Economic relationship between China and Japan

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Economic relationship between China and Japan
General situation
China is the world’s largest developing country (, 2011) and Japan is the major economic entity .They play an important role in both region and world economy. Japan is one of China’s important neighbors. In 2006 former Japanese Prime Minister Shinzo Abe visited China. This visit is called “ice-breaking journey” (Xinhua, 2007). After that journey, Sino-Japanese political relations has been warmed, and bilateral economic and trade relations are also well off. Economic and trade relationship between the two countries has formed a mutually beneficial and win-win situation. However, under the circumstance of warm political relation, there was a certain degree of heat politics and cool economy phenomenon. Trade volume

From point of Sino-Japanese trade volume, the development of Sino-Japanese trade is in good condition. Affected by the financial crisis, the rate of growth of Sino-Japan trade decreased slightly, but the absolute amount has remained increase. As the figure following shows, China and Japan’s bilateral trade increased expect year 2009 and the surplus has the intendancy of inclining. Figure 1 China and Japan’s bilateral trade

Data from Foreign Investment China of Ministry of Commerce,2012 Commodity structure
Sino-Japan trade commodity structure is stable. China’s export mainly concentrated in the mechanical and electrical products, textiles and raw materials, base metals and products, furniture, toys and chemical products. Japan’s main export products to China focused on mechanical and electrical products, base metals and products, chemical Products, transport equipment, plastic and rubber (Nam, 2004). Trade methods

Processing trade is the main methods of trade between China and Japan (Eu SME Centre, 2011). The rapid development of trade is largely based on the background that China has become the production basement of Japanese industries. Japanese industries’ domination of trade helps to boost development of trade, improve the quality of Chinese exports products and decrease trade friction. However, Chinese industries cannot improve the competitive power if they still adopt that trade methods. Investment

Since year 2000, China joined the WTO and the market is more open. Japanese investment to China increased. But from 2005, the investment started to fall until year 2010. The figure following illustrated that. The Japanese investment in China started late and the investment was stagnant. However, Japanese industries will invest China in the future, because the Chinese consumer market is so big that the opportunities are large.

Figure 2 Japanese direct investments to China
Data from Foreign Investment China of Ministry of Commerce, 2012 Industries of Japan's direct investment distribution are more diversified. Traditional manufacturing industry is still the main industry to invest. Since 1993, manufacturing industry investment has accounted for 70% of total Japanese investment to China (, 2014). Meanwhile, in the non-manufacturing industries, financial service, housing estate and business has become the new hot investment area. Japanese investment to China has changed a lot, from pursuing cheap cost of labor and raw material to paying attention to high-valued area. The economic relationship with China and Japan has developed deeply.

Eu SME Centre (2011), Processing trade in China. Available from: [Accessed: July 2, 2014]. Foreign Investment China of Ministry of Commerce (2012),  Available from:, Web site: [Accessed: July 2, 2014]. Japan's Ministry of Finance (2014), Processing trade in China. Available from: [Accessed: July 2, 2014]. Sang-yirl Nam, Research fellow (2004), Trade Structure and Trade Potential Between China, Japan and...
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