Beijing - The Chinese market remains critical for Japanese enterprises, even after Japan's direct investment in China fell further last year due to a mix of internal and external factors, according to a recent think tank report.

Issued by the Chinese Academy of Social Sciences' Institute of Japanese Studies, the 2025 edition of the "Blue Book of the Japanese Economy" centers on the Japanese economy in a changing global economic situation.

The blue book notes that in 2024, the complementary nature of bilateral trade between China and Japan remained strong despite growing asymmetry in trade interdependence between the two countries.

This year, China-Japan economic relations stand to advance cooperation, though they face challenges such as rising protectionism, fragmented supply chains and sluggish economic growth, according to the report.

It calls for the two major economies to deepen regional economic cooperation in the Asia-Pacific and third-party market collaboration under the Belt and Road Initiative.

It also points to the potential for China and Japan to tap into synergies by leveraging their structural complementarity in such areas as the "silver economy," carbon-reduction strategy and the digital economy.

Overall, the report offers a systematic analysis and outlook on Japan's macroeconomic performance, key economic policy priorities and future economic trends.