The number of Japanese companies operating in China has dropped sharply to its lowest level since 2010, a bad sign for China's pull as a manufacturing base and for trade between the two countries.

• Japanese firms in China are down 30% from the 2012 peak, with a 22% drop in just the past two years.
• New arrivals have slowed to a trickle, while more than 4,000 firms have pulled out or vanished from the records.
• Relations soured after Japanese Prime Minister Takaichi said a crisis over Taiwan would be a crisis for Japan, prompting Beijing to hit back with cuts to direct flights and tourism.
• Companies cite China's property slump, rare earth export limits, too much production, and brutal price competition from state-backed rivals.
• Many are moving factories to Vietnam and other parts of Southeast Asia, as China loses its edge as a cheap place to produce.

Outlook: Without a better business climate and calmer politics, Japanese firms are unlikely to expand in China again, and smaller companies will keep shifting production elsewhere.