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

No Need to Fear a Fall in Population

HATTA Tatsuo – President, Asian Growth Research Institute SAITO Shiro – Executive Research Director at the Japan Center for Economic Research 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. Population growth and development unrelated Saito: We hear it said a lot that one of the greatest problems facing the Japanese economy is the decreasing birthrate and aging population, and population decline. I also ... ... [Read more]

Economy, No.23  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.” Enhancement of Corporate Governance Emphasized in Japan Revitalization Strategy The Abe administration approved the Japan Revitalization Strategy 2014 at a Cabinet meeting in June 2014. This strategy stresses that “it is essential for global corporations in particular to strengthen ... ... [Read more]

Economy, No.23  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, and he directly criticized China’s military expansion at ... ... [Read more]

Economy, No.23  Aug. 26, 2014

The Abenomics Growth Strategy Enters the Implementation Stage

KOJIMA Akira, Chairman of World Trade Center Tokyo, Inc., Member, Board of Trustees of the National Graduate Institute for Policy Studies

On June 24, 2014, the administration of Abe Shinzo endorsed the “third arrow” growth strategy for Abenomics (the economic policy of the Abe administration) by Cabinet decision. This is a revised version of the growth strategy of one year ago. In addition to incorporating the previously postponed reduction in corporate tax rates, it also gets to grips with regulatory reforms in the so-called “regulatory bedrock” of the agricultural, health and medical fields, which had been thought difficult due to strong resistance by existing groups with vested interests. Markets have reacted favorably, unlike last year when the growth strategy was met with disappointment by investors worldwide and led to a sharp drop in share prices that coincided with the announcement. Immediately after the announcement of the second part of the current growth strategy, even the British magazine The Economist, known for being outspokenly critical, commented ... ... [Read more]

Discussions, Economy, No.22  Jul. 10, 2014

Discussion on the Future of the Abe Economy:Will there be a Knowledge Industrial Revolution?— In-depth discussion on innovations and the future of Japan

    NONAKA Ikujiro Professor Emeritus at Hitotsubashi University ASAHIOKA Eishun President of the Social Infrastructure Research Center Data unleashing human potential Nonaka Ikujiro: The biggest topic for the Japanese industries this year is the conversion of knowledge into data. For example, behavioral patterns of customers, which were not visible in the past, are made available for analysis and reflected to corporate strategies utilizing so-called “big data” (large volume digital data). Another example is Google’s development of self-driving cars, as well as the acquisition of several robot-related companies at the end of last year; these are also the efforts to convert as much knowledge as possible into the form of data. In this context, it seems the role of knowledge in society is facing a major change.  Asahioka Eishun: As a representative of a private sector think tank, I have been conducting research on ... ... [Read more]

Economy, No.22  Jul. 7, 2014

Choices for the Future —Overcoming depopulation and a hyper-aged society to build a growth and development model originating from Japan—

In May 2014, the Committee for Japan’s Future, a task force under the Council on Economic and Fiscal Policy, released an interim report on the discussions that have been held thus far. With the permission of the Cabinet Office, Discuss Japan here presents the main arguments and summary conclusions of the detailed discussions. Introduction If no action is taken against the current situation, an extremely harsh and difficult future will be awaiting us. Nevertheless, if systems, policies and people’s way of thinking are changed rapidly, the future can be changed. The Japanese economy is beginning to get out of a long-standing deflation on the back of Abenomics. We must ensure that the recovering economy will turn into a solid one and result in sustained growth and development. To make sure this happens, it is essential that, while closely monitoring structural changes in our economy ... ... [Read more]

Economy, No.22  Jul. 4, 2014

The Chinese Economic Slowdown — How Does It Affect Japan? Massive debts, rising consumer prices, declining childbirth and an aging society — Days of fearing the “phantom superpower” are over

TSUGAMI Toshiya, Modern China researcher, Tsugami Workshop President

Japan today is threatened by the shadow of its inflating neighbor, China. While some people allege that its being a super economic power growing at a 7% rate or that it will pass the United States in GDP are established facts, a substantial number of commentators argue that the Chinese economy is collapsing and will soon default since it has a 200% debt ratio versus GDP and that the country’s outstanding shadow bank financing has surpassed 60% of the GDP. From an economic standpoint as a close observer of modern China, I have to say that these threat and collapse theories are all illusions, far too extreme. The reality is, China’s growth rate will drop drastically and the economy will not empower itself limitlessly, nor will its GDP surpass that of the United States. In fact, China will be forced to suffer an age ... ... [Read more]

Economy, No.22  Jun. 5, 2014

Will Exports, the Japanese Economy’s Cleanup Hitter, Recover?

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

Finally, the consumption tax rate has been raised. On the morning of April 1, I saw that the prices of newspapers had gone up. Fares for JR trains had been changed, and there were digits other than zero. The minimum fare for a taxi ride in Tokyo had also risen to ¥730. At a family restaurant the menu had changed completely. I ordered eggs benedict since it was unusual to find the dish in a Tokyo restaurant. But the next moment I said to myself, “Ah, this new item on the menu was only to camouflage the price hike.” Tsk, tsk. I had just spent ¥704 on breakfast. Increases in costs are everywhere. Typical for Japan, there was little confusion. So, what will the economy be like? I expect that the consumption tax hike will have adverse effects. Every time I have been asked ... ... [Read more]

Economy, No.22  Jun. 4, 2014

How to View a Trade Deficit and a Current Account Deficit ―Domestic Reforms Necessary for a Structural Change in the Balance of International Payments to Those Found in a Creditor Nation

KOJIMA Akira, Chairman of World Trade Center Tokyo, Inc., Member, Board of Trustees of the National Graduate Institute for Policy Studies

Will Japan, which has been viewed as a country with huge surpluses, become a nation with twin deficits (budget and current account deficits)? Overseas investors have been asking this question frequently in recent years, in addition to arguments on the same point coming from Japan. Japan’s prominent external surplus received criticism and created pressure on the country to cut the surplus in the 1980s when trade and economic friction between Japan and the United States were at a peak. Measures for expanding domestic demand, which were taken to address the situation, went too far and produced a bubble economy. It is quite the problem to make a correction in the current account surplus or deficit a policy goal by attaching importance to the balance of payments only. This is undoubtedly a lesson learned from that experience. In the author’s view, it is essential for ... ... [Read more]

Economy, No.22  May. 18, 2014

The 21st Century Public Policy Institute Research Project Effective Measures to Halt Birthrate Decline -Responding to the declining birthrate and aging society is Japan’s mission in world history -

KOMINE Takao, professor at the Graduate School of Regional Policy Design at Hosei University; Project Leader at the 21st Century Public Policy Institute

The future is filled with uncertainty and yet, amid this uncertainty, there is quite a high level of certainty regarding the population outlook. In this sense, the population can be said to represent a “certain future.” Any attempt to forecast the future of Japan’s society and economy through its population raises many serious issues, including “constraints on economic growth,” the “social security crisis” and “regional depopulation,” so much so that these issues can be collectively referred to as the “population crisis.” This population crisis is the “certain crisis” in the certain future. The causes of the certain crisis include the aging of the population and the decrease in the working-age population, but the real root of the problem lies in the declining birthrate. However, currently, despite government efforts to implement measure against birthrate decline, the downward trend continues unhalted. At the moment, the “persistence ... ... [Read more]