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Japan Spends Hundreds Of Millions Of Dollars On Companies Leaving China

Sharp is paid by the Japanese government to move production out of China.

The Japanese government has started paying its companies to move factories out of China and back home or to Southeast Asia, as part of a new program to ensure supply chains and reduce dependence on manufacturing in China.

57 companies including private masks manufacturer Iris Ohyama Inc. and Sharp Corp will receive a total of 57.4 billion yen ($ 536 million) in grants from the government, the Ministry of Economy, Trade and Industry said Friday.

30 other companies will receive money to shift production to Vietnam, Myanmar, Thailand and other Southeast Asian countries, according to a separate announcement, the company has provided detailed information about the amount of compensation.

The government will pay a total of 70 billion yen in this installment, the Nikkei newspaper reported. Payments came from the 243.5 billion yen that the government spent in April to reduce dependence on China's supply chain, with money to help companies move factories back to countries or other countries.

As relations between the United States and China deteriorate and the trade war worsens, there is much discussion in the United States and elsewhere about how to separate China's economies and Quoc companies.

Japan's decision is similar to a Taiwan policy in 2019, aimed at bringing investment back home from China. To date, no other country has issued a specific policy to encourage change.

China was Japan's largest trading partner before, and Japanese companies have invested heavily in it. The outbreak of the coronavirus pandemic has ruined economic relations as well as China's image in Japan.

The government of Prime Minister Shinzo Abe has been trying for years to improve relations with China after the 2012 anti-Japanese riots, but a collapse from the pandemic and territorial disputes are taking place on the islands and gas fields in the East China Sea have undermined those efforts.

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