Japan flagged its supply-side vulnerabilities in a recent report, highlighting risks posed by the country’s heavy dependence on Chinese imports.
On Feb. 3, Japan’s Cabinet Office released the latest edition of its twice-yearly World Economic Trends report. The report analyzes Japanese, American, and German goods trade with China, underscoring Japan’s larger share of imports from China compared to other major economies.
Out of the 5,000 or so items examined, China accounted for more than a 50 percent share (calculated by value) in 1,133 categories of Japan’s imported goods, compared to the U.S.’s 11.9 percent share in 590 categories and Germany’s 5 percent in 250 items, the analysis showed.
The analysis said that Japan’s reliance on China was about twice the U.S.’s dependence on China, while noting the heightened risks posed by Chinese supply chain disruptions.
“We will improve the autonomy of our economic structure and make our technology superior and essential to protecting our security,” Kishida said. “Economic security is an urgent matter and a key pillar [of his administration’s agenda].”
Japan’s reliance on Chinese imports extends across various goods but is most pronounced in household electronics such as personal smartphones, tablets, and laptops. China’s share of electronic handsets imported by Japan rose to 85.7 percent in 2019 from 69.1 percent in 2009, and the country gets nearly all its imported tablets and laptops, 98.8 percent, from China, according to the Nikkei Asia report.
However, the makeup of China’s exports has shifted as the country’s economy has grown and labor costs rose. While its share of Japanese imports of electronic devices and semiconductors has risen, labor-intensive products have shifted to Vietnam, Indonesia, and other Southeast Asian countries.
In 2019, Japan bought 66 percent of its imported footwear from China, down from 91.7 percent in 2009, a significant reduction.
Stolen Technology
Hajime believes that Japan’s dependence on Chinese-made products will gradually decrease, and that one of the primary reasons for this is that Japan has realized that China has been stealing Japanese technology.“In the past, many electronic parts were produced in Japan and then assembled in China, but many key technologies were stolen during this process, resulting in Chinese-made electronics now dominating the market,” Hajime said.
Similar views were expressed in the March 2019 edition of Japan’s Cabinet Office World Economic Trends report, according to the Chinese edition of Nikkei Asia.
As the world’s assembly factory, China has gradually acquired the technologies to manufacture high-quality parts and machinery, benefiting from domestic production of price-competitive goods.
According to the report, China’s exports in intermediate goods and capital-intensive commodities increased more than 10 percent in 2016 compared to 2000.
Although the import of information technology devices from China has increased substantially for Japan, the United States, and European countries over the past decade, they have been reworking their supply chains since the coronavirus pandemic began due to economic security concerns. Japan and the United States have taken steps, such as promoting domestic semiconductor manufacturing.
Justin Yifu Lin, Dean of the Institute of New Structural Economics at Peking University, said in July 2021 that to compete with developed countries in technological innovation and industrial advancement will require enormous investment and incur high risks if relying on Chinese innovation, according to the Chinese state-run Xinhua News Agency.
However, Lin said that developing countries, like China, have the unique advantage of being latecomers. As the world’s manufacturing hub, it can “import” the advanced technologies and industries from developed countries and use them as a source of innovation. He suggested that would be much cheaper and less risky than relying on independent inventions in China.
“In the context of the Chinese Communist Party, ‘import’ means plagiarism,” Hajime said.
Japanese people are often hesitant to buy products made in China due to their inconsistent quality. On the contrary, Chinese people love Japanese products as they are known to be of high quality, Hajime added.
While the Japanese analysis showed the overall dependence on Chinese imports had changed little from a decade earlier, experts around the globe have called for more resilient supply chains and less reliance on China.
