China's economic crisis has lately been exacerbated further by sluggish exports, excessive production capacity, mounting bad debts accumulated in both private and public financial institutions, and massive outflows of capital.
As Beijing tightens its grip on capital transactions, Japanese firms are being adversely impacted. Their Chinese subsidiaries are facing difficulties in their export and import operations. It also has become increasingly hard for them to pay loans, dividends and compensation for services to their parent companies.
Several major automotive parts makers that are affiliated with Toyota and Honda and have plants in Guangdong Province have since last fall been denied permission by the Chinese authorities to repay debts amounting to billions of yen to their Japanese parent firms. Pleas and protests made through Japanese banks' branches in China and the Japanese consulate have made no headway.