G20 Osaka summit could be game changer if China, Japan explore BRI possibilities
By
Li Qiaoyi
It
seems the days when Japanese brands were hotly favored in the Chinese market
are gone. However, tangible signs still exist of strong trade and investment
ties between the two East Asian economies.
Beliefs
are also firmly held that wide-ranging China-Japan cooperation, especially the
bonds between the two nations concerning the exploration of business
opportunities in third markets, will continue on its forward trajectory despite
trade tensions between the US and other economies, notably China.
The
newly released annual white book on China’s economy and Japanese businesses
offers a fresh reminder of deepening bilateral economic ties.
Actualized
investment by Japanese businesses in China grew 16.5 percent year-on-year to
$3.81 billion in 2018, according to the white book released in Beijing last
week by the Japanese Chamber of Commerce and Industry in China. This compares
with an increase of 3 percent in actualized global investment in China last
year, which hit $134.97 billion.
Results
from a Japan External Trade Organization (JETRO) survey on Japanese-invested
companies operating in China between October-November 2018 showed that 48.7
percent of the surveyed companies considered expanding their businesses within
the next two years, while 44.8 percent said their business plans would remain
unchanged. The ratio of those opting for expansion has continued to climb since
registering 38.1 percent in 2015 - for the first time falling under 40 percent
since the first survey was conducted in 1998.
The
numbers speak volumes for China-Japan ties in the economic arena, although
Japanese brands, from electronic devices to home appliances, are no longer the
focus of attention in China’s consumer market, as China's indigenous technology
brands have rised to prominence.
In
late March, Sony announced it would halt production at its smartphone plant in
Beijing, explaining the move was part of efforts to restructure its mobile
business. The move heightened concerns over the Japanese electronics giant's
sagging smartphone fortunes.
That
being the case, some Japanese brands are still appealing to Chinese consumers.
One recent example was the sensation caused by Japanese fast-fashion brand
Uniqlo whose partnership with US artist and designer Kaws sent Chinese shoppers
into a buying frenzy. The online resale value purportedly is eight times higher
than the original retail price.
In
addition, Japan remains a popular overseas travel destination for Chinese
tourists, indicating a deeper bond between the two peoples while creating
significant business potential.
Japan
received a record 8.38 million Chinese travelers last year, an increase of 13.9
percent from the prior year, according to statistics from Japan National
Tourism Organization. China continues to be Japan’s largest source of
international tourists, a position it has held since replacing South Korea from
the top spot in 2015.
More
noteworthily, the two nations have been forging closer ties in the financial
sector. In April, they signed an agreement to cross-list exchange-traded funds
(ETFs) in each other’s markets. The ETF scheme linked both stock markets under
China’s Qualified Domestic Institutional Investor and Qualified Foreign
Institutional Investor programs and has arguably become a viable contributor to
China’s financial opening-up.
As
such, China’s consumer market, its sizable middle-income population, and a
continuation of bold reformist drives are the cornerstones of bilateral
economic cooperation and explains the business optimism among Japanese
enterprises operating in China.
As
long as this optimism remains intact, it is believed that Japanese businesses
would remain committed to the Chinese market to maintain strong bilateral ties.
Apart from that, growing attention given to the two nation’s presence in third
countries should cast light on China-Japan economic relations which extend
beyond investment in each other’s markets.
In
this regard, both sides have made progress. The two governments concluded a
Memorandum on Business Cooperation in Third Countries between Japan and China
in May 2018.
Additionally,
the China-Japan Forum on Third Country Business Cooperation was held in Beijing
last October. A total of 52 memorandums of cooperation were inked and included
areas such as infrastructure, logistics, IT, healthcare and finance, according
to JETRO.
Highlighting
bilateral cooperation in third countries at its annual white book release, the
Japanese Chamber of Commerce and Industry in China suggested the Chinese
government can offer opportunities and disseminate information about bilateral
cooperation to create even more business opportunities for Japanese businesses.
There’s
little doubt that such advice will be heard attentively as the Chinese economy
continues to open wider to the outside world. Meanwhile, efforts should be made
on the Japanese side as well. Since the China-proposed Belt and Road Initiative
(BRI) fits well into the vision for third country business cooperation between
both nations, perhaps the Japanese government, while pushing for the
Indo-Pacific strategy, could open its mind a bit.
Japanese
companies have begun to understand the potentially huge market involving
projects under the China-proposed BRI, Eiichi Shindo, head of the Belt and Road
Initiative Japan Research Center, told the Global Times.
By
joining the BRI, which highlights connectivity and inclusiveness, Japanese
companies could enjoy the economic dynamism not only of Asia but also the
Eurasian continent at large, including Europe, Shindo noted.
The
upcoming G20 summit in Osaka could be a game changer if the two Asian economies
explore BRI possibilities and figure out a way that they could join hands
within the initiative’s framework.
Source:Global
Times
Japanese
products are displayed at Japan's booth during China International Fair for
Trade in Services in Beijing on May 28. Photo: VCG
G20 Osaka summit could be game changer if China, Japan explore BRI possibilities
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