For decades, China held a central place in the overseas expansion strategy of Japanese banks. Financial institutions followed Japanese manufacturers into the Chinese market, financing factories, supporting supply chains and facilitating trade. That model is now shifting. As Japanese companies reassess their China exposure amid slowing growth, rising costs and geopolitical uncertainties, banks are increasingly redirecting attention and capital toward India and Southeast Asia.
This is not merely a cyclical adjustment but part of a broader strategic realignment. Japanese regional banks are shrinking their footprint in China and looking at India and Singapore, while major financial groups are making some of their largest-ever investments in India's banking and financial services sector. The trend mirrors a larger transformation underway in Asian manufacturing and investment flows, with India emerging as a key beneficiary.
