Japanese companies are retreating from China at a record pace, with the number of firms falling to a historic low of 10,118 as of June, down 22% from June 2024. This marks the lowest level since Teikoku Databank began tracking the data in 2010, driven by a slowing Chinese economy and a diplomatic freeze between the two nations. In the past two years, 4,137 Japanese companies fully withdrew from China, while only 1,221 entered, the fewest on record outside the Covid-19 pandemic. Factors such as U.S. tariffs, growing labor costs, local competition, and concerns over personnel safety have also contributed to the exodus. Chinese Vice Premier He Lifeng stated on Tuesday that China "always welcomes" Japanese enterprises.