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No.40
No.40 ,Economy  May 08, 2017

Interviewing an Expert on International Trade
Efforts to Implement the TPP Fail — Exercise Leadership to maintain a high level of trade negotiations

The TPP is an agreement that was reached to create a huge value chain in the Asia-Pacific region. With its implementation becoming uncertain, what role is expected of Japan in trade negotiations? Editorial department of Wedge: Why does it make sense for Japan to ratify the Trans-Pacific Partnership (TPP) as soon as possible, while President-elect Trump says that he will announce the United States’ withdrawal from the TPP on the day of his inauguration? Urata Shujiro: The TPP will be implemented if either the twelve nations complete the domestic procedures within two years after signing in February 2016, or if more than six nations accounting for 85% of the total GDP of the twelve nations complete them, even after two years have passed. I do not expect that Trump will change his campaign promises before the mid-term election. That said, even if the United ... ... [Read more]

No.40
No.40 ,Economy  May 03, 2017

Views on the Chinese economy:
Step-by-step Action on Capital Outflows
― Avoiding a hasty transition to a floating system

< Key Points > Reform state-owned enterprises to promote private sector development Strengthen the financial system to prevent international capital outflows Liberalize trade and investment to avoid friction with the United States China’s economic growth rate for 2016 was 6.7%, a persistent slowdown from the peak of 2010 (10.6%) in the post-Lehman shock period. The economy has clearly shifted from high growth to medium growth. This is due to both long-term and structural factors affecting the Chinese economy and medium-term factors triggered by domestic and overseas economic changes in the wake of the 2008 global economic crisis. Long-term and structural factors relate to China’s trend towards a lower potential growth rate. Specific factors include (1) a peak-out in the country’s working-age population (aged 15–64), (2) reduced labor movement from rural to urban areas (passing of Lewis’ turning point), (3) lower growth in public infrastructure ... ... [Read more]

No.40
No.40 ,Economy  May 02, 2017

Is U.S.-Japan Trade Friction Avoidable?
Stay Resilient with Fair Arguments against Unfair Criticism
―Japan must not accept import obligations

< Key Points > Free trade and investment promotion should be addressed through economic dialogues Japan must accelerate structural reforms in agriculture, which is heavily protected by high tariffs Japan is compelled to accept the invitation to the Free Trade Agreement (FTA) negotiations with the United States It has been a little over one month since the inauguration of Donald Trump as the President of the United States. His political style remains unpredictable without a clear logical approach, leaving the entire world guessing with serious uncertainties. The US government is faced with quite a few lingering risk factors, particularly with respect to its international trade policies. I am deeply concerned about the Trump administration’s attitude, which looks as though it is prepared to disregard the principles of non-discrimination or the international tariff agreements that have been embraced by the World Trade Organization (WTO) over ... ... [Read more]

No.39
No.39 ,Economy  Apr 26, 2017

Views on the Chinese economy:
Dynamism Holds the Key in the Private Sector
―China is Using Incomplete Intellectual Property Protection and Insufficient Laws to its own Advantage

< Key Points > The electronics industry in Shenzhen is a perfect example of active technological innovations There are cases in which pioneering companies changed the system by disregarding regulations Vitality may be lost if the Chinese government strengthens interventions The Chinese economy can be said to have maintained generally favorable conditions since the second half of 2016, under the positive effects of the expansive macroeconomic policies underpinned by the flexible foreign exchange policies. To cite an example, the Produce Price Index (PPI) moved back into the positive range after staying in the negative range for a long time. Under such good conditions, problems on the supply side, which China should address in the mid- and long-terms, tend to attract interest. In this article, I would like to consider the sustainability of the technological innovations on which the future growth of the Chinese economy ... ... [Read more]

No.39
No.39 ,Economy  Apr 18, 2017

A New Perspective on Measures for the Declining Birthrate:
Expected fertility rate of 1.8 can be realized
Put all necessary measures into action in eight years

< Key Points > Shortening working hours and reducing university tuition fees are effective. Initiatives to eliminate waiting lists for nursery school enrollment and provide free preschool education should also be pursued. Improvements in labor productivity and childhood poverty rates could also be at-tained. If increasing the fertility rate and birthrate are set as policy goals, a society might be created in which people that do not have children feel pressured. The policy goal of taking measures to address the declining birthrate should be to create an environment in which people who want to give birth to children can do so. The government has set the goal of realizing the expected fertility rate of 1.8 by 2025. This numerical target is based on an estimate of the number of children desired by the child-rearing generations gauged from nationwide surveys in 2010. Because the fertility ... ... [Read more]

No.39
No.39 ,Economy  Apr 17, 2017

Trade: New Partners

Prime Minister Abe continues to stress his commitment to a range of key Free Trade Agreements despite the recent setback of US withdrawal from the Trans-Pacific Partnership.   As globalization has accelerated, the importance of the liberalization of trade, not only in goods but also services, has become widely recognized in international society. Discussions about the benefits and risks of globalization are held around the world. Everyone understands that trade negotiations may be difficult, but the expectation in international society is that free trade will inevitably spread as the various difficulties are overcome to form a better trade scheme for the coming era. Nevertheless, on January 23, the United States decided to withdraw from the Trans-Pacific Partnership (TPP) negotiations and agreement. The decision startled not only the countries party to the TPP but also promoters of free trade around the world. Soon after the ... ... [Read more]

No.39
No.39 ,Economy  Apr 16, 2017

A New Perspective on Measures for the Declining Birthrate:
Provide Better Benefits in Kind Instead of Benefits in Cash ― The imminent challenge of expanding child care services

< Key Points > Create positive effects of female employment on fertility rates Rapid increase in benefits in cash does not directly lead to the reverse trend of fertility rates Other countries that show higher fertility rates shifted to benefits in kind after the 1990s Japan’s total fertility rate (average births per woman during her lifetime) was 1.45 in 2015, which seems to show a tendency toward recovery. Some advanced countries, including the United States, the United Kingdom and France, show fertility rates greater than 1.8. The pressure of the declining birthrate and aging population that currently faces the Japanese economy and society is not seen in other advanced countries as a common phenomenon. Child-rearing support as a measure for the declining birthrate consists of benefits in cash, such as child allowance, and benefits in kind, such as child care services. The scale of ... ... [Read more]

No.39
No.39 ,Economy  Apr 14, 2017

Bringing The Truth Behind Inflation to the World
― Reading the State of the Global Economy from the Demographics of Japan, China and Singapore

Six years have passed since Defure no shotai (The Truth Behind Deflation) was published. Here, I expand upon the answers offered by the book — which highlighted the importance of population in predicting the future economic outlook — and apply them in analyzing the global economy.   In my book Defure no shotai (The Truth Behind Deflation), which was published in 2010, I pointed out that the root cause of the long-term stagnation in the Japanese economy was the decrease in the population size of the active working generation. The productive working-age population of Japan (those aged between 15 and 64, including foreign residents) peaked in 1995 at around 87 million, and by 2012 had already declined by over 10 million; a decrease of more than 12%. This decrease was accompanied by a decline in the volume of demand for housing, cars, home appliances, ... ... [Read more]

No.38
No.38 ,Economy  Apr 12, 2017

Is U.S.-Japan Trade Friction Avoidable?
Blaming Trade Partners for Deficits Is Pointless

The new U.S. administration inaugurated in January 2017 is moving to restrict international trade by pursuing protectionist trade policy. Upon taking office, President Donald Trump declared his intention for the United States to withdraw from the Trans-Pacific Partnership (TPP) agreement and renegotiate the North American Free Trade Agreement (NAFTA). Furthermore, media reports show that the administration is moving to raise tariffs to correct bilateral trade deficits with certain trade partners, as the new administration considers the phenomenon to be quite problematic. The intent behind the sequence of moves is to protect U.S. producers from their foreign competitors. Many warn that such protectionist tilt could plunge the world economy into chaos. In the first place, why does a country’s attempt to protect domestic producers from foreign competitors pose the risk of chaos? In this article, I would like to explain how protectionist trade policies could ... ... [Read more]

No.38
No.38 ,Economy  Apr 12, 2017

Excessive Pessimism about the Shrinking Society

Since the collapse of the bubble economy in 1991, the Japanese economy has remained stagnant for an unprecedented length of time. Initially, economists from various countries regarded this long-term stagnation as economic deceleration that was happening only in Japan due in part to poor policy responses. However, the financial crisis triggered by the Lehman Brothers’ collapse in 2008 involving Europe and the United States and the slowdown in the economic growth of various countries have led to the rise of the so-called secular stagnation theory, which argues that long-term stagnation is not exclusively a problem of Japan, but a structural slowdown in growth of the overall advanced economies. Factors such as the falling birthrate and the aging population demographic change and dwindling investment opportunities are regarded as common factors. However, discussions in Japan are excessively pessimistic. This has created a vicious circle, in which ... ... [Read more]

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