Reports that the Chinese mainland would be excluded from Japan's post-earthquake industrial relocation plans have spread fast across the Chinese Internet.
Japan has always relied on industry as one of the foundations of the state, and the technological superiority of its industries makes it an attractive partner for many countries, especially developing ones.
China is the biggest sales market for many Japanese firms, and provides a great deal of cheap labor for Japanese industries.
Previously market analysts argued that, because of these two advantages, China would be a priority target for Japanese industries, which would provide an external stimulus for the improvement of China's industrial structure.
But these are just hopes. Japanese industries cannot escape the pull of China, but they are highly wary of their giant neighbor. Lin Zhixing, a professor of management at Waseda University, commented, "What worries Japanese industrial circles most is the uncertainty brought by government interference in Chinese business."
Japanese firms are also wary of having their technology stolen. They instinctively see China as a place of copycat goods and intellectual property theft.
In 2010, a copyright infringement scandal hit China when it erected a huge statue of the robot from Gundam, a famous Japanese anime series, imitating a similar statue in Japan and without obtaining any permissions from the Japanese creators. This was widely reported in Japan, and China's image further damaged.
Japanese industry also holds a lasting grudge over China's high-speed trains, which the Japanese widely believe imitated their
Shinkansen high-speed rail system. A Japanese industry insider, who refused to disclose his name, said: "After China decided to carry out high-speed rail construction on a large scale, Japan and Germany competed to boost their output of high-speed rail technology to win the bid. China blew hot and cold at the two countries, and eventually obtained a good deal of technological information from Japanese and Germany technicians."
Japanese industrial circles are also nervous about China's prospects. Based on my observation, there are only extreme opinions voiced about Chinese economy, either that China is a rising menace or that it faces imminent collapse. It's rare to hear relatively rational voices.
In domestic Japan, the belief that China's comparative advantages are vanishing is becoming more popular, and many people are calling for Japanese firms not to put all their eggs in one basket. Japanese firms are looking to transfer their overseas operations from China to other developing Asian nations.
And the clashes over the Diaoyu Islands last year made Japanese even more wary of China. The heavy ripples caused by the incident were not only reflected in diplomacy, but also had a worse than expected impact in Japanese industry circles. China took a series of measures including stopping rare earth exports and tightening customs restrictions, which caused keenly-felt pain to Japanese industry. The over-reliance of the Japanese economy on China was exposed, impelling the Japanese to reconsider their strategies.
Japan is highly sensitive to restraints on its economy imposed by other nations, due to bitter experience in World War II. Mainstream opinion in Japan still believes that the fundamental cause of Japanese defeat was because US alliances cut off Japan's access to resources, while the submarine blockade strangled the Japanese economy. These fears are deeply rooted in Japan.
After the massive earthquake happened on March 11, Japan will further rely on Chinese economy. For Japan's industry circles, giving up Chinese market would be a fatal mistake, and it's impossible for the Japanese economy to not be highly dependent on China in the short term.
As China transforms from global factory to global market, it should cooperate with Japan, show patience, and provide pathways for Japanese industry to shift to China.