Reforms offer new opportunities for Japanese businesses

BEIJING - Although political tension has caused China-Japan trade to suffer recently, China will remain an important destination for investment by Japanese businesses and the country's reforms will offer fresh opportunities for them, analysts have said.

According to the Ministry of Commerce, direct investment from Japan, China's fifth-biggest investor, plunged 42.2 percent year on year during the January-May period.

The drop was partly a result of tense relations between the two countries due to territorial and historical issues, which ministry spokesman Shen Danyang warned would cause further damage to business cooperation if the situation keeps deteriorating.

"The impact on bilateral economic and trade ties is not in the interests of either side," Shen stressed.

Song Zhiyong, an analyst with the Chinese Academy of International Trade and Economic Cooperation, said the current trade volume between China and Japan did not come easily, and the two sides should work together to maintain the momentum.

Other than the impact of political factors, China's ongoing economic restructuring, with the country's growth slowing and production costs rising, is posing new challenges for Japanese businesses.

In the first three months of 2014, China's growth slowed to 7.4 percent, the lowest pace since the third quarter of 2012.

Beneath the headline number are China's painful efforts to gradually shift away from export-driven growth, which brought pressure to bear on foreign manufacturing businesses that once rode on China's cheap labor and land.

"For Japanese businesses, the investment dividends are retreating," noted Zhang Huanli, an analyst with the Xinhua Center for World Affairs Studies.

But along with the new challenges also come fresh opportunities. Song pointed out that China's reform push to expand market scale, open industrial scope and improve the business environment will still make it attractive for Japanese enterprises.

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