Boao Forum for Asia Annual Conference 2018 Session Summary (No. 31)

Transcription

1 Boao Forum for Asia Annual Conference 2018 Session Summary (No. 31) Boao Forum for Asia Institute April 10, 2018 Session 17 The Japanese Economy Time: 3:15 p.m. - 4:30 p.m., April 10, 2018 Venue: ICC, Level 1, Dong Yu Grand Ballroom A Moderator: QIN Shuo, Founder, Commercial Civilization Research Center of China & Chin@Moments Panelists: Kent CALDER, Director of Asia Programs and Director of the Edwin O. Reischauer Center for East Asian Studies, Johns Hopkins SAIS Paul GRUENWALD, Chief Economist, S&P Global Ratings JIA Kang, Former Director, Research Institute for Fiscal Science (RIFS), Ministry of Finance; Chief Economist, China Academy of New-Supply Side 1

2 Economics Justin LIN Yifu, Professor and Honorary Dean, National School of Development, Peking University Yoshihiko MIYAUCHI, Senior Chairman, ORIX Corporation Key points: The Japanese economy has transformed from deflation to a certain degree of inflation. Japan is confronted with sustained economic downturn, thus needing to focus on structural reforms in order to be out of this dilemma. The entire Asia-Pacific economies including Japan as well as the world-wide economies should promote the technological progress through multilateral cooperation. Japan should make efforts in the innovation of science and technology. Synopsis: When it comes to the Japanese economy, the commonly used word is "the lost twenty years". In fact, it is not necessarily the case. What Japan has lost is its finance, for Japan's fiscal position is not optimistic and its monetary and fiscal policies also present some problems. However, in terms of other aspects of Japanese economy, Japan's power cannot be underestimated. Questions like how to correctly judge the Japanese economy, how to help Japan out of the doldrums, and how to carry out structural reform are thought-provoking among many economists, political scientists, and entrepreneurs. 2

3 From deflation to inflation. Yoshihiko MIYAUCHI deems that Japan now has a slower and more stable inflation trend. Different from the Japanese deflation in the 1990s, Japan now has the problem of rising prices. But for Japan, the inflation target of 2 percent a year is too high, as Japan is an ageing society with a shrinking population, especially a reduction in the Labor force. In this case, it would be difficult for Japan to achieve a 2 percent inflation target. As is suggested by Paul GRUENWALD, Japan's fiscal policy is not particularly effective. In the past few years, Japan has also seen structural fiscal revenue problems. Japan raised its consumption tax in 2015, but caused a recession and reduced investment. Since 1991, according to LIN Yifu, Japan's economy has actually been in a state of stagnation. There must be internal structural problems in any country where financial and economic crisis occurs. For Japan, the structural reform in Japan has a big problem. The Three swords of Abenomics proposed by Mr Abe with his administration coming to power are a loose monetary policy, a massive fiscal stimulus, and a package of growth strategies encompassing TPP, deregulation, and innovative promotion. Now the Japanese economy is in a situation where the devaluation of the currency and the increase in the fiscal deficit coexist, whereas sound structural reform has yet to be carried out. How to end the economic downturn? JIA Kang argues that to end a relatively weak state in the process of economic development, Japan should do the following things. First, Japan should focus on structural countermeasures. Second, Japan should adopt a proactive population policy to address the problems caused by an aging 3

4 population. Third, the Japanese government should focus on government debt. Fourth, Japan should make efforts in scientific and technological innovation. LIN Yifu believes that the Japanese economy needs to do two things in order to really get out of the dilemma. First, Japan should actively participate in the Belt and Road initiative proposed by China, and increase overseas infrastructure investment, thereby bringing more exports and creating space for internal structural reforms. Second, Japan should actively create the Northeast Asia free trade group and the Northeast Asian economic community to overcome the problem that the size of Japan's domestic economy is not big enough. Kent E. CALDER proposes that for not only Japan, but also for the entire Asia-Pacific economies and the world-wide economies, a very important issue is technological innovation. To be out of the plight of economic malaise, Japan should promote the progress of technology through multilateral cooperation and push more women into the workforce. Enlightenment to China LIN Yifu said, after the Second World War, Japan became the first non-developed country to realize the industrialization and modernization, whose success brought very important experiences to East Asia and other parts of the world. One experience is how to truly carry out internal structural reform. The other one is how to create a favorable environment under the circumstances where informationization becomes the main feature and future technological development is characterized by artificial intelligence. This is also what China needs to ponder. Kent E.CALDER said that since Japan entered the world market in the 1980s, the overall economic situation was relatively prosperous, but there was still 4

5 a need to boost the domestic demand. Consequently, the bank of Japan cut interest rates, and the government pulled out of the economic stimulus program, which brought the economic bubble. The Chinese government should learn from Japan's history. When the consumer price index rises, the government should not overdo it, that is, the consumption index should stay at the normal level instead of falling too far. LIN Yifu pointed out that in the 1980s, under American pressure, the Japanese government caused a surge in the Japanese yen, which further led to its massive outflows and irrational exuberance of investment. Furthermore, the appreciation of the Japanese currency also accelerated the housing bubble, leading to a 27-year period of economic weakness. China also needs to learn from this lesson. JIA Kang said that broad population policies should include immigration policies, and that Japan should move its economic relationship in a reasonable direction through immigration given the serious problems of aging population and low-birth rate in Japan now. This has implications for China's population policy. China's population policy should be further adjusted and relaxed. In addition, the government should actively take into consideration future immigration policies, which should be relaxed properly in terms of quantity and focus on guiding structural optimization. 5