The evolution of trade between China and Japan
On 9 November 1989 Berliners began hacking into the wall that had divided capitalist West Berlin from the Soviet-controlled East since 1961. This action was to have far-reaching consequences, not least on trade relations between China and its immediate neighbours. The Berlin Wall's
collapse became a metaphor for the fall of the Soviet Union. In the years that followed, former Soviet states became independent republics, ranging from Lithuania on the Baltic coast to new Central Asian nations such as Kazakhstan. As far as China was concerned, one of the most fundamental effects of the dissolution of the Soviet Union was that it became forced to seek alternatives to what was once a potent trading partner.
In the 20 years since the demise of the Soviet Union, Chinese trade with Japan has increased dramatically. The nature of this economic traffic has not only grown quantitatively, it has evolved into radical new markets, with Chinese traders interested in many contemporary products that were only a pipe dream when they were dealing with counterparts in Moscow.
There is no denying that China and Japan are economic giants. Both nations are well aware of the market trends and the areas which are ripe for investment in 2013. Indeed, trade between the two has specifically expanded into many high technology sectors: up until 2008 this amounted to well over $210 million. As long ago as 2004, Japan surpassed even the USA in terms of its annual trade figures with China.
Although China sold Japan textiles and raw materials up until the mid-1990s, this trade has altered radically with China now sending far more consumer goods across the East China Sea. There was a dip in trade during the worldwide economic downturn of 2008-9, but this has been rebounding, mainly based on Chinese state spending on machine equipment from Japan.
Approximately 20% of Japan's total trade is conducted with China. There are many reasons for this, not least the fact that China has industrialised at a fantastic rate. China has also liberalised its trading policies with the global markets, joining the World Trade Organisation in 2001. The third reason would be the fact that direct foreign investment in China has increased significantly, signalling to investors that China is now very much an investment-friendly environment. All these factors have led to China becoming the primary target for Japanese investment. This is underlined by the fact that Japan now employs more than 1 million Chinese workers.