No.62 | Discuss Japan-Japan Foreign Policy Forum

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No.62
No.62, Economy  Nov. 20, 2020

COVID-19 Pandemic and the Economy: Need Sound Public Finance for Maintaining Social Safety-Net

Nobuhiro Kiyotaki, Professor of Economics, Princeton University   Key points Should corporate bankruptcies increase, credit crunch may follow Postponing retirement is more effective than high inflation for fiscal consolidation Promoting open economy is important for growth after the containment of COVID-19   Following COVID-19 pandemic and government restrictions on social and economic activities, the global economy plunged into the deepest recession of the postwar era and the lives of people have been affected profoundly. This article discusses the impact of the COVID-19 pandemic, policy responses and the future direction from a macro-economic perspective. The COVID-19 pandemic makes it difficult to engage in activities that involve social contact and possibility of infection. Consumption, especially services consumption in restaurants, leisure and hospitality, has decreased significantly. Let us look at consumption and employment in the United States by referring to data collected by Professor Raj Chetty of ... ... [Read more]

No.62, Society
Nov. 16, 2020

We Are Approaching the Limits of Having Only Policies that Preserve Employment!: The Largest Number of People Taking a Leave of Absence Since World War II—What Has Happened in the Labor Market?

Genda Yuji, Professor, University of Tokyo Only a Slight Increase in Unemployment in April When the declaration of a state of emergency was issued for all of Japan due to the spread of COVID-19 in April 2020, the survival of many companies was in jeopardy and the Japanese workplace faced unprecedented difficulties. Job opportunities collapsed and there was concern that we might see workers lose their jobs and struggle to survive. According to the Labor Force Survey by the Statistics Bureau, Ministry of Internal Affairs and Communications, released at the end of May, the number of workers across Japan was reduced by 1.07 million (seasonally adjusted) in just one month from March to April when infections rapidly spread. As a great reduction from the previous month since May 1953 when comparisons can be made, it was second to the 1.13 million workers from January ... ... [Read more]

No.62, Economy
Nov. 15, 2020

Future Direction of International Trade Systems: Institutions matter – a rise of “peer value chains”

Inomata Satoshi, Chief Senior Researcher, Institute of Developing Economies, Japan External Trade Organization (JETRO)   Key points Institutional similarity will be even more important in shaping global value chains than geographical proximity Multinational firms will seek to offshore production to countries with robust institutions akin to their home business environment Complete decoupling of the world economy is inconceivable, but partial decoupling is probable   According to Richard E. Baldwin, Professor of the Graduate Institute of International and Development Studies, the international production system is based on tri-polar networks of Factory Asia, Factory North America and Factory Europe. Namely, global value chains (GVC) are not truly global, but are more likely to be regional. How will GVC look like in the post-COVID19 world? They are considered to evolve from regional value chains based on geographical proximity to production networks connected through institutional similarity (of legal ... ... [Read more]

No.62, Diplomacy
Nov. 13, 2020

Looking Back at Prime Minister Abe’s Diplomacy: A Political Legacy of the Long-term Abe Administration—Leadership for liberal international order

Kanehara Nobukatsu, Former Assistant Chief Cabinet Secretary, Professor of Doshisha University   Interview by Nakamura Kiichiro, Editor-in-Chief of Gaiko (Diplomacy)   ――Professor Kanehara, you were appointed Assistant Chief Cabinet Secretary with the formation of the second Abe Cabinet. Prof. Kanehara Nobukatsu: I remember suddenly being told to go to the Prime Minister’s Office on December 28, the day the Abe Cabinet was formed. When forming the Cabinet, a team of three was set up under Chief Cabinet Secretary Suga Yoshihide and Deputy Chief Cabinet Secretary Sugita Kazuhiro. It consisted of Assistant Chief Cabinet Secretary for Internal Affairs Sasaki Toyonari (from the Ministry of Finance) (later replaced by Furuya Kazuyuki), Assistant Chief Cabinet Secretary for Security Takamizawa Nobushige (from the Ministry of Defense), and myself who was in charge of External Affairs. We had excellent teamwork.   ――What was the feeling at the time of ... ... [Read more]

No.62, Discussions, Diplomacy
Nov. 12, 2020

What of the United States? Or Japan? New Visions of Leadership under COVID-19: How Will Leaders Engage the Libertarian Youths Sweeping over the World?

Uno Shigeki vs Watanabe Yasushi The True Nature of Leaders Uncovered in Crisis ―What are your views on the success stories and failures of different countries’ leaders in their COVID-19 responses? Uno Shigeki: When it comes to COVID-19 measures, it’s said that the East Asian countries that have taken a micro approach of tracking individual behavior have been more successful that the European countries that have focused on lockdowns. However, the causal link between differences in policy and the infectious spread is complex. It’s true that the exposure of political leaders has surged due to increasing social media contact by staying at home, but it’s still unclear what difference it’s made in terms of preventing infections. Having said that, it’s also not so that it’s the same the world over. As the first stage of focusing solely on preventing the spread of the virus ... ... [Read more]

No.62, Economy
Nov. 12, 2020

How to Face up to an Uncompromising China? (II): China’s Economy Towards a Stronger Governance Coexisting with Negotiations/Coordination with US

Ito Asei, Associate Professor, University of Tokyo   Key points Toward an “unknown normality” after the US-China conflict and COVID-19 Stronger governance and a more sophisticated, expanding Chinese economy Japan to continue to exert influence on thoughtful action   The concept of the new normal entered the picture after the advent of the Xi Jinping administration. The end of the rapid economic growth and China becoming a middle-income country transformed national issues. The new normal indicated that the administration recognized this fact. But now, after the US-China conflict and COVID-19, China’s political economy finds itself in an unknown normality in a dual sense. This article will confirm the economic situation during the COVID-19 crisis and examine trends in China from the perspective of structural change. There are both strong and weak aspects to the economy in China after COVID-19. At the start of the ... ... [Read more]

No.62, Diplomacy
Nov. 12, 2020

How should Japan approach China, a country that takes a hardline stance against the backdrop of insecurity in the world order?

Kamo Tomoki, Professor, Keio University   Key points China aims to embed its requests into the current world order Both cooperation and coercion, two conflicting concepts, are prominent in its diplomacy with major countries Japan should present a new world order that includes China   China’s external actions are growing tensions in the Asia-Pacific region due to the deepening of the US-China trade friction.   The Communist Party of China (CPC) established developmentalism as one of its slogans and is on a path of reform and open-door policies in which its ruling guarantees internal and external environments that must be established to support the slogan. Through its diplomacy, China aims to facilitate reform and open-door policies; that is, to establish a stable international environment that secures development. It has already accomplished high economic growth and is in the process of becoming a middle-income country. ... ... [Read more]