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Asia Pacific Viewpoint, Vol. 50, No. 2, August 2009 ISSN 1360-7456, pp198–214 On the economic interdependence between China and Japan: Challenges and possibilities apv_1393 198..214 Claes G. Alvstam,* Patrik Ström† and Naoyuki Yoshino‡ *Department of Human and Economic Geography, School of Business, Economics and Law, University of Gothenburg, Sweden. Email: claes.alvstam@geography.gu.se †Swedish Collegium for Advanced Study (SCAS) and Department of Human and Economic Geography, School of Business, Economics and Law, University of Gothenburg, Sweden. Email: patrik.strom@geography.gu.se ‡Faculty of Economics, Keio University, Japan. Email: yoshino@econ.keio.ac.jp Abstract: The paper presents an analysis of the economic relationship between the two most important economies in Asia. Over the last decades, the Chinese and Japanese economies have become more economically interdependent, a development which will, in the long run, impact the countries’ political relationship. The paper seeks to answer the question: How can China and Japan gain from the current economic situation, further enhance their relationship and increase their synergies for regional economic development? Data on trade and Foreign Direct Investment are used in combination with primary data from interviews with Japanese and Chinese companies on how they perceive the current business situation and future pote