The semiconductor friction between the United States and China is entering its eighth year. The US government sanctions since the first Trump administration have succeeded in blocking China’s development and production of advanced ICs. However, China is becoming more competitive. Three Phases of US sanctions against China The friction between the United States and China over semiconductors, a strategic material, entered its eighth year in the spring of 2025. The sanctions against China imposed by the first Trump administration were strengthened by the Biden administration and are now back in the hands of President Trump. The series of sanctions imposed by the US government can be summarized as a “blockade against miniaturization” of integrated circuits (ICs), but China’s semiconductor industry is gaining the competitiveness to evade them. Before looking ahead to semiconductor friction in the “another Trump” era, let’s look back at how ... ... [Read more]

Massive support for the semiconductor industry The semiconductor industry is the target of huge government subsidies in Japan. In 2021, the Ministry of Economy, Trade and Industry (METI) attracted Taiwan Semiconductor Manufacturing Company, Ltd. (TSMC), a Taiwanese semiconductor manufacturer and the world’s largest foundry (semiconductor contract manufacturing) company, to Kumamoto Prefecture. The first and second fabs of Japan Advanced Semiconductor Manufacturing, Inc. (JASM), which TSMC established as a joint venture with Sony Semiconductor Solutions and others, are scheduled to receive subsidies totaling up to 1.208 trillion yen under the framework of the Amended 5G Promotion Act, which came into effect in 2022. In 2022, Rapidus Corporation (hereinafter Rapidus), a foundry company, was established with strong support from METI and investment from eight private companies. The company introduces cutting-edge technology with a circuit line width of 2 nm (1 nm is one billionth of a ... ... [Read more]

  Key Points: Structural economic growth cannot be lifted by fiscal and monetary policies. Price controls through subsidies, etc. result in huge fiscal expenditure. Promote privatization of social security to harness the vitality of the private sector.   The public is clamoring for this or that measure to revitalize the Japanese economy. However, many of these measures are unnecessary and may even create obstacles. Fiscal and monetary policies designed to stimulate the economy do not have the effects that the public generally believes they do. A review of economic research shows that these policies have had some success in providing support during business cycle downturns. However, their effects are strictly limited to business cycles as defined by economists. Such downturns do not occur as frequently as the public perceives. Real gross domestic product (GDP) typically zigzags and rises slowly over time. The average straight ... ... [Read more]

Although stock prices and exchange rates remain unstable, can policy management aimed at a “desirable exchange rate” or “normal interest rate level” really be considered rational? The priority should be to achieve an improvement in the economy and economic growth. On August 5, 2024, the Nikkei Stock Average recorded its largest decline in history, falling 4,451 yen from the previous day’s close. The decline of 7,643 yen (closing price basis) in the three business days from August 1 was an unprecedented crash. The Nikkei Stock Average, which peaked at 42,427 yen on July 11, is still unstable, but by August 16 it had recovered somewhat to 38,062 yen. The sharp fluctuations in August may not necessarily be a turning point for stock prices and exchange rates in the medium to long term. On the other hand, it provides important discussion points for future monetary ... ... [Read more]

Key Points: The Modi administration has delayed one economic reform bill after another. People are facing a triple whammy of unemployment, rising prices and poverty. The Modi administration should not succumb to resistance and should move away from protectionism. India’s national elections were a major disappointment to the ruling party’s expectations, with the Bharatiya Janata Party (BJP) winning only 240 seats, far short of the 272 seats needed for a single majority. Even with the cooperation of powerful regional parties in its coalition, the Narendra Modi administration was barely able to launch its third term. The BJP lost 63 seats from the previous election. Investors at home and abroad were concerned about the instability of the government, and Indian stock prices plunged immediately after the vote count. The amount of wealth lost on the day of the vote count was the equivalent of about ... ... [Read more]

  On March 4, 2024, the Nikkei Stock Average briefly broke through 40,000 yen (40,109.23 yen), reaching an all-time high that surpassed the bubble period (38,915.87 yen on December 29, 1989). There is currently an optimistic mood in Japan about the economic outlook. However, I am not optimistic about the current state of the world economy surrounding the Japanese economy. This is because what we are witnessing now is the interruption of the “globalization” that followed after World War II and the chaos accompanying it. “The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep; he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises ... ... [Read more]

Key Points: Clear message that there is no rush to raise interest rates Remaining high import prices due to the weak yen are a turbulent factor Focus on revisions to future guidance and JGB (Japanese Government Bond) purchases The Bank of Japan (BoJ) has almost completely ended large-scale monetary easing, including its negative interest rate policy, and taken a step toward financial normalization. The BoJ will end its control of long-term interest rates and return to traditional policy management using short-term interest rates as its sole policy tool, and will gradually end its purchases of risky assets. Meanwhile, the Bank has continued to purchase long-term government bonds and has stated that accommodative financial conditions will be maintained for the time being. I would like to reflect on the key points of the policy changes, the outlook for future policy, and related issues. The BoJ ... ... [Read more]

  In Cambodia, Bakong, the world’s first digital currency issued by a central bank, has been welcomed by the people and widely established. The author, who helped design and implement it, discusses the factors behind its success in the country, as well as its further development and future opportunities in the Asia-Pacific region.   Miyazawa Kazumasa, President, Soramitsu Co., Ltd. 1 Introduction This article introduces the development of central bank digital currencies (CBDCs) in the Asia-Pacific region and the efficiency of cross-border remittances, taking into account the latest developments in Cambodia. In Cambodia, the digital currency “Bakong” issued by the National Bank of Cambodia (NBC) officially launched in October 2020. Japanese fintech startup Soramitsu Co., Ltd. also participated in the development and design of Bakong. I currently serve as the president and representative director of Soramitsu, and since 2017 I have also served as ... ... [Read more]

  Tsuru Kotaro, Program Director and Faculty Fellow, Research Institute of Economy, Trade and Industry (RIETI)   Wage increases are attracting intense attention as a touchstone for the future course of the Japanese economy. The Japanese government and the Bank of Japan are closely watching how the forthcoming shunto spring wage negotiations will play out. There are signs of a shift in the long-entrenched norm that prices and wages simply do not rise, which has permeated the nation throughout the long period of deflation, and now is the time to aim for an increasing, virtuous circle between prices and wages. This article will examine whether such a virtuous circle can become sustainable. First, when assessing the shunto wage increase, it is important to understand that it usually consists of two portions—the regular annual pay increase that company employees receive, and the increase in the base pay. It is ... ... [Read more]

    Makino Momoe’s newly released book, Jenda Kakusa: Jissho keizaigaku wa nani wo kataruka (Gender Gap: What does empirical economics tell us?) (Chukoshinsho), gives an easy-to-understand explanation of research by Claudia Goldin, laureate of the Nobel Memorial Prize in Economic Sciences. This noteworthy author touches on Goldin’s achievements as she explores the reality of Japan’s “gender gap.” Interview by Voice editorial team   Makino Momoe, Senior Research Fellow, Development Studies Center, Institute of Developing Economies, Japan External Trade Organization   Goldin’s Achievements ――Makino-san’s new book, Jenda Kakusa (Gender Gap), has attracted attention for explaining the Nobel Memorial Prize in Economic Sciences winner Claudia Goldin’s research for the general reader. Makino-san, what was your take on Goldin receiving the award? Makino Momoe: To be honest, I was surprised when I first saw on the news that Goldin alone was awarded the prize. My field of expertise, ... ... [Read more]