Members of the delegation, including Masayoshi Matsumoto, Chairman of the Kansai Economic Federation (center), attend the pre-event for the gathering in China. November 25, Beijing. (©Sankei by Kohei Inoue)
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In late November, a delegation of business leaders from Kansai visited Beijing to meet senior officials of the Chinese Communist Party. The Kansai region, located in the south-central part of Japan's main island, includes prefectures such as Wakayama, Osaka, and Hyogo.
Their discussions focused on strengthening economic ties between Kansai and China. This marked the delegation's eighth visit and the first in 12 years, with the previous trip occurring in 2012.
The phrase ichii taisui (literally "separated by a strip of water") was frequently used to assert the "close connection" between the two regions.
Kansai's delegation received a notably warm reception, underscoring China's intent to strengthen ties. The calculated effort Beijing made to draw Japan closer was evident. It appeared to be preparing for heightened US-China tensions following the inauguration of President-elect Donald Trump.
Wooing Kansai
On November 27, the delegation's main schedule concluded with a celebratory dinner in Beijing. "Cheers! Cheers!" exclaimed Masayoshi Matsumoto, chairman of the Kansai Economic Federation, at the restaurant.
The delegation, comprising 85 members, included representatives from seven organizations such as the Kansai Economic Federation and the Osaka Chamber of Commerce and Industry. It surpassed the size of the previous delegation.
Coordinated by the government-affiliated China Council for the Promotion of International Trade (CCPIT), the group held meetings with prominent Chinese officials from November 25 to 27.
Li Qiang's Private Meeting
On November 25, the delegation visited the Chinese People's Association for Friendship with Foreign Countries (CPAFFC). Discussions addressed safety concerns for Japanese expatriates, particularly following the fatal stabbing of a Japanese boy in Shenzhen in September.
During the visit, Matsumoto discreetly met with Premier Li Qiang and Western multinational executives in a meeting arranged by Chinese officials. Matsumoto reportedly advocated for an economic partnership to foster mutual development between Japan and China.
Ahead of the visit, China reinstated visa exemptions for short-term stays by Japanese citizens, effective November 22. This policy permits stays of up to 30 days. It is seen as a move to attract greater Japanese investment amid China's slowing economy and escalating US-China trade tensions.
Safety Concerns
During the delegation's stay, Trump announced plans to impose additional tariffs on Chinese imports. Concurrently, the China International Supply Chain Expo opened in Beijing, with the Kansai delegation attending as guests of honor. Leaders of pro-China economic organizations from Western countries delivered speeches praising China's commitment to supply chain development.
Shingo Torii, co-leader of the delegation and chairman of the Osaka Chamber of Commerce and Industry, remarked, "I felt the Chinese government's strong determination" to build a China-centered supply chain.
The visit's highlight occurred on November 27, when the delegation met with Vice Premier He Lifeng at the Great Hall of the People. Matsumoto emphasized the importance of Kansai-China ties, stating, "Strengthening ties with China is essential for the development of the Kansai economy."
Vice Premier He reassured the delegation, stating, "China is one of the safest countries in the world. If any incidents occur, we will respond swiftly and enhance safety measures." He added, "Overcoming challenges and achieving win-win development is vital."
Growing China Risk
According to insiders in the Kansai business community, the delegation's visit was first proposed in February. It followed a request by senior CCPIT officials during their visit to Osaka for Expo 2025.
The trip was scheduled to align with China's diplomatic calendar. It created opportunities for high-level dialogue with aides who were more likely to effectively convey the delegation's message to President Xi Jinping.
At a press conference, Matsumoto praised China's efforts to strengthen economic relations with Japan. "They seem committed to listening to the voices of foreign companies," he noted. However, he acknowledged challenges such as China's sluggish economic growth and its problematic business environment.
He also added, "Given China's economic dynamism, exploring and advancing collaborations is a vital strategy for our country."
Reliance on China has become increasingly risky due to economic coercion and security concerns. This has prompted many Japanese companies to diversify in order to reduce dependence. Kansai businesses, however, have made little progress in this regard.
Kansai 'Left Behind'
According to the Resona Research Institute, the number of Japanese companies expanding overseas peaked at 26,000 in 2018 but has since declined. While the numbers for Europe and the United States have remained stable, expansion into ASEAN countries has grown significantly.
However, the number of companies entering China has dropped sharply. One major factor behind China's reduced appeal is rising labor costs, which have weakened its status as the world's manufacturing base.
The Resona Research Institute's China Risk Index measures the share of corporate revenue derived from China-related transactions. In 2021, Kansai ranked the highest at 18.1%, followed by Tokai at 14.9%, and Southern Kanto, including the Tokyo metropolitan area, at 10.0%.
Kansai's slower shift away from China can be attributed to the continued reliance of its non-manufacturing sectors on the Chinese market. While China's appeal as the world's factory has diminished, it remains a vital consumer market.
Hideyuki Araki, Chief Researcher at the Resona Research Institute, stated, "While companies based in other regions of Japan are withdrawing, Kansai companies are being left behind."
He also expressed concern about a potential Taiwan contingency, warning, "The time to address China risks is running out. The entire region must recognize these challenges and take strategic steps to mitigate them."
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Author: Kohei Inoue, The Sankei Shimbun
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