The Chinese economy and the Sino–Japanese economic relations

This chapter briefly reviews the current status of the Chinese economy. It argues that the “new normal” cannot fully explain the dramatic slowdown of the Chinese economy and the sharp fall of China’s export growth is mainly due to reorientation of global value chains with relocating low value added activities out of China. Persistent depreciation of the yuan and massive capital outflows since the summer of 2015 challenge the stability of the Chinese economy and may trigger a financial crisis. Despite unstable political relations between China and Japan, the two economies have been closely integrated through bilateral trade and investment. The two countries will benefit more from further economic cooperation, especially when the world faces the headwinds of anti-globalisation.