Business | FOCUS

U.S.-China trade war may provide window of opportunity for Japan businesses

by Tomoyuki Tachikawa

Kyodo

Although China’s economy has been slowing down due to a trade war waged by the United States, hurting not only exports but also domestic demand, such a situation may provide a window of opportunity for Japanese businesses.

As relations between the two Asian nations have improved and Washington has repeatedly voiced wariness about Beijing’s geopolitical rise, Chinese people have started to have a favorable image of Japan, several surveys show.

Japanese companies and organizations are expected to seize chances to bolster their businesses especially in the fields of food, clothing, nursing care and the environment, some analysts say. Japanese products and services in such areas are already highly regarded in China.

Since late last year, the world’s second-biggest economy has been clearly weakening against a backdrop of sluggish exports as well as lackluster investment and consumer spending, prodding the Chinese government to implement large-scale stimulus measures.

During the April-June quarter, China’s economy grew at its slowest pace in nearly 30 years, expanding 6.2 percent from a year earlier, according to the country’s latest gross domestic product data released Monday.

In particular, China’s exports to the U.S., one of the engines of economic growth, fell more than 8 percent from the previous year for the six months from January, darkening the outlook for the nation’s economy.

Amid expectations that a tit-for-tat tariff escalation with the U.S. would dampen consumer and business sentiment further, Japan’s exports to China have also declined, said Yusuke Miura, chief researcher at the Mizuho Research Institute.

But China has been trying to boost cooperation with Japan, as there is little sign that negotiations with Washington — which has implicitly urged Beijing to change its socialist economic system — will go smoothly.

As U.S.-China ties have been cooling, it “sounds true” that Beijing has “rushed to improve relations with Japan” to counter Washington, said Naoto Saito, chief researcher at Daiwa Institute of Research in Tokyo.

In tandem with a thaw in ties between the two Asian powers, more Chinese citizens now hold favorable views on Japan.

The ratio of Chinese people who have a “favorable” impression of Japan was 42.2 percent in 2018, up 11 points from the previous year, said the Genron NPO, an independent and not-for-profit think tank in Japan.

The percentage was the highest since the survey began in 2005, the organization said, adding the most popular reason for the favorable impression of Japan was the “remarkable growth of Japan’s economy and its high standards of living.”

Another survey conducted late last year by the Japan External Trade Organization (JETRO) also showed that 43.4 percent of Chinese respondents answered that Japan’s services are “good” and 46.5 percent of them said that they “want to go” to Japan in the future.

Indeed, the number of Chinese visitors to Japan jumped 13.9 percent from a year earlier to a record 8.38 million in 2018, according to the Japan Tourism Agency.

As more Chinese people have actually traveled to Japan, they have gradually taken after their neighbor by adopting Japanese senses of “cleanliness” and “safety,” said Shigeto Sonoda, a professor of sociology and Asian studies at the University of Tokyo.

A taxi driver in Beijing said, “I really like Japanese high-quality and sophisticated services and I respect Japanese people because they are polite and humble.”

In China, many citizens have become more interested in Japanese products, including food. The number of Japanese restaurants in China has also doubled to 40,800 in 2017 for the past two years from 2015, JETRO said.

As for clothing, the number of Uniqlo casual clothing chains, operated by Japan’s Fast Retailing Co., had risen to 687 in mainland China as of the end of May. The firm launched its first Uniqo store there in 2002.

“Uniqlo’s clothes are inexpensive but high quality. I like them,” the taxi driver said.

China has also faced a rapidly aging population due largely to its decades-old “one-child policy” and environmental pollution stemming from thermal power generation using coal and exhaust gases. The one-child policy was scrapped in 2016.

“We believe that Japan has state-of-the-art technologies and know-how to tackle such areas. We hope that Japanese companies will invest more on China. Now is good timing for them to earn money in our country,” a Chinese businessman said.

China-Japan tensions intensified after the government of Prime Minister Yoshihiko Noda, Shinzo Abe’s predecessor, decided in September 2012 to bring the uninhabited Senkaku Islands in the East China Sea under state control.

The Senkakus, called Diaoyu in China, are controlled by Japan but claimed by Beijing.

The relationship between the two nations, however, has changed recently, with last year’s 40th anniversary of the bilateral Treaty of Peace and Friendship serving as an incentive to forge better ties.

Washington, meanwhile, has imposed 25 percent levies on a total of $250 billion worth of Chinese imports in response to Beijing’s alleged intellectual property and technology theft. China has retaliated by taxing $110 billion worth of goods from the United States.