China-Japan Trade War 'Pains' Japan's Transnational Enterprises

On April 23 this year, Japan decided to apply emergency import restriction measures against three Chinese farm products-onion, mushroom and bog rush, after repeated representations were made but without results, the Chinese side declared on June 22 the collection of a 100 percent tariff on three Japanese industrial products-car, air-conditioner and mobile telephone. So a trade war between China and Japan has started on the eve of China's accession to the WTO.

Japan's Industrial Circle Begins to sense the "Pain"

The figures released by concerned Japanese departments show that the total value of cars Japan exported to China last year came to 53.7 billion yen; telephone 11.1 billion yen and air-conditioner 2.4 billion yen, accounting for 2.1 percent of Japan's total export volume to China.

Even though the influence is not destructive, the three products mentioned above face fierce competition on the Chinese market, the surcharge of 100 percent tariff will mean that these Japanese goods will find it hard to enter the Chinese market for the rise in price and they will even face the danger of being directly squeezed out of the Chinese market by China's growing domestic products and European and American goods, and it would be very difficult for Japan to regain the market in the future. .

No wonder the leader of the Toyota Company said: Considering from the long-term perspective, the sanction measures will bring much influence. Head of the Sanyo Electric Motor Multi-media Company also said he was very disappointed at learning about increase in tariff at a time when his company was to enlarge the sales of the Sanyo mobile telephone in the Chinese market. Because Japan's car, handset and air-conditioner can easily be replaced by the brands of other countries, so the loss of the future sales market will be a greatest pain to Japan.

Main Battlefield: Japan's Auto Industry

Among the three kinds of Japanese commodities, car enjoys the highest volume of export to China, therefore the auto industry naturally becomes the main battlefield in Chinese-Japan trade war. It is reported that imported Japanese cars being sold in the Chinese market cover many Japanese brand-name products. In the Asian Games Village car market, the largest motor car transaction market in Beijing, imported Japanese cars can make up over 10 percent of the sales volume.

Viewed from the angle of the whole country, in 2000 and the Jan-May period of this year, among the total volume of cars China imported from abroad, the ones imported from Japan represented 59 percent and 51 percent respectively. These figures reflect the fact that in Japan's trade with China, its cars hold an important proportion. Last year, Japan exported 47,000 cars to China, a 36 percent increase over 1999. This good development momentum will be forfeited as a result of the surcharge of "special tariff".

Therefore at the time when Japan's auto industry is prepared to carry out its ambitious plan to enter the Chinese market, the price rise brought about by the trade war actually forfeited the sales market for Japanese cars, undoubtedly, this would be a misfortune dropping from Heaven for them.

Complaints of Automobile Magnates

As soon as the news came, Japanese automobile companies uttered complaints everywhere. The Toyota Company of Japan said frankly Chinese counter-measures against restriction will, in the long run, exert great influence on Toyota, therefore they urgently hope the two countries would start negotiation to solve the problem as soon as possible. At the same time, head of the Toyota Company, in a speech, appealed the Japanese government to abolish the emergency measure on limiting the import of Chinese farm products.

Last year, Nissan Company exported a total of 9,500 cars to the Chinese market. Chinese levy of special tariff will make the prospect for the company's cars very bad. An official with the Nissan Company in Beijing indicated that the surcharge of special tariff would be "a very painful thing" for them, and they have felt "the great pressure". They hoped the two governments would solve this problem as quickly as possible.

Japanese enterprises whose products are exported to China reported to the Japanese embassy in China, saying "now Chinese enterprises and customers wishing to buy the above-mentioned three Japanese commodities are decreasing rapidly in number, this makes it impossible to do business." According to an investigation conducted by Fuji Comprehensive Institute among 1,200 Japanese enterprises, these firms expressed "total opposition" to Japan's import restrictions and 50.6 percent of them expressed the hope for cancellation of these restrictions.

How Far Will the Trade War Go?

The trade war was provoked completely by Japan. Superficially, Japan's reasons for the sanction are that the rapid increase in the export of Chinese agricultural products has exerted impact on related Japanese industries, and the Japanese government was forced to resort to restrictive measure. In fact, the direct fuse was the election of the House of Representative in July this year, the Liberal Democratic Party wanted to take this opportunity to ingratiate the farmers and gain votes from them.

The Chinese purpose is, in fact, very simple, it is to draw Japan to the negotiating table and conduct face-to-fact talks. The Japanese government, however, does not want to show its weakness before the Senate election in July and thus led the negotiation to failure. But anyway, the problem invariably has to be resolved, as a result of restriction on the import of Chinese agricultural products, China's losses have to be borne by Japan's industrial circles, this can only be regarded as the result of the disaster courted by Japan to itself.

This time, the Japanese government used specious reasons and rashly adopted the emergency import restriction measures against three Chinese agricultural and sideline products, that is actually a retreat in the aspect of a knowledge economic policy. This perverse measure has not only encountered opposition from China, the United States and some other countries, it is also unpopular in Japan itself, otherwise, the Chinese government's counter-restriction measures would not have aroused so strong a reaction from the Japanese government and the industrial and commercial circles. Under the cover of so-called reform banner, the Japanese government's arbitrary economic retrogressive policy is a quite dangerous signal for Japan.



This article by Pan Yuanyuan and Li Wei appears on Page 9 of People's Daily (Overseas Edition) on July 27.


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