As labor wages rise and geopolitical risks increase, coupled with a series of “anti-Japanese” violent incidents in China, many Japanese companies have adjusted their operations in China. Consequently, the number of Japanese residents in China has been continuously decreasing. According to statistics, the number of Japanese staying in China for three months or more in 2024 has dropped to less than 100,000.
As of October 1, 2024, according to the latest statistics from the Japan Ministry of Foreign Affairs, there were a total of 97,538 Japanese nationals staying in China for three months or more. This marks the first time in 20 years that the Japanese population residing in China has fallen below 100,000. Compared to 2023, this number decreased by 4.2% and has been on a declining trend for 12 consecutive years, surpassing the number of Japanese residents in Australia.
Reported by “Nikkei Asia,” over the 12-year period, the Japanese population in Beijing decreased by about 60%, while in Dalian, it decreased by about 50%.
After China’s accession to the World Trade Organization in 2001, the number of Japanese residents living in China surged. By 2003, China had the second-largest Japanese community in the world, surpassing even Brazil, as more companies set up factories in China to capitalize on cheap labor.
A turning point came in 2012 when Japan raised funds domestically in an attempt to purchase the disputed Senkaku Islands (known as Diaoyu Islands in China and Diaoyutai Islands in Taiwan) from private owners. Ultimately, on September 10, 2012, the Japanese government officially purchased the Nanshoto and Beishoto Islands of the Senkaku Islands for 2.05 billion yen and completed payment and registration on September 11 of the same year. This move sparked large-scale protests in China and boycotts of Japanese products, with Japanese-owned factories being attacked.
During the COVID-19 pandemic from 2020 to 2022, the Chinese authorities implemented strict travel restrictions, severely affecting daily life. Additionally, several Japanese citizens were arrested on charges of espionage by the Chinese government. In July 2023, China’s revised “Anti-Espionage Law” came into effect, further broadening the definition of espionage activities. Many experts criticized this law as being Beijing’s “tool for harassment,” leading to growing concerns among Japanese citizens about security issues.
Long-standing anti-Japanese nationalism incited by China, coupled with the economic downturn, has heightened risks for Japanese residents in China, making them targets for some disgruntled Chinese citizens. In 2024, fatal knife attacks targeting Japanese children in Shenzhen and Suzhou have led to an increasing number of Japanese employees in China choosing to return to Japan.
Some Japanese companies have started advising their employees not to bring their families along for business trips or residing in China. An employee of a Japanese manufacturing company working in China told “Nikkei Asia,” “Our company recently informed employees stationed in China that, in principle, they should be on solo assignments.”
Furthermore, some Japanese companies are finding it challenging to recruit employees willing to work in China, resulting in current Japanese personnel in China having to transfer their duties to local employees upon repatriation.
Despite some signs of improvement in bilateral relations, an increasing number of Japanese companies are starting to withdraw from China.
Rising wages and insufficient domestic demand in China are also significant factors leading to corporate exits. According to a survey by the Japan External Trade Organization (JETRO), many Japanese companies in China are experiencing a significant deterioration in performance. The number of companies expanding business in China and Hong Kong is at an all-time low. 42.2% of surveyed companies believe that their confidence in the future has deteriorated, marking the third consecutive year that over 40% of Japanese companies have faced dwindling confidence.
When discussing the challenges of operating in China, companies commonly cite factors such as inadequate domestic demand, fierce competition from local businesses, and pressure from rising wages. According to “Nikkei Asia,” a survey highlighted that in Guangzhou, the average monthly salary of factory workers from Japanese companies increased from $100 in 2005 to $721 in 2023, far exceeding the $385 in Bangkok in 2022 and $250 in Hanoi.
According to data from the Japan Ministry of Foreign Affairs, the number of Japanese companies with a presence in China decreased from 32,887 in 2019 to 31,060 in 2023. In the future, with the ongoing decrease in China’s population and worsening economic conditions, consumer spending in China may face further constraints, reducing the willingness of foreign companies to invest in and operate in China.
Additionally, as working in China becomes less popular, the number of Japanese people learning Chinese is also decreasing. The number of individuals taking Chinese language certification exams has decreased by 34% since 2012, with around 50,000 individuals in 2023.
(*This article refers to relevant reports from “Nikkei Asia.”)