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Japan's Dependence on China in Supply Chains: Diversion of Imports from China to ASEAN Countries

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  • Hayakawa, Kazunobu

Abstract

This study empirically investigates changes in Japan's dependence on China in supply chains from 2012 to 2021. To this end, we exploit product-level data on Japan’s imports in machinery industries. We first show that Japan has the world’s greatest dependence on imports from China in addition to a gradual increase in Japan’s imports from ASEAN countries. Then, we conduct econometric analyses on Japan’s diversion of imports from China to ASEAN countries. As a result, we find that Japan increased its relative imports from ASEAN countries in machinery goods with greater dependence on China during the earlier study period and in those with higher labor intensity during the later study period. The observed trend is especially strong in imports of machinery parts. We also show no systematic changes in import prices from ASEAN countries relative to those from China, which indicate that the increase of relative imports from ASEAN countries is driven by the change of import quantities.

Suggested Citation

  • Hayakawa, Kazunobu, 2023. "Japan's Dependence on China in Supply Chains: Diversion of Imports from China to ASEAN Countries," IDE Discussion Papers 897, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper897
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    References listed on IDEAS

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    More about this item

    Keywords

    ASEAN|Dependence on China|Japan|Supply chain|Trade diversion;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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