Japan announces $2.2 billion to help its manufacturers shift production out of China

As the global coronavirus pandemic has left a huge dent in the global economy, Japan has announced that it will provide a financial package worth $2.2 billion to help its manufacturers shift production out of China, according to a Bloomberg report.

The decision has been taken as the supply chain has been disrupted between the two trading partners due to the COVID-19 crisis.

Citing the plan details posted online, the report added that out of this stimulus package, 220 billion yen ($2 billion) is allocated for companies shifting production back to Japan and 23.5 billion yen for those seeking to move production to other countries.

The development comes at a time when Chinese premier Xi Jinping is expected to be on a state visit to Japan early this month. However, what would have been the first visit of its sort in a decade was postponed last month due to the COVID-19 outbreak and no new date has been set, said the report.

Despite being Japan's biggest trade partner, imports from China fell down by almost 50% in February as the virus outbreak led to the closing of factories. Reportedly, this made the Japanese companies to reduce their reliance on China as a manufacturing base.

As per reports, last month, the Japanese government's panel on future investment had a discussion regarding the manufacturing of high-added value products in Japan only. Alongside, the production of other goods was suggested to be shifted to different parts of South Asia. 

Data compiled from the panel shows that Japan exports a huge chunk of parts and partially finished goods to China in comparison to other industrial nations.