Majority of Japanese companies maintaining or increasing investment in China in 2023: survey

A white paper released by the Japanese Chamber of Commerce and Industry in China on Monday showed that more than half of Japanese companies increased or maintained investment in China last year, underlying the resilience of the Chinese market.

Experts said Tokyo's move of following the US to seek "decoupling" with China in some fields have affected Japanese companies' investment in China, calling for the Japanese side to rule out external disturbance and pursue new cooperation areas with China for win-win results.

Conducted between November 23 and December 13, 2023, the survey collected responses from over 1,700 Japanese companies doing business across China. It covered a wide range of industries from electronic machinery to chemicals, food and medicine, according to a report sent to the Global Times on Monday.

About 38 percent of Japanese companies said that they maintained the same investment level last year as 2022, while another 15 percent said they "significantly increased" or "increased" their investment in China.

Reasons given for increased investment include business expansion in the wake of the COVID-19, conforming to the electrification and intelligence of the automotive industry, and increasing efficiency and functionality through automation.

Around 54 percent of the companies surveyed said they are satisfied with the business climate in China, up 3 percentage points compared with the chamber's last survey, it said.

Those surveyed said their businesses in China is relatively "grim," but slight improvement is also being made, it said, stressing that 51 percent of Japanese companies considers Chinese market their "most important market" or "one of the three most important markets."

"The result of the survey revealed the contradiction state of mindset of Japanese companies. Japan's China policy has shown tendency of following the US in recent years, and the Japanese side's 'industrial decoupling' from China have affected some Japanese companies' investment and operations in China," Xiang Haoyu, a research fellow at the China Institute of International Studies, told the Global Times on Monday.

Despite geopolitical volatility, about half of Japanese companies are willing to maintain or increase their investment in China, which underscores the resilience and potential of the vast Chinese market, Xiang said.

Looking ahead to 2024, Xiang is cautiously optimistic about China-Japan economic and trade relations. Customs data showed that Japan is still a major trade partner of China and the complementary nature of the two economies persist, but the Japanese side ought to rule out external meddling to explore new cooperation areas with China for greater win-win results, he said.

According to data released by the General Administration of China, the volume of bilateral trade between China and Japan dropped 10.7 percent year-on-year to reach $318 billion in 2023.

Japan announced in March 2023 a draft revision to a ministry ordinance on its Foreign Exchange and Foreign Trade Act, adding 23 chip-manufacturing items that require government approval for export, which includes equipment for cleaning, checkups and lithography, a technology essential in producing cutting-edge chips. It took effect in July.