A large number of Japanese companies including chip makers have begun moving out of China in the wake of President Xi Jinping’s zero -covid policy, and its impact on the economy, says a media report.

As many as 135 companies engaged in manufacturing semiconductors, cosmetic items, clothing, household appliances and motor vehicles have begun dismantling their operations in China, the Singapore Post reported.

Quoting Asahi Shimbun, the Singapore daily said that several Japanese companies are shifting their manufacturing bases from China to Vietnam, and to the South Asian region. Some companies are returning back home since “they feel the weaker yen is hurting their profits”.

Two months of lockdown in Shanghai, and tough COVID-19 restrictions in other parts of the country have led to disruptions in the manufacturing, logistics and tourism sectors.

About 90 per cent of Japanese products are manufactured abroad. Toyota, Honda, Nissan, Mazda, Suzuki, Kawasaki, Mitsubishi, Toshiba, Hitachi, Sony, Nikon, Canon, and Pioneer  from the Japanese stable have their  plants in China.

Citing a survey done by the Japan-based financial research and support services, The Singapore Post reported that as many as 249 Japanese companies left China between 2016 and May 2019.

However, in 2022, ongoing effort by Japanese companies to locate their manufacturing capacities outside China gained momentum as 135 companies have either left the Chinese shore or are on the verge of relocating them outside the Middle Kingdom.

Due to suspension of auto part plant operations owing to pandemic-related lockdowns in Shanghai and other parts of China, global production of Toyota Motor Corp, as per the Asahi Shimbun, declined by 9 per cent year-on-year to 690,000 vehicles, while Honda Motor Co, witnessed a 54 percent decline and Hino Motors Ltd recorded a 27 per cent drop.

Meanwhile, Chinese Premier Li Keqiang had said that China had reached its most difficult stage of economic stabilization and called on leaders of key provinces to coordinate efforts on economic recovery.

“The economy continued to recover in July, but small fluctuations are still present. We are now at the most tense stage of economic stabilization, so we need to build a solid foundation for economic recovery without wasting time,” Keqiang said at a meeting with leaders of the provinces of Guangdong, Jiangsu, Zhejiang, Henan, Shandong and Sichuan, as quoted by Xinhua news agency. Keqiang said that measures to combat COVID-19 must be coordinated based on the need to rebuild the economy.

• Report From Beijing Bulletin