Japan's Direct Investment In China And The Sino-japanese Trade Relations

Economy crisis which erupted in 2008 has not come to an end, while Europe emerges debt crisis, as a result, the global economy turns to be more unstable. It's very important to deal well with the relationship between China and other countries. Japan as a major economic power in eastern Asia, has a great economic strength and political influence. Democratic Party of Japan adopts an independent foreign policy, which gives an end to the policy attached to the united states. The government has repeatedly expressed their desire to strengthen the relationship with Asian countries, especially China. However, by 2010 Diaoyu island events pushed the relationship between China and Japan into trouble. Therefore, in this complex international context, the study of the relations between China and Japan appears very important. On the basis of existing research, this article has a deep research about the relationship between Japan FDI and bilateral trade. On one hand, through normative analysis to clarify the issue.On the other hand, through case study to prove the results. Conclusion shows that whether in long-term or short-term, Japan FDI and imports from china has a mutual positive influence. In short-term, Japan FDI promotes exports to china; however, in the long run, Japan FDI demotes exports to china.Since both in the short or long term, Japan FDI and imports from china have a mutual positive influence, this article proposes policy advices for China how to make good use of this relationship. Since in the long run, Japan FDI demotes exports to China and promote import from China. Predictably, sino-japanese trade frictions will become fiercer; therefore, this article puts forward the relevant policies to ease trade frictions between the two countries.