Japan monitoring impact from China’s slowing economy
Japan is looking for any adverse effects on China’s slowing economy, and trade conflicts between the U.S. and China are affecting its financial growth, a public study said Tuesday.
According to the White Paper on Economics and Finance for fiscal 2019, China’s slowdown has already affected Japanese domestic production and exports to the world’s second-largest economy.
Hit by negotiating requirement for smartphone components, China continues in a trade conflict with the U.S. and the spat between the world’s two largest economies threatens to limit worldwide development, the quarterly document said.
“Special consideration should be given to uncertainties regarding foreign financial strategies and circumstances, including the slowing Chinese economy, the effect of U.S.-China trade problems and the (scheduled) departure of Britain from the European Union,” he said.
The govt said in a financial evaluation previously this year that the world’s third-largest economy is probable to be in the middle of its most extended development stage since the beginning of World War II, backed by improving labour and salary circumstances. But this view was not referred to in the white paper.
The article suggested that Japan enhance productivity to increase salaries and resolve its serious supply of labour, measures that should both assist increase consumer spending.
In April, the state walked some way to address the problem of labour by implementing new visa status to allow firms to employ more overseas employees. It also seeks to boost the involvement of women in the labour industry and encourages older people to stay in the workplace.
To attract more foreign workers, the paper said, Japan’s ingrained labour culture and employment system, which includes excessive working hours and a seniority-based wage system, should be reviewed.
As the consumption tax is scheduled to rise from the current 8% to 10% in October, the report said it is imperative to monitor closely what impact the tax increase will have on household income and expenditure — critical domestic demand pillars.
Because spending by people in the 39 and younger age brackets remains weak, it is also necessary to spark consumption to raise their wages and increase opportunities to spend more money by reducing long working hours.
The fiscal 2019 edition of the Japanese Economy and Public Finance Annual Report was presented to a Cabinet meeting on the same day by Minister of Economic Revitalization Toshimitsu Motegi.
The annual report also highlighted the need to pay attention to the effects that future developments in the Chinese economy could have on production and exports, including those of information-related equipment and machine tools, both of which are becoming increasingly dependent on China.
According to the report, the rate of dependence on China’s final demand reflected in production value in 2015 was 14.4% for the information and communications equipment sector and 10.2% for electrical machinery, including semiconductors, both doubling from 2005 levels.
The rate also doubled to 9.7 per cent for chipmaking equipment and other general machinery.
Of some $2 trillion in industrial goods exported by China in 2015, Japan created $34.6 billion in added value by exporting parts to the neighbouring country, the report said.
The study advised that if the United States imposes extra tariffs on Chinese products, the change could harm Japan through the supply chain owing to an anticipated fall in imports from China.
However, it noted that it is expected that the Japanese economy will continue to recover moderately, driven by domestic demand.
Learning lessons from a last-minute rise and subsequent decline in consumption that occurred before and after Japan raised the consumption tax rate from 5 per cent to 8 per cent in April 2014, the report stressed that it is essential for the government to increase consumption by 8 per cent to 10 per cent in October during the planned rise in consumption tax.