Japan has earmarked ¥243.5 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.

China is Japan’s biggest trading partner under normal circumstances, but Chinese imports sank by nearly half in February as the contagion shuttered its all-important factories, starving Japanese manufacturers of parts.

That has renewed talk of reducing Japan’s reliance on China as a manufacturing base. The government’s panel on future investment last month discussed the idea of shifting manufacturing of high-added-value products back to Japan, and for production of other goods to be spread across Southeast Asia.

Japan exports a far larger share of parts and partially finished goods to China than other major industrial nations, according to data compiled for the panel. A February survey by Tokyo Shoko Research Ltd. found 37 percent of the more than 2,600 firms that responded were diversifying procurement to places other than China amid the health crisis.

Read the full article here (www.japantimes.co.jp – 8^th April 2020)

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