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Xi Dreading US, Japan Exit From China As Vietnam, Thailand, Indonesia Vie For Opportunities

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China’s pivoting role in the spread of the novel coronavirus pandemic has earned it the fury of countries across the globe. This has many to consider reducing their reliance on China for their manufacturing needs including Japan.  

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The Japanese decision to ‘leave’ China has set alarm bells ringing in Beijing with President Xi Jinping calling for a ‘protracted battle’ while assuming the worse, writes Katsuji Nakazawa for the Nikkei Asian Review.

The Sino-Japanese bonhomie was on track until the global pandemic derailed it earlier this year. President Xi canceled his first-ever state visit to Japan and ever since then, Shinzo Abe has insisted that his country’s need to stop being dependent on China.

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Speaking at Council on Investments for the Future, Abe said he wanted high value-added product manufacturing bases to come home to Japan.” We should try to relocate high added value items to Japan,” the PM said. “And for everything else, we should diversify to countries like those in ASEAN.” This marked the beginning of Abe’s ‘shift away from China’ policy.

In its emergency economic package adopted on April 7, the Japanese government called for the re-establishment of supply chains that have been impacted by the virus. Japan will devote more than $2.2 billion(220bn Yen) of its coronavirus economic stimulus package to incentivize its manufacturers to move their production out to Japan or 23.5bn Yen to diversify production hubs into Southeast Asia.

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Other countries such as the USA and the UK are also planning to reduce their dependence on China. An exodus such as this will hurt the Chinese economy which has anyway been spiraling since the shutdown of the domestic economy earlier this year. The Chinese economy contracted 6.8% in the first quarter of 2020 as compared to 2019.

This was the first contraction in the country’s quarterly (GDP) since it first began reporting the metric in 1992. The novel coronavirus pandemic has created a massive unemployment crisis in the country as well.

According to Liu Chenjie, the chief economist of fund management firm Upright Asset, as many as 205 million people in China may have been put out of a job due to the Covid-19 outbreak. China’s downfall does have a positive, albeit for South-East Asian countries.

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China is currently the world’s production hub, but it may no longer remain that way post the coronavirus pandemic as companies have started to look for other economic avenues to move their production facilities, in order to reduce the dependence on China.

As EurAsian Times reported earlier, after the US-China trade war last year and the coronavirus outbreak in the current year, US technology giants Apple, Google and Microsoft are reportedly looking at shifting their production base outside China and countries like Vietnam, Thailand, Indonesia and Malaysia are set to benefit.

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Another topic that has generated interest amongst the Chinese intellectuals is the year of Geng-Zi, or the metal rat, which comes once every 60 years. It is believed that the year of the metal rat leads to a history-changing occurrence every time. In 1840 is was the Opium War, in 1900 it was the Boxer Rebellion and in 1960 it the great famine under Mao Zedong. What would the metal rat bring in 2020 remains a mystery.

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