Yao Yang, Dean of the National School of Development at Peking University, sees two reasons why the global supply chains will not easily be "de-Sinicized". First, global value chains reflect economic rationality. Each microeconomic decision by firms to organize the manufacturing of their products is based on a cost-advantage analysis of the division of labor, technical specialization and overall costs. The arrangement of supply chains is constantly improved and optimized. For example, China has long been mostly a location for assembling iPhone devices by Taiwanese giant Foxconn. Today, Chinese companies are involved in the manufacturing of key components. Moreover, rumors abound in the technology press that Apple will soon select China’s BOE Technology at the expense of Samsung and LG Display for manufacturing the OLED screens of the next generations of iPhones. The textile industry is moving from China to Southeast Asia, but Chinese exports of intermediate textile products to Southeast Asia have increased simultaneously. Yao Yang expects the Chinese industry to continue moving up the value chain. Second, he underlines the importance of Japan’s automotive industry for the stability of China-Japan business relations: the business interests of a Japanese spare part supplier to Toyota are likely to prevail over soft guidelines of the Japanese government if Toyota builds a car factory in China.
Gui Yongtao, Vice-Dean of the School of International Studies at Peking University, argues that unlike the Trump administration, the Abe government does not regard relations with China as zero-sum competition. The difference between the US and Japan is particularly important in trade. Japan is exposed to the "friendly artillery fire" (友军炮火) of American tariffs against China and fears US tariffs on cars as much as Germany, given that 76% of Japan’s trade surplus with the US is derived from the automotive sector. Gui Yongtao argues that Japan pursues a rather modest goal, that explains the trajectory of its bilateral and multilateral trade agreements in recent years: deny China the leadership of regional trade integration.
That the policy of resilience implemented by METI strictly targets healthcare equipment related to Covid-19 means that it comes at almost no political cost for China-Japan relations, but it also does not sum up the overall dynamic in China-Japan relations, which is characterized by deep distrust and security competition. Japan is not pursuing a strategy of decoupling from China, but decoupling could still happen in information and communication technology. The US crackdown on Huawei’s supply chain already affects many Japanese companies – Huawei’s procurement in Japan increased by 50% in 2019, reaching US$10,3 billion. The cost for Japan’s ICT suppliers would further increase if the US restrictions on exports of semiconductor products continued to expand beyond Huawei and its affiliates – a scenario that China takes seriously.
Copyright : Behrouz MEHRI / AFP