Japanese, Korean investors dial back on China, but can Beijing find common ground on trade?
- In November, China’s Foreign Minister Wang Yi called on Japan and South Korea to restart negotiations on a trilateral free-trade agreement
- Japan and South Korea remain important trading partners and investors in China, but also face growing pressure to diversify away
As China seeks to build closer ties with Japan and South Korea amid lower capital flows, political tensions with the United States, coupled with economic security problems, thwarting its hopes for strengthening supply chain and investment links among the major East Asian economies.
China’s Foreign Minister Wang Yi called on the countries to restart negotiations on a trilateral free-trade agreement as soon as possible after they had previously agreed to cooperate more on trade, technology and innovation.
“[Japanese investors] and the Koreans are facing the same challenges of balancing geopolitical challenges with efficiency,” said Jayant Menon, a senior fellow at the ISEAS-Yusof Ishak Institute in Singapore.
Japan and South Korea remain important trading partners and investors in China despite shifting their export business away from the world’s second-largest economy over the years amid rising costs.
Japanese and Korean advanced technology companies are still key targets for some of China’s local governments, who hope to leverage historical and geopolitical ties to find new foreign investment opportunities.
