Japan’s government yesterday pledged to create 5 million new jobs through a 10-year economic growth strategy centered on green technology, health care, tourism and closer links with Asia.
The center-left government of Prime Minister Naoto Kan, who took office last week, has pledged to end two decades of stagnation in Asia’s biggest economy and achieve stable real economic growth above 2 percent a year.
In the short term, the government aims to beat deflation by the end of the next fiscal year and to boost weak demand while bringing unemployment down from about 5 percent now to below 4 percent soon and then down to three percent.
Japan is also eyeing lowering the corporate tax rate, from an effective 40 percent now to the average level of major industrialized nations, which is around 25 percent, possibly from the next fiscal year, the strategy paper says.
Kan, a former left-wing activist who most recently served as finance minister, has promised a “third way” approach for the economy. The premier has identified the “first way” as the heavy infrastructure spending of the 1980s and 1990s, much of it pork-barrel projects that drove up public debt and left many “white elephant” projects of dubious economic value.
Kan has also rejected as the “second way” the “excessive market fundamentalism” of former prime minister Junichiro Koizumi, which aimed to slim down government but also weakened social safety and widened income disparities.
In a speech last week, Kan outlined his “third way” policies — an ambitious approach that would strengthen domestic demand and jobs while also boosting the social security system and reducing the public fiscal deficit.
Kan has pledged to reduce the world’s biggest public debt mountain, which is nearing 200 percent of GDP.
He has said the Democratic Party of Japan would call for a full debate on tax reform and did not rule out the possibility of doubling the five percent sales tax.
His party, in an election manifesto released on Thursday, pledged to slice the country’s public deficit in half or less by the year to March 2016, with a longer term ambition of eliminating it by fiscal 2020.
Japan — with an ageing and shrinking population — already collects less than half the taxes it needs to cover its spending.
In order to revitalize the economy, the government wants to focus on core areas, including “green innovation,” which it estimates will create 1.5 million jobs, and healthcare, which would generate 2.8 million jobs.
More growth would come through strengthening ties with booming Asia, which is already the key market for Japanese exports, and selling technology from renewable energy innovations to Shinkansen bullet trains abroad.
Growing tourism from less than 10 million annual visitors now to 25 million by 2020 is expected to boost Japan and many of its regions, creating more than half a million jobs, according to the growth strategy.
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