Japan is shifting its economic approach towards China due to concerns about economic coercion and political disputes. It is promoting reshoring, diversifying supply chains, and strengthening domestic industries. However, the mutually dependent economic relationship between the two countries remains intact.
The economic cooperation between Japan and China has been overshadowed by political and territorial disputes. As China’s economic coercion and long-term goals raise concerns, Japan is shifting to a new “economic realist” diplomacy. The country is diversifying its supply chains away from China, promoting reshoring and friend-shoring, and investing in national technological development to enhance economic security. Nonetheless, the deep economic relationship between Japan and China remains intact, as Japan heavily relies on China as a major market and source of low-cost goods. Decoupling the two economies would be challenging due to their mutual dependency.
Prime Minister Fumio Kishida has made economic security a priority, urging Japanese businesses to reshore production to Japan or seek new bases in Southeast Asia and India. Japan is also prioritizing the diversification of supply chains, especially for critical components like rare earth metals. The government is investing in alternative sources, such as recycling and mining in other countries. Collaboration under the concept of the “Free and Open Indo-Pacific” is being encouraged to enhance economic ties. Japan is also focusing on strengthening domestic industries, particularly in semiconductor materials, to decrease vulnerability to China and reduce import dependence.
In conclusion, Japan is taking steps to address concerns about political influence on its economic security by diversifying supply chains, reshoring production, and investing in domestic industries. However, the deep economic relationship with China remains crucial, and decoupling the two economies would be challenging.