Japan's decoupling with China to dramatically increase product prices: report

Japanese companies' exploration to build supply chains independent from China amid growing tensions between China and the United States is expected to dramatically increase the costs of all products, Nikkei Asia has recently reported.

Companies nowadays are closely intertwined with China, from upstream like procurement of raw materials, to downstream like product assembly, said the report.

Japan has particularly strong ties with China, which accounted for 26 percent of Japan's total imports as of 2020, larger than the U.S. ratio of 19 percent and Germany's 11 percent, it added.

If 80 percent of Japan's imports from China, which worth about 1.4 trillion yen (10.8 billion U.S. dollars), were disrupted for two months, Japan can't produce a wide range of products including home appliances, cars, resins, clothing and food products, said Nikkei Asia citing estimates by professor Yasuyuki Todo and his colleagues at Waseda University.

In addition, about 53 trillion yen (407.6 billion dollars) worth of production would disappear, which would amount to a loss of about 10 percent of Japan's gross domestic product, it said.