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China does not quite have the game.
Western public relations at the time of Trump and Brexit are so bad that it's easy to see the "big time". Chinese ascension as a welcome stabilizer in the markets, finance and the economy. and trade. The fear of President Xi Jinping's Belt and Road initiative is a striking example, conveying the unhealthy idea that democracies can no longer do great things and that China is sweeping everything in front of her.
The same mythology characterizes China as the only important country in Asia. Suddenly in the Western mind, Asia is China and China is Asia. (Never mind that in the 1990s, many people were saying the same thing about Japan.)
The depreciation of the rest of Asia neglects the strength of Japanese companies and the measures taken by Tokyo to guide economic policy – not to mention the development aid – to counter the Chinese influence. A secondary theme is the feeling that America, Japan's closest economic and security ally since 1945, is becoming more introverted and unreliable.
Japan needs to diversify its portfolio. The country wants to get back into the game and is recruiting partners where it can. India, which feels surrounded by China, is eager for an ally. In September, Prime Ministers Shinzo Abe and Narendra Modi jointly announced the construction of a high-speed rail line funded almost entirely by Japan. India receives infrastructure and Japanese companies like Hitachi and Kawasaki Heavy get contracts. A few months earlier, the two leaders unveiled the Asia-Africa Growth Corridor for joint development in Africa. The competition with China, which has made great breakthroughs in Africa, is impossible to miss.
In Southeast Asia, Japanese companies are also winning the infrastructure race. Not only are they doing more business than Chinese companies among the 10 members of the Association of Southeast Asian Nations, but they remain the dominant direct foreign investor in Southeast Asia. Asia. With the United States and the European Union, Japan accounted for more than half of the total in 2015.
Chinese companies could catch up. And the Chinese army can get to dominate Asian security. But Japan will not acquiesce. Japanese interests did not just pack their bags and headed to their home country with low growth and low inflation.
On the contrary, domestic conditions are partly responsible for the renewed interest of Japanese companies in foreign markets. Abe and the Governor of the Bank of Japan, Haruhiko Kuroda, have made concerted efforts to revive and revive the Japanese economy. They met with mixed success. Deflation is no longer ubiquitous, and capital spending plans look promising, but public servants and executives are still struggling with the consequences of an aging and declining population. The prospects for sustained income and income growth seem stronger away from home.
Japanese companies invest heavily in China, but again, Japan feels the need to diversify. The pace of China's economic growth is still high, but it has cooled considerably over the last decade and is expected to slow to around 6% over the next few years.
Japanese companies, like other foreign investors, are increasingly exposed to diplomatic tension. Imagine if a Japanese minister makes a derogatory remark that displeases Beijing. The next thing you know, this factory in Guangzhou is put on hold or, as was the case with the South Korean conglomerate Lotte, fire safety rules suddenly become a problem.
It was different when China was building its economy and had to catch up. to the big industrial powers. This era is over. "Made in China 2025", another initiative of Xi, may offer opportunities for technology investment, but this program aims to make China a great city.
The idea of a "southern strategy" Japanese has its roots in the history of the country. As the writing Corey Wallace in International Affairs, the concept exists since the Meiji era in the late nineteenth century. At the time, he had military as well as commercial components.
However, it diversifies its portfolio, Japan sends a clear message: China has not yet defeated all its competitors.
Source: Bloomberg
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