The ultimate goal of the council is to establish coordination between the two governments on Eurasian infrastructure projects.
SUMMARY
As of May 8th, the Japanese and Chinese governments have announced plans to create a council to discuss joint China’s Belt and Road Initiative (BRI) projects in other nations. Prime Minister Shinzo Abe and Chinese Premier Li Keqiang are expected to formally establish the council during the Japanese, Chinese, South Korean summit happening May 9. The council would include private corporations from both countries in addition to high-ranking government officials. The ultimate goal of the council is to establish coordination between the two governments on Eurasian infrastructure projects. This is one of several signs of Japanese efforts to improve economic relations between with the People’s Republic of China (PRC). Japan has major advantages in technology and financial industries but struggles to stay cost competitive. Chinese firms have had trouble with credibility, with the concept of guanxi or connections (or mutually beneficial relationships) playing a huge role in who is successful. United, the two sides can help the other overcome their shortcomings. This announcement comes amidst trade disputes between the United States and China.
FAO GLOBAL ASSESSMENT
In the midst of growing uncertainty with American trade, China needs to find reliable partners in the region. Beijing will need to establish a new, stable source of high-tech imports while it works on bringing its own tech industry into maturity and Japan could be a strong contender. Should the council be successful, it could indicate major opportunities for Japanese tech and shipping firms. On the other hand, this could reduce reliability on American technology companies that may be at risk of losing out on the Chinese market. In order to mitigate the consequences of this potential move, American firms may seek Japanese partners in order to take advantage of a possible supply chain shift and mitigate disruptions due to trade tensions.
Related Links
- The Nation – Japan, China eye Belt & Road council
- Kyodo News – Japan, China try to create amicable atmosphere after years of disputes
- CNN – China’s ZTE says main operations ceased after US ban
- Business Insider – The Most Misunderstood Business Concept in China
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