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US-China rift looms over Japanese companies

Tensions between Washington and Beijing add to concerns over rising Chinese competition in world’s largest auto market

Last week Yuko Kishida, the wife of Japan’s prime minister, made a rare solo trip to the White House to plant a cherry tree with Jill Biden, celebrating a friendship between the two countries that will last “forever and ever”, in the US first lady’s words. It was a congenial symbol of the close alignment between the two nations.

The costs of those ties have been a source of concern for some Japanese executives as tensions mount between the US and China. But at the Shanghai motor show also held last week, there were more pressing concerns for Japanese carmakers — how to survive in the world’s largest car market.

Japanese carmakers are already suffering the sharpest sales decline this year among foreign brands in China. The likes of Toyota and Honda are facing further big risks if they fail to keep pace with the rapid advances in electric vehicle and self-driving technology of Chinese rivals. Both companies pledged at the Shanghai show to increase local production so they can deliver EVs to Chinese consumers faster.

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