Beijing, Tokyo Sign Pact to Spur Investment by Japanese in China

China and Japan signed an accord Saturday designed to boost economic cooperation between the two countries by encouraging Japanese businesses to invest in China.

“The investment protection agreement being signed today can be seen as a new starting point,” Japanese Prime Minister Noboru Takeshita said at a press conference before the signing ceremony. “Medium- and small-sized enterprises in Japan are especially enthusiastic about investment in China. I have great expectations.”

Japan is China’s second-largest trading partner after Hong Kong, while its investment in China ranks third, after Hong Kong and the United States.

But Japanese trade surpluses and the rising yen have given Japanese corporations massive cash reserves, and China now hopes to attract infusions of Japanese capital to assist its modernization drive.

The new “investment protection agreement” promises Japanese investors equal treatment with Chinese businesses in obtaining raw materials and labor. It also will allow Japanese investors to bring more of their profits home.

Japanese investment as of the end of last year accounted for only 8.7% of total foreign investment in China, but it has recently shown a sharp upward trend. New Japanese investment during the first six months of this year was nearly $100 million, double the figure for the same period last year, according to Chinese statistics.

At the press conference, Takeshita praised China for working to improve its economic infrastructure, levels of work efficiency, taxation system and general investment climate. He said that this will contribute to the growth of Japanese investment.