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Japan will provide USD 2.2 billion as incentives for Japanese manufacturers’ production shift out of China

1404 - 2020

Japan will provide about $2.2 billion in its economic stimulus package to help its manufacturers relocate their production out of China as Covid-19 pandemic complication arise across the globe leading to disrupted supply chains among major trading partners.

bring production back to Japan

This budget is considered to compensate for the devastating effects caused by the pandemic, including 220 billion yen (about $2 billion) is to bring production back to Japan and 23.5 billion yen to transfer production to other countries.

China is Japan's largest trading partner, however, due to the impacts of Covid-19 causing closure of various factories in China, preventive measures by Chinese authorities such as blockade, restriction travel, global supply chains, including that of Japan, are shuttered. Only in February 2020, Japanese imports from China dropped by nearly half, causing Japanese manufacturers’ shortage of materials and components for production.

This has forced Japanese manufacturers to reduce reliance on China. Japanese government's panel on future investment last month also discussed the necessity to bring back to Japan high-added value production and to diversify manufacture of other goods across Southeast Asia. textile, processing, assembly sectors, according to experts’ opinion, shall be the first groups to move to Southeast Asia.

AURORA IP with reference to asiatimes.com and bloomberg.com

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