It Begins: Japan Budgets to Help Firms Pull Manufacturing Out of China

Coronavirus is causing Japan to reconsider depending on China for its supply and manufacturing base, reports the Japan Times.

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.

It’s not a huge amount of money yet but the trend it bucks is important. Japan’s relationship with China has gotten complicated over the past few years. They’re longtime rivals but China has made itself Japan’s top trade partner while, at the same time, threatening Japan’s sovereignty over the Senkaku Islands just this week. Prime Minister Shinzo Abe has sought warmer relations with China despite this. But the pandemic is forcing his hand. It’s unwise for any nation to depend on communist China too much for anything, given its habit of lying about important things.

Abe could have reacted to the pandemic a bit quicker.

[M]any in Japan are inclined to blame China for mishandling the early stages of the outbreak and Abe for not blocking visitors from all of China sooner. Until last month, only visitors from Hubei, the epicenter of the outbreak, and one other province had been banned.

Advantage…Trump. Who, by the way, wanted U.S. firms to start leaving China well before the COVID outbreak. Countries that can afford to leave China, will.

Captain Obvious prediction: Taiwan will end up benefiting from some of the coming avalanche of divestment from the mainland. Taiwan is free and transparent, its legal system is predictable, and it has handled the COVID pandemic very well. Because of this, its economy may rebound ahead of others. It also enjoys a defense pact with the United States, which has a decades-long defense pact with Japan.