Japan to Provide Subsidies, Encouraging Manufacturers to Shift from China to Other Asian Nations
Japan’s ministry of economy, trade, and industry (METI) is planning to allocate $536 Million as incentives to companies shifting from China to the ASEAN nations. This comes after the Covid-19 outbreak, disrupting the world’s supply chain with China which lead to countries mulling over the options to reduce their dependence on the country with respect to trade.
Japan advises companies to recognize the vulnerability that its huge dependency on China poses and, to stabilize its trade and commerce. The subsidy fosters India’s production capability as it has added India and Bangladesh to the list of nations qualifying for the subsidy.
China’s relation with various nations has worsened amid the Sino-American tensions, deadlock on the China-India border, and the novel Coronavirus. It is a great opportunity for India to grow as a production hub because nations are looking for alternatives to China. Trade and commerce ministers of Japan, India, and Australia had participated in a video conferencing meeting and discussed on building trust and strong supply chains in the Indo Pacific regions.
A week later the decision, Prime minister of the two nations Narendra Modi and Shinzo Abe is to meet in the India-Japan summit. The two countries are also expected to sign the ACSA (Acquisition and Cross serving agreement) to boost their defense ties. India’s Commerce minister Piyush Goyal said that decentralizing would help to reduce risk and discipline price volatility. Quad nations Japan, Australia, and India, along with the U.S. are expected to reduce tariffs and introduce policies attempting to build a fare, stable and resilient trade environment.