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Economy, No.43  Feb. 22, 2018

ASEAN’s Problem of Declining Birthrates and Population Aging ― How to Cope with Widening Domestic Gaps

  ASEAN countries are facing more rapidly declining birthrates and population aging than Japan. At the same time, the widening income gaps are leading to increased social unease, and this situation is aggravated by the digital society. As regional issues shift from the economy to politics and society, how should Japan relate to ASEAN countries?   Depopulation, declining birthrates and population aging are common issues not only for Japan, but for the entire Asian region. The global population will continue to increase this century, whereas Asia, including the Association of Southeast Asian Nations (ASEAN), will see populations decrease by the middle of this century. That is, Asia will become a depopulation region half a century earlier than the rest of the world. This is because declining birthrates have been progressing throughout Asia. The total fertility rate (equal to the number of children that women ... ... [Read more]

Economy, No.43  Feb. 8, 2018

Future of the Automotive Industry: Preparing for structural changes in the supply chain networks

Although a gasoline-fueled car is usually said to contain approximately 30,000 parts and components, a closer look reveals that depending on the way of counting, it can be as large as 100,000 with some 10,000 parts used to make just an engine. In the case of an electric vehicle (EV), which runs on a battery-powered motor instead of a fuel-powered engine, there is no need for fuel system parts such as a fuel tank, ignition system components such as a spark plug, exhaustion and emission control system parts such as a muffler, air intake system parts such as a throttle, lubrication system parts such as a fuel pump, cooling system components such as a radiator, and transmission system components such as an automatic transmission (AT) (according to the EVsmart Blog). As such, the number of parts and components used to make an EV is ... ... [Read more]

Economy, No.43  Feb. 8, 2018

Future of the Automotive Industry Strategies with a View to the Future of EVs and Beyond: Exploring the Application of Technologies to Other Fields

Key Points The elimination of either FCV or EV  by market competition is unavoidable Competition will intensify as obstacles to market participation are lowered by the widespread popularization of EV Current revenues cannot be maintained with a changeover to EV Both the British and French governments have announced policies to ban the sale of conventional combustion engine-powered vehicles by the year 2040. This, together with the toughening of environmental regulations by other countries such as China and the United States, indicates that the global movement shifting away from engine-powered cars is accelerating. Amidst all of this, the greatest issue for Japan is that the road that lies ahead, after this shift away from engine-powered cars remains unclear. Does it lead to electric vehicles (EV), or to fuel cell vehicles (FCV)? The major reason for this uncertainty is that manufacturers have divided into two camps. ... ... [Read more]

Economy, No.42  Dec. 20, 2017

EV Revolution to Bring Drastic Change to Auto Industry

Toyota’s EV concept car (TOYOTA Concept-i) Executive Vice President Didier Leroy of Toyota Motor said, “We have no doubt that EVs will be one of the key solutions in the near future. That is why we have created a new company with Mazda and Denso to develop EV architecture with a view to mass production” at the 2017 Tokyo Motor Show. PHOTO: COURTESY OF TOYOTA MOTOR   Electric vehicles (EVs) without engines appear to be gaining momentum as a driving force behind a drastic turning point in the 100-year history of internal combustion engine vehicles, and are beginning to cause a major paradigm shift in business for auto manufacturers around the world. This new trend in automobile technology has been given further momentum by significant developments in government policies, social values and the technological environment that were seen during the course of 2017. In ... ... [Read more]

Economy, No.40  May. 8, 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]

Economy, No.40  May. 3, 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 ... ... [Read more]

Economy, No.40  May. 2, 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]

Economy, No.39  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 ... ... [Read more]

Economy, No.39  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]

Economy, No.39  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]