Asia Unhedged | China and Japan compete for influence in emerging Asia
Source: Bloomberg
Source: Bloomberg
Asia UnhedgedReal-time intel on what moves markets

China and Japan compete for influence in emerging Asia

Japan’s exports to Asia grew 20% year-on-year in March, while China’s has been flat, in a sign that, despite Beijing’s growing influence, the competition is still fierce.

April 21, 2017 11:19 PM (UTC+8)

Japan is not prepared to cede influence in Asia to China as the region’s largest economy gears up its One Belt, One Road investment program.

Japanese foreign direct investment in Southeast Asia is bigger than China’s, and it is far more user-friendly: Japanese companies emphasize local content in foreign operations, allying with local manufacturers and working with regional governments, while China acts the like an 800-pound gorilla wherever it invests.

Japan’s view is strategic as much as economic. It doesn’t want China to dominate the region militarily, and hopes to work with Washington to create a strategic counterweight to China.

One month doesn’t make a trend, to be sure, but Japan’s spectacular 20% year-on-year increase in exports to Asia in February was an eye-opener. The 16% increase in exports to China in March may have been exaggerated by the lunar New Year effect, but it suggests that the trend is continuing. Growth in China’s exports to Asia, by contrast, has been flat.