China Center Chart of the Week: Interdependence of Chinese and Japanese economies is much larger than their trade relationship

This China Center members-only chart demonstrates How much is at stake if the territorial dispute over the Diaoyu/Senkaku islands begins to undermine economic dependencies between Japan and China. Our analysis shows that the interdependence of the Chinese and Japanese economies, in terms of both direct and indirect economic value, is much larger than the very large trade relationship.

As recently as 2007, overall economic activity in China induced (directly and indirectly) approximately 1,980 billion RMB of Japan’s gross output, driving 2.28 percent of Japan’s GDP that year – amounting to approximately 748 billion RMB in value. And economic activity in Japan induced 2,215 billion RMB of China’s gross output, driving 2.33 percent of China’s GDP that year, amounting to approximately 619 billion RMB in value. This means that the direct and indirect economic interdependence of the two countries in 2007 was approximately 4,195 billion RMB in total. For comparison, Japan and China’s bilateral trade relationship in 2007 was approximately 1,793 billion RMB, so less than half of the overall interdependences between the two economies.

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