How China, Japan’s hot trade and economic relationship is being tested by cold politics

After a half-century of diplomatic relations, plenty of cracks still exist between Beijing and Tokyo, and Japan is seen entering ‘a new era of de-dependence on China’

China may not be as appealing to some Japanese firms as it used to be, but it remains a critically important market despite the risks

7-MIN READ7-MIN

Trade remains strong between China and Japan, but geopolitical cracks have formed between the two in the lead-up to 50 years of normalised diplomatic ties. Illustration: Lau Ka-kuen

Published: 6:00am, 18 Aug 2022

In 50 years of diplomatic relations with Japan, one tenet appears to have stood the test of time: as Dalian goes, so goes China.

The northeastern port city in Liaoning province has a long and complicated history rife with Japanese influence. This was a city under Japanese control for four decades, until 1945, and many of the architectural remnants remain. Its very name comes from a Chinese reading of the Japanese colonial name Dairen. And to this day, more Japanese companies have a presence in Dalian than in any other foreign city besides Bangkok and the much more commercially dense Shanghai – a big selling point that Dalian authorities still use to woo firms from Japan.

So, when Dalian made international headlines and generated a bit of online buzz nearly one year ago because of news that featured a Japanese angle, it served to epitomise how China’s relationship with Japan has ebbed and flowed over the years.

A 30-year-old factory of Japanese electronic giant Toshiba – once considered the “pearl of the Dalian Development Area” and an economic force in the city – ceased operations in September. Today, the main entrance of the shuttered facility is lined with rusty barbed wire, and the surrounding landscaping is overrun with metre-high weeds and overgrown grass.

A decades-old factory of Japanese electronic giant Toshiba has been closed for nearly a year. The main entrance is lined with rusty barbed wire, and the surrounding landscaping is overrun with metre-high weeds and overgrown grass. Photo: Ji Siqi

Just prior to Toshiba’s exit, a Japanese-themed shopping street – similarly located in Dalian’s Jinpu New Area – abruptly closed a mere two weeks after opening. Part of a 6-billion-yuan (US$890 million) complex spanning 600,000 square metres (6.5 million sq ft), the project dubbed Tang Little Kyoto was based on the townscape of Kyoto, Japan.

Despite proving extremely popular among domestic tourists who were unable to travel due to coronavirus restrictions, the street was closed in the wake of a social media firestorm, with an outpouring of angry calls for Chinese people to boycott it.

It finally reopened months later but downplayed Japanese elements while also featuring North Korean and Russian shops. Chinese red lanterns also hang from the roofs above every shop, making it clear that this is now a more diverse cultural excursion – and one with Chinese characteristics.