Illustration: Chen Xia/GT

Japan's Nippon Steel will withdraw from a joint venture with Shanghai-based Baosteel,mk Nikkei Asia reported on Tuesday. As a result, Nippon Steel's steel production capacity in China will be reduced by 70 percent. This is undoubtedly regrettable.

At the beginning of China's reform and opening-up period, Japan's Nippon Steel offered assistance and support to Baosteel in plant construction, personnel training and so on. The Japanese steel enterprise established a close cooperative relationship with Baosteel. In the meantime, Nippon Steel successfully increased its presence in the Chinese market.

Nikkei Asia said in its report that Nippon Steel's withdrawal marks a turning point in a decades-long relationship that was "a symbol of China's progress in modernizing its steel industry." This is something of an overstatement, but that doesn't mean the Chinese people aren't willing to express their appreciation for the contributions multinational enterprises have made to the Chinese economy. 

Nippon Steel, like many other foreign enterprises, has made overall positive contributions to the country's economic development, although there are inevitable conflicts even in mutually beneficial cooperation. It is regrettable to see the Japanese giant reduce its steel production capacity in China.

Japanese automakers are the main customers of the joint venture, Baosteel-Nippon Steel Automotive Steel Sheets (BNA), which was established in 2004 as a 50-50 joint venture between Nippon Steel and Baosteel. Japanese automakers are facing fierce competition in the Chinese market due to the rise of local electric vehicle (EV) makers. Nippon Steel has concluded that it would be difficult to expand its business here, and instead will concentrate its investment resources in the US and India, according to Nikkei Asia.

Over the past few decades, Japanese cars have achieved commercial success in the China market and have also brought a long supply chain that serves them. But Japanese cars are now facing various challenges, so the industry chain that supports them is also undergoing transformation and upgrading. This is normal, and it's an inevitable result of China's economic growth and the increased competitiveness of Chinese enterprises.

China's auto market is expanding. Both output and sales set new records in 2023. Output exceeded 30.16 million vehicles, up 11.6 percent year-on-year, and sales exceeded 30.09 million units, up 12 percent, according to data released by the China Association of Automobile Manufacturers. 

The monumental development of China's auto industry is a vivid display of the success of China's industrial upgrading, as well as the vast potential and broad scope of the auto market. In particular, the rapid growth of China's EV market has brought economic dividends to Asian economies. Those dividends underlie the development of the Asian supply chain. 

China always welcomes foreign companies, and it has pledged to further open its economy to overseas firms, allowing them to share the dividends of China's economic growth. We hope foreign-funded enterprises can seize new opportunities in the China market and share the dividends brought by China's economic transformation and the growth of emerging industries. There is great potential for cooperation.

Recently, some Western media outlets have been sensationalizing the rhetoric of "foreign capital leaving China," which is a new round of bad-mouthing of China's economy.

During a period of economic transformation, some foreign-invested enterprises in traditional industries are temporarily facing challenges. However, it should be seen that China has always treated foreign companies as important players in the Chinese market. The country is willing to share the dividends brought about by emerging industry growth with foreign investors.

China's market is open, and it is normal for foreign capital to enter and leave. There is no need to read too much into Nippon Steel's withdrawal. China is expected to further accelerate its economic transformation and upgrading, which will offer many opportunities for foreign investors, especially in emerging industries. We hope that foreign companies can explore the opportunities brought by China's economic transformation.

As long as the Chinese economy continues to grow, investment structure continues to optimize and consumer market continues to expand, China's attractiveness to foreign investment will continue to increase. 

The author is a reporter with the Global Times. [email protected]