In a bid to reverse declining investments to China, a Japanese business and trade delegation had a meeting with the National Development and Reform Commission (NDRC) of China last Monday.

 

Japanese investment in China increased by 19.8 percent in 2005, amounting for US$6.5 billion, the record in history. This figure, released by the Japan External Trade Organization at the beginning of this year, helps represent Sino-Japanese relations: cool politically and heated economically.

 

However, according to statistics released by the same organization, total direct investment injected into the Chinese manufacturing industry from Japan stood at US$2.244 billion in the first half of 2006, 31.4 percent lower year-on-year. The big drop, which was rarely seen in recent years, shows the slowdown of direct investment from Japanese manufacturing industry.

 

Observers attribute this situation to following main reasons: the decreasing attractiveness of China’s low labor cost advantages, and China's adjustment of policies and measures favorable to foreign investment. 

 

The Japan-China Association on Economy & Trade sent a 130-member delegation on September 3 to visit Beijing and Shandong Province. The delegation was composed of a large number of key persons in Japanese economic circles, including Mitarai Fujio, chairman of Japan Business Federation (Nippon Keidanren), and its honorary chairman.

 

The delegation's mission was to discuss economic issues with the National Development and Reform Commission (NDRC) and Ministry of Commerce (MOC). Many leaders of Japanese enterprises hoped that the Chinese government would fashion more favorable policies for Japanese enterprises to invest in China.

 

Jin Baisong, expert on Japanese issues, of the International Trade and Economy Cooperation Institute of MOC, said last Monday that Japanese investment to China had been greatly affected by the political relationship between China and Japan. For Japanese companies who have not entered the Chinese market, they may elect to wait and see, or make investment in the more immediate markets of Thailand, Russia or Brazil; for those who have businesses in China, they do not wish to see this huge market stagnate.

 

The delegation had a meeting with the MOC last Tuesday, hoping that they might expand their business to more fields and areas in China. This is the first issue on the agenda of many Japanese enterprises.

 

(China.org.cn by Xu Lin, September 11, 2006)