Depend on China at your peril

The Yomiuri Shimbun (Sep. 30, 2010)
Depend on China at your peril
対日経済圧力 中国リスク回避へ分散化図れ(9月29日付・読売社説)

China is piling economic pressure on Japan following the collision this month between a Chinese fishing boat and two Japan Coast Guard patrol vessels in Japanese waters near the Senkaku Islands.

China effectively has limited exports of rare earth minerals, which are vital for manufacturing hybrid cars, energy-efficient electrical appliances and other products. Some Chinese customhouses have reportedly cranked up inspections of other goods exported to and imported from Japan, resulting in delayed shipments between the two countries.

Officially, the Chinese government has denied ordering this crackdown. However, China is clearly attempting to unsettle Japan. China's actions make a mockery of international economic rules. We think China should immediately retract its retaliatory measures.

Japan imports 90 percent of its rare earths from China. Industries that depend on these minerals are increasingly anxious about the slowdown in customs clearance procedures.

Actions trump words

China has claimed that it has not banned exports of rare earths. However, officials at several Japanese trading houses said the issuance of customs documents needed to approve exports has been halted.

A China ban on exports of rare earths only to Japan would violate World Trade Organization rules. The Japanese government must immediately investigate this worrying situation and demand an explanation from China on why customs clearance procedures have been held up.

At the same time, the government must do more to secure other rare earths production centers to ensure this nation has a stable supply of the minerals, promote research and development of rare earths substitutes and find ways to recycle the minerals.

Many Japanese companies, mainly those in the textile, auto and electrical appliance industries, have shifted their manufacturing bases to China, where labor costs are a fraction of what they are in Japan.

China's 1.3 billion population has increasingly strong purchasing power; it is certainly an attractive market for Japanese companies suffering from lethargic domestic demand due to the declining birthrate and graying population.

Reconsider business model

Nevertheless, Beijing's hard-nosed response to the latest dispute has made it painfully obvious to many Japanese firms that they should not rely too much on China to protect their business and interests.

It is disturbing that allowing Japan's economy to become a "hostage" to China's whims could sway government decisions on foreign and security policies.

Japanese companies should take this opportunity to reconsider their business strategy of concentrating production centers and investment in China, and instead start exploring new markets as the first step to reducing business risks.

Japanese companies have helped China develop technologies in such fields as energy and the environment. Some Japanese supermarkets and convenience stores have opened their doors in China, bringing jobs and a wide range of goods to the Chinese public.

We hope the Chinese government will not overlook the contributions Japanese companies have made to that country.

(From The Yomiuri Shimbun, Sept. 29, 2010)
(2010年9月29日01時52分 読売新聞)

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