Japan To Pay Its Firms $2 Billion From Covid-19 Stimulus Package To Shift Production Out Of China

As the Coronavirus pandemic disrupts supply chain between Japan and China, the Japanese government has earmarked $2.2 billion of the economic stimulus package to help its firms in shifting their production facilities out of China, reports Bloomberg.

The Japanese government, in the supplementary budget to deal with the economic fallout of Coronavirus pandemic, has designated 220 billion yen ($2 billion) for companies shifting production back to Japan and 23.5 billion yen ($215 million) to those seeking to move production to other countries.

The move comes after the imports from China, which is Japan’s biggest trading partner, decreased to almost half in February as the pandemic resulted in the shutdown of Chinese factories, in turn starving Japanese manufacturers of necessary components.

The slump in imports has led to renewed talk of Japanese firms reducing their dependence on China as a manufacturing base.

Earlier last month, Japanese government’s panel on future investment discussed the need for the manufacturing of high-added value products to be shifted back to Japan, and for the production of other goods to be diversified across Southeast Asia.