Abstract

This paper provides an extensive analysis on the Sino-Japanese trade and Japanese direct investment in China. It investigates the trend, the growth and the structure change of the bilateral trade, and examines the scale, the major characteristics of Japanese FDI in China, as well as its contribution to the Chinese economy. The analysis suggests that rising trade and FDI flows have deepened the economic relations between China and Japan. It is market forces that have been driving the economic integration between the two countries. The common interests and mutual benefits have outweighed the political disputes in the development of the bilateral economic relations.