Japan starts paying firms to cut reliance on China

Bloomberg

Japan’s government will start subsidising some companies to invest in factories in Japan and South-East Asia as part of efforts to reduce reliance on manufacturing in China.
Fifty-seven companies including privately-held facemask-maker Iris Ohyama or Sharp will receive a total of 57.4 billion yen ($536 million) in subsidies from the government to invest in production in Japan, the Ministry of Economy, Trade and Industry said. Another 30 firms will
receive money for investments in Vietnam, Myanmar, Thailand and other Southeast Asian
nations, according to a separate announcement, which didn’t provide details on the amount of money.
While the METI statement doesn’t explicitly state the money is to move production out of China, Prime Minister Shinzo Abe said in March that Japan needed to bring production back home or diversify output to Asean nations and elsewhere to cut reliance on any one country such as China.
The government will pay a total of 70 billion yen in this round, the Nikkei newspaper reported. The payments come from 243.5 billion yen that the government earmarked in April to reduce reliance on Chinese supply chains, with the money aimed at helping companies shift factories back home or to other nations.
As US-China relations deteriorate and the trade war worsens, there’s been increasing discussions in the US and elsewhere about how to “decouple” economies and firms from China. Japan’s decision is similar to a Taiwanese policy in 2019, which was aimed at bringing investment back home from China. So far, no other country has enacted a concrete policy to encourage the shift.
China is Japan’s biggest trading partner under normal
circumstances and Japanese companies have massive investments there.