The Japan Chamber of Commerce and Industry in China released its 8th member enterprise survey on February 10 in Beijing, covering 1,427 Japanese-invested companies operating in China between July and December 2025 across manufacturing, services, and other sectors. The findings paint a cautious picture of Japanese business sentiment in China.
Only 1% of surveyed companies said China’s economy had “improved,” while nearly half believed it was “deteriorating or will continue to deteriorate” — a proportion largely unchanged since the first survey three years ago. Just 17% of companies planned to increase investment in China, while over 40% said they would reduce or entirely halt investment. Most firms opted to maintain existing operations while cutting costs, and some were evaluating a phased exit from the Chinese market.
Key pressures cited included falling product prices, rising labor costs, weak domestic demand, geopolitical instability, and institutional uncertainties around customs and tax enforcement. Some firms also flagged concerns about policy transparency, regulatory consistency, and personnel safety.
Industry observers noted the broader implications. A Jiangsu-based business association member said that shrinking Japanese investment would affect supply chain stability, particularly in technology cooperation and order reliability. A Zhejiang investment consultant emphasized that Japanese firms collectively maintain a presence worth hundreds of billions of dollars (~$100+ billion USD) in China, and their potential withdrawal could deprive numerous Chinese upstream and downstream firms of critical orders.
A Shenzhen-based executive pointed to deepening sector ties — in automotive, electronics, precision manufacturing, chemicals, and retail — noting that while some factories like Canon’s Zhongshan plant have closed and Sony has scaled back certain operations, these represent business-line adjustments rather than full exits.
A Shandong scholar linked the conservative investment trend to rising geopolitical friction, including Japan’s stance on Taiwan and shifting U.S.-China relations, along with a broader multinational trend of diversifying production to Southeast Asia and India. He concluded that future foreign investment flows into China will hinge on improvements in market access, policy stability, and the overall business environment.
Source: Radio Free Asia, February 20, 2026
https://www.rfa.org/mandarin/shangye/jingji/2026/02/20/china-japan-investment-withdrawal/