Mutual benefit: Basis of China-Japan economic cooperation

Editor's note: Yan Zeyang, a special commentator for CGTN, is an assistant researcher at the Institute of Northeast Asian Studies, China Institutes of Contemporary International Relations. The article reflects the author's opinions and not necessarily the views of CGTN.

On January 23-26, a delegation of senior Japanese business leaders is visiting China, marking the first visit of its kind in around four years. Since 1975, the Japanese government and economic community have organized economic delegations to visit China almost every year. However, due to various factors, the last time a Japanese economic delegation visited China was in 2019.

In addition to economic figures such as representatives of the Japan-China Economic Association, the Japan Business Federation, and the Japan Chamber of Commerce and Industry, the delegation for this visit to China also includes many political figures, with a total of about 200 people. It can be said that the lineup is impressive and the scale is large, reflecting the importance that the Japanese delegation attaches to this visit to China.

The two neighboring countries are holding consultations on de-carbonization, strengthening industrial capabilities, and promoting supply chain stability, conveying the necessity and importance of economic cooperation between China and Japan to the outside world.

The visit of the Japanese economic delegation to China is being carried out in the complex context of Sino-Japanese relations, which have suffered from a lack of mutual trust and communication, thereby affecting their economic cooperation in recent years.

However, the close economic relationship between China and Japan cannot be ignored, and decoupling and breaking the chain is not beneficial for either side. Since 2007, China has been Japan's largest trading partner. In the past decade, the average annual bilateral trade volume has been around $300 billion, accounting for more than one-fifth of Japan's total foreign trade.

China has become an important force driving Japan's foreign trade and economic growth. According to the Japan Exterior Trade Research Organization, in 2021, the investment return rate of Japanese companies in China reached over 15 percent, far exceeding Japan's investment return rate of 4.2 percent in the U.S. and 10.4 percent in Thailand. The survey results released by the China-Japan Chamber of Commerce on January 15 showed that 88 percent of Japanese companies still consider China as an important market for their positioning in the Chinese market after 2024.

Secondly, decoupling and breaking chains are not beneficial to either side. In recent years, under the instigation of the United States, the Japanese government has strengthened its "economic security" measures, artificially weakening and attempting to sever economic ties with China.

It is unrealistic for Japan to completely decouple from China's economy. Japanese newspaper The Nihon Keizai Shimbun said that "zero China import will lead to Japan's annual loss of 53 trillion yen ($359 billion)," which is equivalent to 10 percent of Japan's annual GDP "evaporating out of thin air."

Taking semiconductors as an example, the Chinese mainland is the largest export destination for Japanese semiconductor manufacturing equipment enterprises. In 2022, Japan exported more than 820 billion yen ($5.7 billion) of semiconductor manufacturing equipment to the Chinese mainland, more than 30 percent of Japan's total exports in this field. Cooperation in the semiconductor industry between China and Japan is in line with the interests of both countries.

Thirdly, there is broad space for future economic cooperation. As the two largest economies in Asia, China and Japan share many similarities and complementarities. Both countries are manufacturing powers in the world and an important part of the global supply chain, and both are facing challenges of transformation and upgrading. For example, China is currently facing an aging population, and Japan is one of the first countries in the world to enter an aging society. Therefore, both countries are confronted with challenges in the supply of elderly care industry and the construction of supporting systems, and the cooperation space between the two countries is enormous.

On November 16, 2023, the leaders of the two countries exchanged in-depth views on strategic and directional issues and reached many important consensuses during the 30th Asia-Pacific Economic Cooperation (APEC) Economic Leaders' Meeting in San Francisco, U.S. This released an important signal of efforts to stop the decline and promote stability in China-Japan relations.

The economic cooperation between China and Japan is also conducive to maintaining and promoting regional and global peace and stability. Both countries are important members of Asia-Pacific, supporters of the multilateral trading system, and participants in global governance. The two countries can cooperate within frameworks such as the China-Japan-South Korea Free Trade Agreement, the Regional Comprehensive Economic Partnership, the Asia-Pacific Economic Cooperation, and the Group of 20 to jointly address global issues and contribute to building a community with a shared future for mankind.

The current situation of China-Japan relations is complex, encountering many new problems. In this context, China and Japan need to build on the consensus reached during the leaders' meeting, implement mutually beneficial strategic relationships, deepen economic cooperation, and achieve win-win results.

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