Japan offers subsidies to firms shifting base from China to India, B'desh, ASEAN countries

Japan's Ministry of Economy, Trade and Industry has said it will provide subsidies to Japanese manufacturers that shift their manufacturing setups from China to ASEAN countries. The ministry also said it will add India and Bangladesh to the list of relocation destinations, according to Japanese media.

This comes as the world's supply chain was disrupted after the outbreak of COVID-19 which originated in China. A majority of the countries including Japan relied heavily on China which was cut off after the outbreak of COVID-19 in the country. The countries have now started mulling on options to either exit from China or at least reduce their dependence on it with respect to trade or other procurements.

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Japan to reduce dependence on China

Japan too aims to decentralise its supply chain by reducing its dependence on a particular country for medical and well as electronic components supply. The Japanese government has allocated 23.5 billion yen in 2020 supplemental budget for the subsidy to encourage companies to disperse their manufacturing sites across the ASEAN region.

In concurrence to the second round of applications that began on September 3, projects contributing to the resilience of the ASEAN-Japan supply chain were added to the list, along with relocation plans to India and Bangladesh.

The second round of application targets feasibility studies on decentralising manufacturing sites, the experimental introduction of facilities and implementation of model projects. The total amount of subsidies which will be provided is reported to reach several billion yen, said Nikkei.

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China's misdeeds

Besides the COVID-19 pandemic, China has also been criticised in the international community over its imposition of draconian national security law in Hong Kong, in turn threatening the autonomy of the trade city. Moreover, the ASEAN countries, Australia, India, Japan and the US have moved against China for its aggression in the South China Sea.

China has also shown aggression towards India along the LAC twice this year. The earlier violent faceoff in June had led to the martyrdom of 20 Indian army soldiers including a commanding rank officer. The latest flare-up occurred in late August during which Indian Army foiled their attempt to unilaterally change status quo on the LAC.

China has been known to strong-arming its way with weaker countries and exercising debt trap policy by luring the countries into offering capital and resources for development. Sri Lanka remains the prime example of China's debt-trap policy besides some of the African countries.

(With ANI inputs)

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