US export controls driving Japanese firms from China, study finds
US export controls are prompting Japanese companies to exit China at increasing rates, with restrictions on advanced technology likely raising production costs for multinational firms, according to research published on 14 February by the UK-based Centre for Economic Policy Research (‘CEPR’).
‘The exit share in China has been consistently higher than in other regions since the mid-201Os. This trend appears to have accelerated since 2020,’ wrote economists Kyoji Fukao and Ivan Deseatnicov in their analysis of Japanese corporate data.
The researchers found that ‘a one standard deviation increase in the “export controls index” raises the probability of exit of Japanese affiliates by up to 2.52 percentage points,’ with the effect ‘particularly pronounced in China’s telecommunications and electronics manufacturing industries.’
‘US export controls have likely constrained access to critical advanced technologies and components, raising operating costs and reducing the viability of manufacturing in China,’ the study noted.
The analysis suggests the controls are having broader impacts beyond targeted sectors, as ‘export controls targeting specific items and technologies appear to have caused rip e effects throughout supply chains, impacting not only China but also global value chains.’
