Guan Zhaoyu: Japan shouldn't say no to Huawei


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Guan Zhaoyu: Japan shouldn't say no to Huawei


By Guan Zhaoyu    Source: CGTN    Published: 2018-12-12

On Monday, Japan decided to exclude Chinese telecoms giants Huawei Technologies and ZTE from the government procurement list.

Since the Donald Trump administration signed the National Defense Authorization Act in August this year banning the U.S. government and contractors from using Huawei technology, there had been rumors that Japan would follow suit.

Days after the detention of Huawei's chief financial officer Meng Wanzhou by Canadian police at the U.S. request, the Japanese government locked Huawei out of the purchase list, re-exposing its diplomatic nature of dancing with America's tune.

Huawei brings a much-needed "crisis consciousness" to Japanese society

This year marks the 150th anniversary of Japan's Meiji Restoration and the 40th anniversary of China's reform and opening up. The Meiji Restoration has not only led Japan onto the road of economic prosperity but also cultivated a number of world-renowned companies.

The 21st century has seen the rise of China. After 40 years of reform and opening up, countless Chinese successful companies are going global.

Huawei seeks talents in Japan

Huawei benefits from China's reform and opening up, and its influence has gradually increased in Japan these years. Starting from the summer of 2017, "Huawei Shock"' has become a topic.

Huawei has always realized the significance of talent acquisition. By offering higher salaries, Huawei endeavored to recruit staff from Japan. This forced some Japanese high-tech firms to rethink their own pay deals. Huawei's ambition indeed put pressure on them.

As a result, Japanese companies are gradually increasing their salaries. However, for companies with similar wages in the same industry, the sense of crisis has increased rapidly. Japanese companies realize that, from the starting salary, they will not be able to obtain excellent talent if not pay the salary commensurate with abilities. Known for its crisis awareness, the Japanese society gradually realized the necessity of change under the "Huawei Shock."

Cooperation with China is the best choice for Japan

In the 1970s, the Japanese manufacturing industry developed promptly and thus quickly occupied the international market. The U.S. was unwilling to see the rise of Japan and it launched trade with his ally in the east, which struck a blow to the Japanese economy. As a response to the U.S. trade bully, Japan decided to cooperate with China.

The Japanese economy has experienced systemic problems resulting in the loss of 30 years. Today, 30 years later, with Trump provoking Sino-U.S. trade disputes, it not only affected China and the United States, but also harmed Japan.

According to estimates by the Japan Daiwa Institute of the additional tariffs imposed by the United States and China, the direct negative impact on Japanese companies has been converted into a monetary value of about 53.3 billion yen (roughly 500 million U.S. dollars).

It was not a great loss but, compared to such direct economic loss, there is a further worry hanging over Japan. If the U.S. decreases the demand for Chinese high-tech goods, it will also indirectly inflate similar products in Japan. The total net profit of Japanese listed companies in FY2017 is estimated to renew the record.

As an important part of the China-U.S. trade chain, the escalating trade war means a great loss for Japan, because many of the goods that China exports to the U.S. come from Japan. The U.S. sanctions on Chinese exports will inevitably reduce China's imports of Japanese intermediate products, thereby damaging Sino-Japanese economic and trade relations.

At the same time, it also has an adverse effect on the promotion of China-Japan-Korea FTA and RCEP negotiations. In the future Asia-Pacific economic integration and the Asia-Pacific economic and trade pattern, U.S. influence may be reduced. Correspondingly, China and Japan will play a larger role in the region, and finally, economic cooperation and competition between China and Japan will accelerate under the Asia-Pacific development pattern.

In this context, China and Japan should strengthen cooperation with the third-party markets especially in the area of the Belt and Road Initiative and, allow full play of Japanese advantages in the fields of energy conservation and environmental protection, scientific and technological innovation, advanced technology, and market channels etc., and China's strength of high quality and low cost manufacturing.

The two countries can reinforce coordination and cooperation with mutual benefits. It will create more opportunities for the two countries in regional and international markets, propelling liberalization of global trade and investment, and promoting economic globalization towards a more open, inclusive, and balanced and win-win direction.

Guan Zhaoyu is an associate research fellow at Chongyang Institute for Financial Studies under Renmin University of China.