On 14 August, the day before the 70th anniversary of the end of the Pacific War, Japanese Prime Minister Shinzo Abe issued a long-awaited statement on Japanese memory of the war and his vision for the future. In it, he emphasised that the apologies given by previous Japanese cabinets ‘will remain unshakable into the future’. Abe’s statement received mixed responses from around the world.
The burst of Japan’s massive financial bubble in 1990 caused the value of stocks, land and other assets to plummet. Japanese banks had financed their asset purchases using them as collateral. Many banks failed due to a combination of the collapse of asset values and their clients’ inability to pay back loans.
In early 2015, Japanese companies, Panasonic and Toshiba, announced that they would stop producing television sets in China. As Japan continues to decrease its investment in China, the two multinational corporations’ partial exit seemed to underscore an overall trend of Japanese firms withdrawing from China. On 23 February 2015, Nikkei News reported that Citizen Watch Company had suddenly closed down its parts factory in Guangzhou, laying off all 1000 employees there.
I was never one that anticipated the BOJ to step up its unorthodox easing of monetary policy next week. Talking with officials here, I have become even more convinced that there is no strong sense of urgency to act.
Does Japan’s accession to the Trans-Pacific Partnership (TPP) agreement mean that the Abe government has set a course for agricultural reform? The short answer is no — for several reasons.
First, despite expectations that the TPP will encourage structural reform of low-productivity industries such as agriculture, just how much of an impact the deal will have on the domestic farm sector is contestable.
Japan is moving toward its largest privatization in two decades. It is selling Japan Post. It will consist of a holding company, a bank, and an insurance company. It will likely raise the equivalent of $10-$12 bln.
There will be 495 mln shares of the holding company that will be sold, 412 mln shares of the bank and 66 mln shares of the insurer. Domestic investors will take 80% of the initial public offering, and the remaining 20% is earmarked for overseas investors.
Japan’s new security laws, passed on 19 September, allow for limited forms of collective self-defence, have been described as a ‘move away from pacifism’, the opening of a ‘Pandora’s box’ and the ‘unsheathing of a new Japanese sword’. But considering the bill’s extreme limitations and significant domestic constraints — including a greying and shrinking population, mounting domestic debt and deeply embedded pacifist norms — one wonders how and why this narrative has taken root so deeply.
Japan is almost fully dependent on energy imports. In March 2011, a devastating earthquake and tsunami hit eastern Japan and damaged the nuclear power plant in Fukushima. This disaster led to the shutdown of all nuclear power plants due to the lack of government safety approvals. Japan replaced this significant loss of nuclear power with energy generated from imported natural gas, low-sulfur crude oil, fuel oil, and coal.
After arguably squandering his limited political capital on pursuing a controversial agenda for an expanded role for the military and re-starting nuclear plans, Japan’s Prime Minister has turned his attention back to the economy. He unveiled Abenomics 2.0.
Recall that Abenomics was the traditional LDP economic policy but ramped up. The LDP relied on easier fiscal and monetary policy and a weaker yen. It has pursued structural reforms, with varying degrees of success.
Japan’s markets will reopen Thursday. The day after, Japan expects to report that core inflation fell back below zero for the first time since April 2013. Abenomics has lost its shine with the economy contracting in four of the past seven quarters.
In some ways, Abenomics was a typical LDP program of fiscal and monetary expansion but on steroids. The reforms that are part of the third arrow have largely failed to capture the imagination of investors though we see the corporate governance reforms as significant.
