[People News] On February 10, the Japan Chamber of Commerce and Industry in China released in Beijing the results of its 8th “Survey on Member Companies’ Business Conditions and Perceptions of the Business Environment.” The survey covered 1,427 Japanese-funded enterprises operating in China and spanned the period from July to December 2025, involving manufacturing, services, and other sectors. The results show that only 1% of respondent companies believe that China’s economy has “improved,” while nearly half judge that the economy is “deteriorating or will continue to deteriorate.” Compared with the first survey conducted three years ago, this proportion has shown almost no significant change.

According to a report by Radio Free Asia, the Japan Chamber of Commerce and Industry in China noted that if the current business environment continues, Japanese companies in China may further adjust their investment willingness, scale of personnel deployment, and business layout. Some surveyed enterprises indicated that actual operating pressures may be even greater than what the survey data reflect.

Regarding investment intentions, Japanese companies are becoming increasingly cautious overall. Only 17% plan to increase investment in China; more than 40% say they will reduce investment or completely stop investing. Most companies are choosing to maintain their current scale and cut costs; some have begun evaluating the feasibility of scaling down operations or gradually exiting the Chinese market.

Survey Shows Declining Investment Confidence

Commenting on the survey results, Zhu Ping, a member of the Jiangsu Chamber of Commerce, told Radio Free Asia: “If Japanese companies continue to reduce investment, it will affect both upstream and downstream sectors, especially in terms of technological cooperation and order stability. Our chamber went to Europe last year to attract investment. The other side only offered polite words—they are still concerned about policy instability in China.”

The survey also indicates that the main pressures currently faced by Japanese enterprises in China include continued declines in product prices, rising labor costs, weak market demand, instability in the international situation, as well as institutional uncertainties such as customs clearance and tax enforcement. Some companies mentioned in their feedback that they are concerned about policy transparency, the scope of law enforcement, and the security environment for personnel.

Mr. Tao, an investment consultant in Zhejiang engaged in foreign-funded services, told reporters that he is closely watching the investment environment for Japanese companies in China: “Japan is one of the most influential sources of foreign investment in China’s manufacturing sector, ranking near the top in both investment scale and number of enterprises. At present, Japanese investment in China remains at the scale of hundreds of billions of dollars. If these companies withdraw, more Chinese upstream and downstream enterprises will lose orders.”

Mr. Tao added that the survey reflects more of a confidence issue. What foreign-funded enterprises value most is certainty in expectations; once expectations fluctuate repeatedly, the pace of investment will naturally slow.

Enterprises Say Policy Expectations Affect Judgments

Japanese-funded enterprises have long been regarded as an important component of China’s foreign investment structure. Japanese factories are located in most regions of China, including Jiangsu, Zhejiang, Shandong, Guangdong, and Liaoning.

Mr. Huang, head of a company in Shenzhen, said in an interview that Japanese enterprises maintain extensive and often deep cooperation with Chinese companies in fields such as automobiles, electronics, precision manufacturing, chemicals, and retail. He said: “For example, Guangzhou Honda, auto parts manufacturing, restaurant chains, and the Sino-Japanese joint venture TDK established in the early 1990s in Dalian, Liaoning. These collaborations are already embedded in the industrial chain. If affected by policy changes, they will impact ordinary people’s employment and income.”

Mr. Huang also noted that some well-known Japanese companies have indeed closed individual factories or adjusted business layouts. He said: “The closure of Canon’s factory in Zhongshan, Sony’s partial withdrawal of business from China, and the termination of some joint ventures—these are adjustments of individual factories or business lines and do not mean a complete corporate withdrawal from China. But from these changes, we can see that the current economic environment is not the same as before.”

Scholars Analyze the Impact of Geopolitical Factors

Mr. Chen, a scholar in Shandong, told Radio Free Asia that Japanese companies’ increasingly conservative investment attitude in China is related to changes in geopolitical risks. He said: “In recent years, statements by Japanese politicians on security and Taiwan-related issues have led to friction at the political level between China and Japan; changes in U.S.-China relations also affect Japanese investment decisions regarding China. In addition, in recent years, many multinational companies have shifted part of their production capacity to Southeast Asia, India, and other regions in order to diversify risks. Japanese companies will naturally reconsider whether they must continue to focus on China.”

Mr. Chen believes that in this survey, the overwhelming majority of respondent companies hold a cautious attitude toward China’s economic outlook, indicating insufficient confidence. He said that the future direction of foreign investment in China will still depend on factors such as market access, policy stability, and the overall business environment. △