Image: Chen Xia/Global Times
Japan on Friday said it would restrict exports of 23 types of semiconductor manufacturing equipment, according to Reuters. Although China was not identified as the target of the restrictions, the development was widely seen as evidence that Japan will align its policies with the US-led “decoupling” push to curb key technology exports to China.
This is a sign that Japan will follow the US in curbing China’s economic development, which will obviously increase the complexity of economic and trade cooperation between the country and its near neighbor.
Whatever the reason or excuse, Japan’s attempt to expand its security alliance with the US into the economic and commercial sphere represents a step backwards in terms of free trade. As a country heavily dependent on foreign trade, Japan must is carefully considering whether its economy can withstand the fallout of the US push for “decoupling” from China, its largest trading partner for more than a decade.
It is true that Japan has a sizeable economy and a well-developed manufacturing base, but its persistently weak economic performance of late has raised many fears that the economy may be on the verge of giving up its crown as the world’s third largest economy. In addition, according to media reports, Japan’s current account surplus was 11.4 trillion yen ($88 billion) in 2022, down a sharp 47 percent year-on-year.
If anything, the lackluster economic performance these days stands in stark contrast to Japan’s expanding geopolitical ambitions. If Japan continues to prioritize geopolitical considerations over economic interests, Japan will not only lose the opportunity to focus on economic recovery, but also unleash its own industrial chain chaos.
As for the semiconductor sector, despite Japan’s competitive advantages in semiconductor raw materials, it should be noted that technological development must be closely linked to market needs. And in the case of Japan, the disappearance of the high-spending market means that the momentum for technological innovation is becoming weaker.
According to a survey conducted by the Japan Bank for International Cooperation, Japan’s manufacturing sector’s overseas production rate was 33.8 percent in fiscal 2021, and the overseas sales rate was 36.3 percent. Among them, Japan’s electronics industry and auto industry are more dependent on the foreign market, with the foreign sales ratio being about 45 percent. China is the most important market for Japanese manufacturers, which is not only due to the relatively high returns on Japanese investments in China, but also due to the growing demand from Chinese customers.
The complementarity of Sino-Japanese trade dictates that if Japan cuts China off the technology supply chain to support the US, the Japanese economy will also suffer significantly. China-Japan economic and trade relations are based on equality and mutual benefit, not favors that China seeks from Japan. China’s development is not a pressure but an opportunity for Japan.
Now that Japan has made it clear that it will join the US ban on chip exports to China, it can be seen as a hostile economic move against China that could have had serious repercussions on some Japanese companies that are breaking the rule of the fair trade and the WTO principle of fair competition. If Japan sides with the US in suppressing China’s development, it is illusory to think that China would not strike back. The stakes across Asia’s industrial and supply chain are so high that China must take appropriate action to counter any behavior that can disrupt and disrupt regional supply chains.
The more the Japanese government sides with the US in politicizing economic, trade and technological issues, the more dependent Japan becomes on the US. Some may argue that US and Japanese interests may be on the same page, but past experience suggests the actual dynamics may be different. When US domestic policy changes, Japan’s interests are often the first to be sacrificed.
Currently, Asia is one of the most prosperous regions in the world, with China, ASEAN and India forecast to have a robust recovery this year. This is said to be an unprecedented opportunity for China and Japan to strengthen cooperation and boost Japan’s economy, but the premise is that Japan must first shake off its geopolitical shackles before integrating into Asian economic development.
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