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Editor's blog  Feb. 3, 2019

Freedom of Finance and the Debt-laden Economy

Paul Volcker, a legendary policy man and the former chairman of the Federal Reserve Board (FRB), published a new book Keeping at It in 2018 at the age of 91. It is a book that allows us to sense the creed of Volcker, who continues to call for the maintenance of healthy finance. Maybe we should say it is an irony, but in August 2018 there was a move to render the Dodd-Frank law, which focuses on the Volcker Rule that restricts the market transactions of banks, ineffectual. That is, the US House of Representatives passed a bill to revise the Dodd-Frank law. This law had come out of reflections following the economic downturn precipitated by the Lehman Brothers bankruptcy in 2008, which resulted in the global financial crisis. It seems that the sense of crisis that prevailed at that time has already become ... ... [Read more]

Blog
Editor's blog  Nov. 16, 2017

Avoiding the Thucydides Trap Through Interdependence Between the United States and China

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 standards for calculating the gross domestic product (GDP) of Japan are set to be changed, beginning with the second preliminary figures to be announced in December 2016. Upon this change, the GDP is expected to be revised upward by about 3%, an increase of over 15 trillion yen. The government has stated its intent to increase the nominal GDP to 600 trillion yen by 2020 (486.6 trillion yen for the fiscal year of 2014) as one of the targets under the “new three arrows” plan. Achieving this target appears to be quite difficult, but the scheduled revision to the standards for calculating the GDP should provide a favorable boost. However, this revision to the standards is not being made arbitrarily. The timing for the revision is in line with the established policy of making a revision once every five years. Reflecting capital investment by enterprises within the GDP, which is the core item of revision, is in line with the international standards that were revised in 2008... [Read more]

Blog
Editor's blog  Aug. 16, 2017

New Population Projection for Japan

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

The standards for calculating the gross domestic product (GDP) of Japan are set to be changed, beginning with the second preliminary figures to be announced in December 2016. Upon this change, the GDP is expected to be revised upward by about 3%, an increase of over 15 trillion yen. The government has stated its intent to increase the nominal GDP to 600 trillion yen by 2020 (486.6 trillion yen for the fiscal year of 2014) as one of the targets under the “new three arrows” plan. Achieving this target appears to be quite difficult, but the scheduled revision to the standards for calculating the GDP should provide a favorable boost. However, this revision to the standards is not being made arbitrarily. The timing for the revision is in line with the established policy of making a revision once every five years. Reflecting capital investment by enterprises within the GDP, which is the core item of revision, is in line with the international standards that were revised in 2008... [Read more]

Blog
Editor's blog  Dec. 23, 2016

Overcome a Number of Traps and Gaps Embedded in the Japanese Economy and Society

The world is now facing an historic and major change in trends and structural transitions. In this context, I would like to reexamine the position of Japan and discuss the direction, potential, and issues related to Japan in the future. What becomes apparent through this attempt is the variety of gaps and traps that are embedded in Japan. There is a gap between Japan and other countries that is caused by a major change in global trends and Japan’s consistent failure to respond to the shifting currents. There is also a gap in awareness about issues and policy opinions between the younger generation and the elderly generation in Japan, which has led to the advent of an aging society in which Japan has become a typical silver democracy. Moreover, as I mentioned in the Editors’ Blog, there is a gap between the image of ... ... [Read more]

Blog
Editor's blog  Sept. 28, 2016

Move to create ‘beyond GDP’ index that emphasizes economic quality and continuity

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 standards for calculating the gross domestic product (GDP) of Japan are set to be changed, beginning with the second preliminary figures to be announced in December 2016. Upon this change, the GDP is expected to be revised upward by about 3%, an increase of over 15 trillion yen. The government has stated its intent to increase the nominal GDP to 600 trillion yen by 2020 (486.6 trillion yen for the fiscal year of 2014) as one of the targets under the “new three arrows” plan. Achieving this target appears to be quite difficult, but the scheduled revision to the standards for calculating the GDP should provide a favorable boost. However, this revision to the standards is not being made arbitrarily. The timing for the revision is in line with the established policy of making a revision once every five years. Reflecting capital investment by enterprises within the GDP, which is the core item of revision, is in line with the international standards that were revised in 2008... [Read more]

Blog
Editor's blog  Sept. 27, 2016

Issues Facing Japan after The Upper House Election

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

In the Upper House election held on July 10, the ruling Liberal Democratic Party and Komeito emerged victorious with more seats. This means the ruling party now maintains a stable majority in both chambers of the Diet, paving the way for Prime Minister Shinzo Abe’s cabinet to enact policies it has essentially devised on its own with a high degree of certainty. The question is what kinds of economic policies the Abe cabinet will expend this political capital on moving forward.... [Read more]

Blog
Editor's blog  Mar. 17, 2016

Soros’ Warning of a Hard Landing in China and Tremendous Adjustments to Its Debt Economy

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

A hard landing is practically unavoidable,” claimed George Soros. His remarks shocked the world and faced strong opposition from China, the brunt of Soros’ warning. Observations also suggest that Soros is critical of the policies of the Japanese government and the Bank of Japan and has started to lean toward selling Japanese shares. The Soros shock sent waves through global financial markets. Soros made the above remark in a television interview in Davos, Switzerland on 21 January 2016. Well, we are seeing a repeat of 2008. It was a time of financial crisis and a bear market. And you have the same situation today. But the source of the disequilibrium is different. In 2008, the root cause was the subprime crisis in America. But now, the root cause is basically China. So it’s not comparable. It is the deflation and over-indebtedness ... [Read more]

Blog
Editor's blog  Jan. 17, 2016

Japanese Companies’ Actions Regarding the Major Trends of the New Industrial Revolution

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

Displays of books entitled Industrie 4.0, IoT Revolution, New Machine Age and Artificial Intelligence can be seen in special sections in bookstores. The Revised Japan Revitalization Strategy 2015: Revolution in Productivity by Investment in the Future, which the Japanese government announced in June 2015, hammers out the government’s commitment to accelerating challenges toward a new era and the Fourth Industrial Revolution in the general introduction. The strategy emphasizes, “The changes by IoT, big data and artificial intelligence are expected to progress at greater speed and with a greater impact than ever before in history, but our country, which lags slightly behind, has no time or margin for trial and error.” Although there are active discussions about this issue to a certain extent,... [Read more]

Blog
Editor's blog  Dec. 25, 2015

Japan’s Economic Outlook for 2016

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

First, let me discuss the economic situation in Japan as of the end of 2015. Simply put, our current economy is full of uncertainty. Japan’s GDP, a comprehensive measure of economic activity, for the second quarter (April–June) of this year was down 0.5 percentage points in real terms (annualized) from the preceding quarter, which was followed by an increase of a 1.0 percentage point in the following quarter (July–September) on the same basis. As this shows, thus far, our economy has been hanging in the balance in fiscal 2015, and will most likely end up with annual growth of less than 1% for the entire fiscal year. In view of the fact that the Japanese government expected growth of 1.5%, it is obvious that the economy this year underperformed expectations. Next, let us examine how the government views... [Read more]

Blog
Editor's blog  Oct. 15, 2015

Outlook for the Chinese Economy

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

China is today confronting some major economic challenges, with the pace of its GDP growth slowing significantly over recent years in comparison with peak levels, at which growth rate was over 10%. In fact, China’s real GDP growth rate for the April–June quarter of 2015 was limited to 7.0% year on year. The stock market in Shanghai is still suffering from the aftershocks of the significant plunge that occurred in July of 2015. Regarding the official statistical data released by the Chinese government, quite a few analysts and other experts appear to share growing concerns that the pace of the country’s recent economic growth remains, in reality, much slower than has been reported. In fact, the Japan Center for Economic Research (JCER), a non-governmental research institute, estimates that China’s GDP growth rate for... [Read more]