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Business trends

Regional leaders from China hunt for more Japanese investment

Officials ramp up visits to corporate Japan to court potential partners

Japanese Prime Minister Shinzo Abe and Chinese Premier Li Kequiang attended the Japan-China Governors’ Forum on May 11 in Sapporo to advance local- and corporate-level cooperation.   © Kyodo

BEIJING -- Improved Sino-Japanese relations are spurring regional leaders in China to visit large corporations in Japan, including Panasonic and Toyota Motor, to deepen business ties.

So far this year, five Chinese provincial officials have met with top executives in Japan.

Thanks to Premier Li Keqiang's formal visit to Japan on May 8, the first by a Chinese premier in seven years, more visits could be on the horizon as provincial governments take a proactive approach to court corporate Japan.

The increased business activity among the two countries comes amid trade disputes between China and the U.S., including moves to impose tariffs.

The Chinese provincial officials, whose visits to Japan coincided with that of Li's, are provincial Govs. Tang Yijun of Liaoning Province, Xu Qin of Hebei Province, Yin Li of Sichuan Province and Wang Wentao, then acting Governor of Heilongjiang Province. They were joined by the vice governor of Jiangxi Province.

The five also held an investment seminar and participated in the Japan-China Governors' Forum on May 11 in Sapporo on the northern Japanese island of Hokkaido. It was the second time since April 2012 that the forum took place in Japan.

This year's meeting attracted more Chinese than last year, according to the National Governors' Association. One official involved in the event said that Chinese attendees had slumped after Japan nationalized the Senkaku Islands in 2012. The move sparked anti-Japanese demonstrations in China, which claims the islets as the Diaoyu Islands.

"Our [recent] activities have been driven by the government in Beijing greenlighting the exchanges," said a senior provincial government official, whose governor visited Japan this month.

"After relations with Japan soured in 2012, we could not push cooperation with Japanese companies. But resumption of high-level economic dialogue and Li's visit have finally set the stage for our efforts," the official added.

A senior Liaoning official visited Panasonic and Canon, both of which years ago feted China's late supreme leader Deng Xiaoping, father of the country's "reform and opening policy." Panasonic has an automotive battery plant in Liaoning, giving rise to speculation that the official discussed plans to expand Japanese investment there.

Sichuan Province has established a free trade zone near a planned airport in the provincial capital of Chengdu to attract Japanese companies. A source said Gov. Yin met with Toyota Executive Vice President Koji Kobayashi and other officials to pitch the initiative.

Yin also met with Yamanashi Prefecture Gov. Hitoshi Goto, with whom he has a friendly relationship.

Meanwhile, Gov. Wang visited a large trading company and other locations.

"Efforts by China's regional governments to lure companies now include more projects that focus on strategic sectors, such as robots, the environment and nursing care, and have a clear goal in mind as regards to cooperation," said Kenji Shimizu, senior director for global strategy in charge of Northeast Asia at the Japan External Trade Organization.

"Now, there are more two-way investments. Parts procurement as well as research and development are handled in Japan while manufacturing is done in China," Shimizu said.

According to China's Commerce Ministry, Japan's direct investment in the country steadily declined from the 2012 peak of $7.3 billion to $3.1 billion in 2016. Over the same period, the figure for the European Union increased to $9.6 billion from $6.1 billion. Investment from the U.S. and South Korea also increased, to $3.8 billion from $3.1 billion and to $4.7 billion from $3 billion, respectively.

Warming Sino-Japanese ties led to increased direct Japanese investment in 2017 to $3.2 billion.

Chinese President Xi Jinping has tightened his grip on the country and increased control over the economy. Although there are risks for both sides in the improved business climate -- including potential fallout from frosty U.S.-Chinese trade relations -- Japanese companies look to profit from China's blistering economic growth, making the recent visits from provincial officials all the more important.

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