The Government of Japan is going to pay 87 Japanese companies a total of 70 billion yen (worth $653 million) to move factories out of China to Southeast Asia or Japan, reports financial newspaper Nikkei.
On Friday, Japan's Ministry of Economy, Trade and Industry unveiled the first group of Japanese companies to subsidise for shifting manufacturing out of China.
The move came in a bid to reduce Japan's reliance on its large neighbour and build resilient supply chains.
"The payments come from 243.5 billion yen that the Japanese government earmarked in April to reduce reliance on Chinese supply chains, with the money aimed at helping companies shift factories back home or to other nations," reports Bloomberg.
Thirty of the companies will shift their production to Southeast Asia. The other 57 companies will move their factories to Japan.
China is normally Japan's biggest trading partner and Japanese companies have some massive investments there. The Covid-19 pandemic has damaged economic ties between the two countries as well as China's image in Japan.