Japan to Pay Companies $2.2 Billion to Move Production out of China

According to the Japanese government’s latest budget, the vibrant island nation has allocated nearly $2.2 billion to help subsidized its manufacturers who are looking to move factories outside of China in the wake of the ongoing Coronavirus pandemic, which leaked from a disease research lab in Wuhan, China.

According to Bloomberg, “Japan has earmarked $2.2 billion of its record economic stimulus package to help its manufacturers shift production out of China as the coronavirus disrupts supply chains between the major trading partners.” $2 billion is designated to help Japanese companies relocate to mainland Japan whereas $200 million is set aside for companies looking to move out of China to another country. This marks the first attempt by a world power to shift its own manufacturing sector out of China following the pandemic.

China has come under heavy scrutiny in recent weeks for its intentionally trying to bury initial reports of the Coronavirus in late December and early January.

President Trump has retaliated against the WHO for taking Chinese propaganda about the virus at face value by withholding funding, but has not yet proposed any way to punish China directly.

The new funding comes as “imports from China [to Japan] slumped by almost half in February as the disease shuttered factories, in turn starving Japanese manufacturers of necessary components.”

Also, “a February survey by Tokyo Shoko Research Ltd. found 37% of the more than 2,600 companies that responded were diversifying procurement to places other than China amid the coronavirus crisis.” It remains to be seen whether other countries follow Japan’s lead.