The new era of Reiwa has begun. The ideal path that the country should take and a hope for national peace were always put into the names of previous Japanese eras. I feel that Reiwa also has meanings suitable for all Japanese people to welcome the new era with one heart in the reign of a new emperor. What struck me particularly strongly was the interpretation of “beautiful harmony,” which is defined as the official English translation of Reiwa by the Ministry of Foreign Affairs. This is because the phrase “beautiful harmony” has some associations with the teachings of Shibusawa Eiichi (1840–1931), the first Chairman of the Tokyo Chamber of Commerce and Industry. Shibusawa was reported to have been selected for the portrait on the obverse of the new 10,000-yen note that will be issued by 2024. Shibusawa, born in the closing days of ... ... [Read more]

  Key points Customer Enclosure is a possibility for a platform operator to take advantage of asymmetric information Current enforcement structure of the Antimonopoly Act remains effective Break down silos, and create sectoral units inside the competition authority Platform functionality that gathers massive amounts of data in one place in a user-friendly format is extremely useful. For example, an online retail platform allows us to easily find the product we want at the lowest price without having to physically go around different stores. On the other hand, stores can significantly shorten the distance between themselves and the consumer. This is a particularly great advantage for Small and Medium Enterprises (SMEs) with limited capital and regional companies located away from the consuming area, since it enables them to promote their products to consumers themselves without incurring advertising expenses. Platforms unconstrained by geographical space that match ... ... [Read more]

Key points Rate of women leaving the workforce after birth of first child continuing at a high level Importance of male participation and social support in the raising of children Despite progress in female empowerment, Japan lags behind other countries The Act on Securing of Equal Opportunity and Treatment between Men and Women in Employment (the Gender Equality Act) was enacted in 1985, near the end of the Showa period. Today, more than thirty years later, female empowerment has again become the government’s most pressing issue, together with “work-style reforms.” In this article, I would like to talk not only about how this is in itself an issue of crucial importance to society, but also how it plays a vital role in the context of dealing with Japan’s most serious social issue, that of the declining birthrate and aging population, as well as creating ... ... [Read more]

Key points China is standing at the crossroads of the middle-income trap The reform of state-owned companies will proceed with difficulty because there are multiple vested interests New startups are rising and will drive industrial advancement Forty years ago, in 1978, China embarked on reform and opening up. It achieved rapid economic growth, surpassed Japan in terms of GDP in 2010 and grew to be the world’s second largest economy. After its transition to reform and opening up, China carried out painful domestic reforms of negative heritage, such as state-owned companies saddled with chronic deficits and financial institutions engulfed by nonperforming loans to reconstruct the devastated economy under a centrally planned economy. Externally, by opening up China not only introduced technologies, capital and business management from overseas, expanded exports and increased foreign reserves, but also increased employment and tax revenue. There is no doubt ... ... [Read more]

Key points There is concern that efforts to improve productivity will be put on the back burner due to increased acceptance An increase in the number of foreign residents has little negative impact on the workers of the country in which they work Efforts should be made to enhance welfare support and review employment practices The Government has submitted a proposal to the Diet to revise the law on immigration control with a view to expanding the acceptance of foreign workers. It is not unusual for us to see foreigners working at convenience stores and izakaya pubs in town. Given the aging population, what needs to be urgently addressed is the acceptance of foreigners who engage in nursery services. In addition, with concern about the workforce shortage continuing into the future as a result of the declining population, an increase in the number of ... ... [Read more]

Governments don’t default? The Logic of Infallibility undermines Japan While the realities of the Japanese economy are progressing smoothly, with stocks surging and competition on the employment front becoming overheated, it is widely known that government finances are continuing to worsen. Some may be concerned that if the present situation holds, a national default will occur. Unless confidence in the Japanese economy is lost, chances are slim that a default will occur within ten years. But because government debt will continue to increase if government finances are not reconstructed, a financial collapse is certain to occur someday. That time may be in the next twenty to forty years, a point of time in the long-term future. But the possibility of a national financial failure is a matter that each of us has to consider in our life in the sense that it will occur ... ... [Read more]

  Oil occupies a central position in the global energy market. In the 2000s (2000 to 2007), global demand for oil grew at an average rate of 1.3 million barrels per day (Mb/d) due to such issues as brisk demand in China. At that time, peak oil theory (theory of an oil supply peak) received wide coverage. Excess liquidity in financial markets caused crude oil prices to soar, resulting in a tight supply and demand balance, which emphasized concern about a supply peak. Policies and lifestyles will continue to change in response to trends in the Reference Scenario in the IEEJ Outlook 2018 prepared by the Institute of Energy Economics, Japan (IEEJ). Accordingly, global oil demand will grow from 90 Mb/d in 2015 to 122 Mb/d in 2050. Demand for oil will decrease by 9 Mb/d in Organisation for Economic Co-operation and Development (OECD) ... ... [Read more]

The Strategic Energy Plan is based on two major principles. The first principle is that the government sets numerical targets regarding the future energy mix. Under the fifth draft plan, the government would maintain the policy of aiming for a share of around 60% for thermal power and around 20% each for both nuclear power and renewable energy. The second principle is that the government determines policy measures to achieve various policy goals. For example, means of reducing CO2 emissions include the use of renewable energy and nuclear power and the promotion of energy conservation. The new Strategic Energy Plan is expected to indicate numerical targets for emission reduction with respect to each means of reduction. In economics, this policy design approach is known as “optimization by social planners.” Under this approach, the government gathers as much information as possible as a social planner ... ... [Read more]

Key Points Growth strategies do not raise corporate and household expectations Younger households suppress their consumption to a greater extent in anticipation of lower lifetime income Working style reforms are essential for increasing expected lifetime income The Abe cabinet has approved the Japanese government’s growth strategies (Future Investment Strategies 2018) and Basic Policies for Economic and Fiscal Management and Reform (big-boned policies). Growth strategies for this year prioritize driverless automatic driving, next-generation healthcare systems and an e-government, among other projects, for realizing Society 5.0. They seek to raise the potential growth rate through technological innovations. The strategies also incorporate various other measures for growth, such as human resources development, working style reforms, regulatory reforms and economic partnerships, as stated in big-boned policies that are growth strategies in a broad sense. This is the sixth year under the growth strategies adopted by the Abe cabinet. ... ... [Read more]

Key Points Stock buying by central banks is highly unusual No need to worry that unrealized losses will push BOJ into negative equity One option is for BOJ to simultaneously sell ETFs and buy an equivalent amount of stocks There is much debate surrounding the BOJ’s exit from monetary easing. In particular, market watchers and players alike are keeping an eye on developments in the BOJ’s Exchange Traded Fund (ETF) Purchase Policy. In this article, I would like to examine the impact of the BOJ’s ETF purchases and its exit strategy. The BOJ started buying ETFs as part of the monetary easing policy introduced in December 2010 under Governor Shirakawa Masaaki. ETF purchases were initially intended to reduce Japan’s high market risk premia (additional returns) in the aftermath of the global financial crisis. However, the BOJ made it a rule that the amount of ... ... [Read more]