China has marked a fifth straight quarter of growth with its gross domestic product having expanded 7.9% from a year earlier during the April-June period, but the country is facing challenges of rising resource costs, a chip shortage, the stronger yuan and a conflict with the United States. China's economic trends are likely to have a significant impact on Japan.
According to Japanese Finance Ministry trade statistics, exports to China in fiscal 2020 rose 9.6% from the previous year to 15.9 trillion yen, making it the largest export destination by country or region. While exports to other major countries have declined sharply across the board due to the novel coronavirus pandemic, China is a driving force that has supported the performance of Japanese exporting companies.
Hitachi, Ltd. saw its sales in China for the fiscal year that ended in March 2021 increase by 20% from the previous fiscal year thanks to upbeat business results such as in the elevator sector. The company expects a trend of active real estate investment in such areas as condominium construction to continue, so it projects that its annual unit sales of elevators in the current fiscal year ending March 2022 will exceed those of the previous fiscal year.
China is also a major market for Saizeriya Co., which runs about 360 restaurants in the country.
"Our business particularly in Shanghai and Guangzhou is doing well," Saizeriya President Issei Horino said at a press conference on Wednesday to report the company's earnings results. "We've been able to operate there with almost no impact from the coronavirus pandemic."
Horino also indicated that the company intends to accelerate efforts to open more outlets in China.
On the other hand, some Japanese companies have been cautious about operations in China. Nissan Motor Co. reported its new car unit sales in China fell 16.3% in June from a year earlier, posting a second consecutive month of double-digit declines. The main reason for the declines was a shortage of semiconductors, which are a major component of automobiles. However, a Nissan senior official said, "There are other factors to worry about, such as [China's] future economic policies."
China is the world's second-largest economy after the United States. Not only Japan but also many other countries in Europe, Asia and North and South America have relied on exports to China to support their economic growth. If China's economy undergoes changes, a wide range of adverse effects on the global economy would be inevitable.
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