In his first speech since taking charge of the second-biggest economy in the world, Japanese Prime Minister Naoto Kan identified his biggest challenge as ending two decades of stagnation.
“For the past 20 years, the Japanese economy has been at a standstill,” said Kan, who served as finance minister in the short-lived government of his predecessor, Yukio Hatoyama.
“Growth has stopped. Young people can’t find jobs. This is not a natural phenomenon. It resulted from policy mistakes,” he said, referring to the half-century of conservative rule that preceded his center-left party’s election victory last year.
“I believe we can achieve a strong economy, strong finances and strong social welfare, all at the same time,” said Kan, a former left-wing activist who has more recently earned a reputation as a fiscal hawk.
Even if Kan does not serve longer than any of his four predecessors, all of whom left office within a year or less, he is likely to preside over a sobering milestone for Asia’s post-war industrial powerhouse.
Some time this year, economists predict, China, the low-wage population giant and “factory of the world,” will overtake the high-tech island-nation of 127 million as the world’s No. 2 economy.
The dynamism of China today reminds many Japanese of where they were in the 1980s, when its auto and electronics exports dominated world markets and Japan Inc awed and scared the Western world in equal measure.
The investment bubble of those boom days popped in 1991, bringing in a cycle of recessions and a draining economic malaise, while ending the country’s jobs-for-life model and heightening income divisions in Japan.
Although most Japanese remain comfortably wealthy, unemployment now stands at 5.1 percent and homeless people, once almost unheard of, are a common sight, sleeping rough under bridges and in city parks.
The Democratic Party of Japan (DPJ) last year pledged to help people cope with tougher times, with policies ranging from higher child payments and free school tuition to scrapping highway tolls, a pledge that has since been dropped.
The danger is that the extra spending will add to the government’s debt mountain, which is nearly double Japan’s GDP and by far the highest in the industrialized world.
Kan has advocated in recent months that Japan raise its consumption tax from the current level of 5 percent. Asked about the issue on Friday — shortly after taking office and weeks ahead of a crucial upper house election — he said only that an announcement would be made later.
The good news for Kan is that Japan’s economy has started to recover, thanks to a resurgence in Japanese exports — driving GDP growth to an annualized 4.9 percent in the January-to-March period.
The bad news is that the upswing has yet to filter through to the broader economy, long burdened by a stagnant jobs market, persistent deflation and weak domestic demand.
As finance minister, Kan has often warned about the dangers of Japan’s crippling deflation, at times heaping pressure on the Bank of Japan to take action on falling prices.
Looking ahead, what most worries Japan’s political and business leaders is the country’s demographic time bomb — a combination of one of the world’s highest life expectancies and lowest birthrates.
The rapid graying of Japan is set to shrink the country’s workforce and consumer market, leaving fewer workers to support more pensioners. On current trends, the population is expected to halve by the end of the century.
With its home market shrinking, corporate Japan is looking to China, which overtook the US as Japan’s top trade partner three years ago and emerging Asia, to keep its economy afloat.
“Japan is located in a very good region geopolitically,” Kan said, echoing that view in his first press conference on Friday.
“Asia has seen great development. Japan is part of it, potentially in a position to have a complementary relationship with developing China, India and Vietnam,” he said.
Huawei Technologies Co’s (華為) latest smartphones carry a version of the advanced made-in-China processor it revealed last year, results from an independent analysis showed. This underscored the Chinese company’s ability to sustain production of the controversial chip. The Pura 70 series unveiled last week sports the Kirin 9010 processor, research firm TechInsights found during a teardown of the device. This is a newer version of the Kirin 9000s, made by Semiconductor Manufacturing International Corp (SMIC, 中芯) for the Mate 60 Pro, which had alarmed officials in Washington who thought a 7-nanometer chip was beyond China’s capabilities. Huawei has enjoyed a resurgence since
purpose: Tesla’s CEO sought to meet senior Chinese officials to discuss the rollout of its ‘full self-driving’ software in China and approval to transfer data they had collected Tesla Inc CEO Elon Musk arrived in Beijing yesterday on an unannounced visit, where he is expected to meet senior officials to discuss the rollout of "full self-driving" (FSD) software and permission to transfer data overseas, according to a person with knowledge of the matter. Chinese state media reported that he met Premier Li Qiang (李強) in Beijing, during which Li told Musk that Tesla's development in China could be regarded as a successful example of US-China economic and trade cooperation. Musk confirmed his meeting with the premier yesterday with a post on social media platform X. "Honored to meet with Premier Li
Dutch brewing company Heineken NV on Friday announced an investment of NT$13.5 billion (US$414.62 million) over the next five years in Taiwan. The first multinational brewing company to operate in Taiwan, Heineken made the statement at a ceremony held at its brewery in Pingtung County. It also outlined its efforts to make the brewery “net zero” by 2030. Heineken has been in the Taiwanese market for 20 years, Heineken Taiwan managing director Jeff Wu (吳建甫) said. With strong support from local consumers, the Dutch brewery decided to transition from sales to manufacturing in the country, Wu said. Heineken assumed majority ownership and management rights
GROWTH DRIVERS: The firm expects to benefit from generative AI applications for smartphones, higher average selling price of flagship chips and market share gains Smartphone chip designer MediaTek Inc (聯發科) yesterday said it estimates that revenue would expand at an annual rate of about 15 percent this year, as a proliferation of generative artificial intelligence (AI) applications for premium smartphones are fueling demand for its flagship smartphone chips. It expects its smartphone chip revenue to outgrow the company’s average growth rate this year, benefiting primarily from the higher average selling price of its flagship smartphone chips and market share gains. The flagship chip revenue is to soar 50 percent year-on-year this year, MediaTek told an investor conference yesterday. As a whole, this year’s gross margin is