Economy | Discuss Japan-Japan Foreign Policy Forum - Part 10

Archives : Economy

No.26, Economy  Jun. 5, 2015

Fifty Years of the Shinkansen, and the Opening of the Hokuriku Shinkansen

October 1, 2014 marked the passage of fifty years since the opening of the Tokaido Shinkansen (bullet train line), which was Japan’s first Shinkansen, and also the world’s first high-speed railway. Japan’s Shinkansen network—which began with the 552.6 km stretch between the stations of Tokyo and Shin-Osaka—has continued to grow and expand and, including the new Hokuriku Shinkansen (between Nagano and Kanazawa) that entered service on March 14, 2015, has now reached a total length of 2,848.3 km. The Shinkansen mentioned above are the ones capable of running at speeds of over 200 km/h. Apart from these, there are also the 275.9 km of the Yamagata and Akita Shinkansen, which are both of the type that run onto conventional train lines; the Hakata-Minami Line; and the 1.8 km stretch of the Joetsu Line between Echigo-Yuzawa and Gala-Yuzawa; which are also essentially part of the Shinkansen network. Including these, the overall length extends to 3,134.5 km. In addition, the construction of new Shinkansen lines is also continuing: the Hokkaido Shinkansen between Shin-Aomori and Sapporo, the Hokuriku Shinkansen between Kanazawa and Tsuruga, and the section of the Kyushu Shinkansen... [Read more]

No.25, Economy  May. 14, 2015

Abenomics Walks a Tightrope as Difficulties Lie Ahead

YOSHIZAKI Tatsuhiko, Economist

Few prime ministers who have been elected from the Liberal Democratic Party (LDP) have won general elections two times in a row. When speaking of prime ministers who demonstrated shrewdness in elections, some people may make mention of Koizumi Junichiro. However, although Koizumi won a landslide victory in the 2005 election following a dissolution of the Diet staged under the name of postal-services reform, his re-election at the previous poll in 2003 was much less convincing for the LDP, the result not something to boast about. Likewise in 1986, Prime Minister Nakasone Yasuhiro brought victory to the LDP — winning more than 300 seats for the only time ever in the era of the multi-seat constituency electoral system. ... [Read more]

No.25, Economy  May. 12, 2015

Control of social security expenses should be expedited.Ensuring Escape from the Deflationary Spiral and to Again Increase Consumption Tax― Outlook of the primary balance of the central and local governments― Case where consumption tax rate was raised to 10% as originally planned

ITOH Motoshige, Professor at the Graduate School of Economics of University of Tokyo

< Key Points >
・The move to escape from the deflationary spiral also contributed to the improvement of the primary balance.
・The reduction of the deficit by half in fiscal 2015 is challenging, but the focus is on the next step.
・The rapid rise in social security expenses is more serious than the postponement of the tax hike.
With the postponement of the consumption tax hike and the dissolution of the House of Representatives, economic policy entered a new phase. Discussions have commenced on the evaluation of Abenomics in the past two years and the new outlook following the election. I wish to tidy up the points under... [Read more]

No.25, Economy  May. 12, 2015

Medium-term economic forecast — Japan Center for Economic ResearchEstablish Social Security that will Support the Future Generation— Allocate 13 trillion yen to childcare support. Stop investing public funds in medical insurance and seek independence.

Kuwahara Susumu, Principal Economist, Japan Center for Economic Research (JCER)

< Key Points >
・Action on the declining birthrate will revive the birthrate, bolstering the growth rate.
・Raise medical and nursing care insurance premium rates and patients’ self-pay rates.
・Encourage nationwide discussions by showing choices for painful reforms.
Following the Lower House election that was held in December 2014, it has been determined that the next consumption tax hike will be put off for eighteen months, and the roadmap for fiscal reconstruction has become increasingly uncertain. Meanwhile, the number of births fell in 2014 to a level that almost dropped below the benchmark of 1 million. The government has set a ... [Read more]

No.25, Economy  May. 7, 2015

Tightening Job Market Begins to Drag Down the Economy — Challenges Confronting the Second Stage of Abenomics

Komine Takao, Professor, Department of Regional Development, Taisho University

Since the spring of 2014, a labor shortage in Japan has emerged as a sudden challenge to its economy. Until just before this shortage became apparent, our normal discussions on the economy primarily focused on possible countermeasures that could be taken to address unemployment issues, which were for the most part intended to provide for employment opportunities in response to such questions as “How do we put an end to the rising unemployment rate?” or “How do we improve the employment of young adults?” and “How do we ensure employment for the elderly by the time they start receiving pension?” But after the spring of 2014, Japan was suddenly confronted with a labor shortage, which must have been a huge surprise to the general public at the time.... [Read more]

No.24, Economy  Feb. 24, 2015

It is not time for local governments to compete with each other. Intensive investment in key base cities nationwide is urgently needed.

Toyama City introduced a new public transportation system “Toyama Light Rail Portram” in 2006.

The government’s policy shift
In postwar Japan, the spread and expansion of urban areas accelerated due to an explosive population increase. We saw occasional disorderly land development and residential areas grew endlessly. The central and local governments cooperated to develop infrastructure in every corner of the country and to facilitate an equalized distribution of educational, fire-fighting, medical and welfare services across the country. However, we see many vacant houses and spaces everywhere nation-wide today. The deterioration and disuse of water supply pipes, sewage systems, roads and school facilities are on-going. In the future situation in which Japanese society will face financial stringency due to the acceleration of depopulation and population aging, it will be impossible for all local municipal governments across the nation... [Read more]

No.24, Economy  Jan. 16, 2015

Japan’s Economy after Exit from Deflation* Potential growth rate has fallen close to zero percent due to decline in productivity ― Need for declaration of exit from deflation and strengthening of supply capacity

HAYAKAWA Hideo, Executive Fellow, Fujitsu Research Institute

The CPI is steadily rising as a result of the BOJ’s new phase of monetary easing. Meanwhile, the unexpectedly low GDP growth rate indicates the low level of the potential growth rate of the Japanese economy. The potential growth rate is probably currently close to zero percent. In order to raise this, productivity needs to be increased. Given that the economy has exited deflation and has attained almost full employment, there is no need for additional demand creation. What needs to be done is to strengthen supply capacity and restore fiscal health, and to set a clear guideline that this needs doing before the CPI reaches 2%.
End of deflation The “greatest achievement” of the BOJ’s new phase of monetary easing (quantitative and qualitative easing; QQE) in terms of its effect on the Japanese economy is, undoubtedly, ... [Read more]

No.23, Economy, Discussions  Oct. 30, 2014

No Need to Fear a Fall in Population

Population decline is beginning to cast a dark shadow across Japanese economy. It is considered to reduce the growth rate threatening the sustainability our social security system. But Hatta Tatsuo, President of the Asian Growth Research Institute, who is also chairman of the Government Working Group to Design National Strategic Economic Zones, has a different view. He says there is no need to fear a fall in population. So what is the basis for that? Saito Shiro, executive research director at the Japan Center for Economic Research, asked him.... [Read more]

No.23, Economy  Oct. 29, 2014

Foreign Investors Who Became the Largest Stockholders, and Corporate Governance Reform in Japan

Kojima Akira, Member, Board of Trustees, and Adjunct Professor, National Graduate Institute for Policy Studies (GRIPS); Trustee, Chairman of the World Trade Center Tokyo

The stockholding of Japanese listed companies by foreign investors reached 30.8% at the end of 2014. This figure surpassed the holding ratio of 26.7% by domestic financial institutions, which used to be at the top in terms of holding ratios. Foreign investors became the largest stockholders in the Japan Corporation for the first time in history, replacing Japanese financial institutions that had had an overwhelming influence on corporate management through lending and stockholding under the main bank system. The governance reform of Japanese companies, long discussed, is entering a new phase along with the growing trend of foreign investors, many of whom are “self-assertive stockholders.”... [Read more]

No.23, Economy  Aug. 27, 2014

Japan and China: Cold Political Relations, Cooling Economic Ties?

YOSHIZAKI Tatsuhiko, Chief Economist, Sojitz Research Institute, Ltd.

The Japan-China relationship is at its worst ever.” “Bilateral economic ties are no longer warm amid cold political relations.” Expressions like these have characterized Japan-China relations for quite some time now. Against this background, I recently visited China to participate in the Japan-China Think Tank Forum hosted by the Shanghai Institute for International Studies on the topic of “How can we implement a breakthrough to resolve the strained bilateral relations?” Holding a track II meeting like this could be interpreted as an indication that the Chinese government is determined to move the strained bilateral relations forward. The conference was held on May 10th, directly after a series of visits to China paid for by delegations consisting of senior lawmakers of Japan’s Liberal Democratic Party (LDP). At the same time, Prime Minister Abe Shinzo was visiting Europe... [Read more]