have no choice but to obey. 

This situation can only be mitigated by diversifying. This is why diversification of manufacturing and supply is necessary. If Japan doesn’t diversify and the U.S. and China impose sanctions on each other, Japan will be thrown into a hellish purgatory. Diversification ensures that, if conflict arrives, Japan won’t be forced to ally with China—neither will they be in economic turmoil should China cut ties if the Japanese side with the USA.

This policy mainly benefits Japan and indirectly helps the United States. It ensures that one of its major allies can securely stand with the American people. U.S. politicians have a lot to learn from this example. It is a reminder that the U.S. should decrease its dependence on China. It even provides an example on how to do so. This way, American supply lines aren’t in jeopardy in times of any political/diplomatic spat.

It also presents a strategy America can use to help its allies to diversify their economy. This way they can continue to stand with the American people. Free and independent of any influence that might compromise their ability to stand with the USA.

Because of globalization, it is highly likely that, should a second Cold War emerge, economics will play a significant role. Countries should work to ensure that crucial supply chains are diversified so that their independence cannot be compromised by one country holding their economy hostage. 

Time will tell if Japan’s strategy is one that other countries can imitate.

Andrew Jose is a freelance journalist, studying for his Bachelors of Science in Foreign Service at Georgetown University's branch campus overseas in Qatar. He is an International Economics major, and Government and Philosophy minor, regularly writing articles on economics, philosophy, and foreign policy. As well, he is a contributor at The Daily Caller and The Western Journal. Andrew's work has been published here, Airways Magazine, International Policy Digest and several other outlets

The views expressed in this article are the opinion of the author and do not necessarily reflect those of Lone Conservative staff.


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About Andrew Jose

Andrew Jose is a freelance journalist, studying for his Bachelors of Science in Foreign Service at Georgetown University's branch campus overseas in Qatar. He is an International Economics major, and Government and Philosophy minor, regularly writing articles on economics, philosophy, and foreign policy. As well, he is a contributor at The Daily Caller and The Western Journal. Andrew's work has been published here, Airways Magazine, International Policy Digest and several other outlets

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