A major player
With an eye to China's cheap and abundant labor force, in the middle and late 1990s, Japanese firms started to expand their investments. China was deemed a perfect manufacturing base by Japanese companies.
Bilateral ties between China and Japan underwent a subtle change in the beginning of the 21st century as China entered the World Trade Organization (WTO). China was growing into an economic peer of Japan rather than an aid recipient.
In the same period, China-Japan relations dropped to the freezing point due to a dispute over former Japanese prime minister Junichiro Koizumi's multiple visits to the Yasukuni Shrine.
However, this political freeze didn't affect Japanese firms' enthusiasm for marching to China, and the Chinese government, in return, received them favorably.
Eric Harwit, professor of Asian Studies at the University of Hawaii, said that China's impressive achievements over the 40 years of reform and opening-up needed the cooperation of foreign enterprises, and Japanese enterprises were a major player.
Speaking fluent Chinese and competent Japanese, Harwit is also a senior research fellow at his department's East-West Center who has been observing the economic engagement between China and Japan in his travels between the two countries for research and study since the early 1980s.
Japanese enterprises' investment in China topped their investment in other countries from the late 1990s to the mid 2000s as the Chinese economy boomed, said Harwit.
