Pedestrians wear face masks amid concerns over the spread of the COVID-19 novel coronavirus, in Tokyo on Tuesday. In Japan, the confirmed number has topped 861, including passengers previously quarantined at the Diamond Princess cruise ship. Photo: AFP

 Japan has reportedly earmarked $2.2 billion to help its manufacturers shift production out of China and reduce reliance on Chinese companies as the coronavirus has seriously crippled global supply chains. 

Experts say the chipset sector could be most affected if the policy takes effect, as Japan is one of China's largest import sources of electronic components.

Tian Yun, vice director of the Beijing Economic Operation Association, told the Global Times on Thursday that Japan's support package to help companies move out of China might be "premature," as the current supply chain layout in Asia is the result of fair competition and a free market environment.

"The supply chain between China and Japan has gone through different phases since the late 1980s," Tian said. 

"The fact that Japanese companies still need to assemble and manufacture in China is the result of cooperation on a level playing field. To move Japanese companies out of China now would mean Japan will have to assemble them at a higher cost," Tian said.

China was Japan's biggest trading partner and it is also the biggest destination for parts and finished goods. It is also an important manufacturing base for Japanese companies' exports to the rest of the world.

According to Tian, as the labor cost rises in China some parts of the manufacturing supply chain have already been shifted to countries in Southeast Asia, but for the manufacturing and assembly of electronic products and automobiles, China's factories remain the most mature and efficient. Rebuilding the supply chain elsewhere would raise costs for Japanese companies.

"Shifting the companies out of China will be costly," Tian noted. "While the $2.2 billion might ease some pressure on Japanese companies, it is hard to evaluate the long-term cost of the move."