1 July, 2005

protests are working

Who says civil activism can’t be effective in China? KokuRyu at Japundit notes that the recent wave of anti-Japanese protests in China are getting results.:

Although conventional wisdom says political and economic relations between Japan and China are two different animals, and are completely unconnected, a recent NY Times News Service editorial has evidence to the contrary. The editorial, which appears in the Taipei Times, argues that the recent anti-Japanese protests in China this past spring seems to have hit a nerve with Japan’s capitalist classes:

After a five-year boom, Japan’s export growth to China stalled in May. Recent polls of Japanese investors show a growing reluctance to make further investments in China.
Two surveys, seperated by six months, of 414 Japanese business operating in China discovered:
The percentage of Japanese companies planning to expand operations in China dropped sharply, to just under 55 percent in late May, from 86 percent last December, according to the Japan External Trade Organization, the country’s trade and investment promotion agency…Although only 10 percent of the companies said that business had suffered from the protests, largely in reduced sales and tarnished brands, 36 percent said they were worried about future effects, and 45 percent said the business risk of operating in China had increased.

I am reluctant to put too much faith in one survey, and moreover attributing the change in Japan’s view solely to anti-Japanese protests.

Actual fixed asset investment (FAI) and foreign direct investment (FDI) into China from all countries was down or slower in January-May - with FDI falling 0.79% and the increase in FAI slipping eight percentage points to 26.4%.

I’m sure the anti-Japan protests are deterring investment but, more broadly, there are reasons for everybody to think that China is not a sure bet. For savvy Japanese investors, surely concerns about widespread overcapacity and tightening profit margins must be as big, or bigger, concerns than rioting college students.

by @ 1:30 pm. Filed under Japan, China, Asia, East Asia, Economy, Northeast Asia

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