chinaJapan-flag.gifJapan's
economy has been in the dumps for a long time, but western businesses
should watch out because the slumbering giant is stirring and making
bold overtures to China.

China is Japan's second biggest trading partner, but Japan is only China's third largest trading partner after the EU and US, according to the China Daily.

Deteriorating
political relations between the two Asian countries caused
Sino-Japanese bilateral trade to suffer in recent years, with the EU
replacing Japan as China's biggest trading partner in 2004.

Nevertheless,
China is now looking to thaw frosty relations with Japan, according to
the Chinese 'paper. The strong recovery signals being put out by
Japan's economy 2005 have weakened somewhat in 2006. However, some
economists believes that if Japan can put its economy back on a
sustainable growth track, Japan could overtake both the US and the EU
and once again become China's top trading parter.

In 2004,
Sino-Japan bilateral trade grew a phenomenal 25% although growth
dropped to below 10% last year. This year, it is currently running at
around 11.8%.

At the Sino-Japanese Economic Symposium, held
recently in Changxing, Zhejiang province, the two Asian giants
discussed ways of boosting bilateral trade.

Interestingly, environmental protection and saving energy were seen as two fields where Japan had much to offer China.

According
to a Ministry of Commerce spokesman, China believes Japan has “ample
management experience and apparent technological advantages” in areas
such as burning rubbish, processing sewage and the development of
renewable energy.

Processing sewage might not seen the most
glamorous of business opportunities but China is crying out for outside
help in the environmental field and it has apparently has lots of money
to invest in projects. The PRC's current five-year plan allocates 3.8
trillion yuan, or almost $500bn to this field in a bid to build a
greener society.

While China's new economy offers enormous
opportunities in areas as diverse as mobile phones, supermarkets and
banking, I think too many businesses in the west focus on these “hot”
markets and neglect the long-term growth potential of less glamorous
sectors like water supply and environmental protection.

The
symposium also discussed greater cooperation between China and Japan in
hi-tech sectors, where Japan's strengths are well known.

Separately, Qingdao Software Park, officially launched an office in Tokyo
in a bid to attract Japanese software enterprises to invest in Qingdao.
So far, 13 Japanese software enterprises have visited Qingdao.

Like the rival Dalian Software Park,
Qingdao is hoping geographic proximity to Japan will help it attract
software-related investment from Japanese hi-tech companies, as well as
provide a base for Chinese software companies to sell into the Japanese
market. Neusoft, for example already, has its facility in Dalian — see
this EngagingChina story for more on Neusoft.

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