itl final paper

7/25/2019 ITL Final Paper

1/16

VERZOSA, Feliciano Jr. A.International Trade LawFriday 7:30!:30

Atty. E"er Ro#e $i%&it

Japans Export Slowdown

Introduction

Toyota, $onda, 'i##an, (ai#o Ja)an, !! #tore, and t*e li+e, w*ere"er we %o,we #ee Ja)an I-)ort#, /ade ro- Ja)an, i-)orted ro- Ja)an. 1rod&ct# li+ea&to-o2ile# ran%in% ro- t*e 2rand# o Toyota, $onda, 'i##an, /ada and S&2ar&*a"e 2een in t*e -ar+et or a# lon% a# we can i-a%ine. T*at 2ein% #aid, Ja)an *a#2een a -a4or i-)ortation %iant ro- t*e 506# &) &ntil today, and it *a# contri2&ted tot*eir econo-ic %rowt* a# a nation.

A 2it o a 2ac+%ro&nd o t*e Ja)ane#e Trade 1olicy i# Ja)ane#ee)ort#%rewra)idly in t*e 8!50# and 8!70#, 2&t %rowt* #lowed con#idera2ly d&rin% t*e 8!90#.

O"er t*e#e decade#, 2ot* t*e co-)o#ition and t*e re)&tation o )rod&ct# ro- Ja)anc*an%ed )roo&ndly.

ecae o t*e #&cce## o certain e)ort#, Ja)an i# oten "iewed a# a *ea"ilye)ortde)endent nation. A# an ea-)le, 4t &nder *al o all a&to-o2ile#)rod&ced

in Ja)an were e)orted.

T*e %rowt* o Ja)ane#e e)ort# d&rin% t*e 8!50# and 8!70# wa# tr&ly)*eno-enal. e%innin% in 8!50 at ;S int*e 8!70#. Fro- 8!98 to 8!99, *owe"er, e)ort %rowt* a"era%ed 88.3> )er year,a2o&t one*al t*e le"el o t*e 8!70#. y 8!!0 -erc*andi#e e)ort# reac*ed;S


2/16

/an&act&rer# concentrated on t*e do-e#tic -ar+et Coten )rotected ro- orei%n)rod&ct#D &ntil t*ey reac*ed internationally co-)etiti"e le"el# and do-e#tic -ar+et#were #at&rated. Oten *el)ed 2y t*e lar%e %eneral tradin% co-)anie#, -an&act&rer#a%%re##i"ely attac+ed orei%n -ar+et# w*en t*ey elt a2le to co-)ete %lo2ally.

E)ort# incl&ded a wide "ariety o )rod&ct#, "irt&ally all o w*ic* were)roce##ed to #o-e de%ree. Ater t*e war, t*e co-)o#ition o e)ort# #*ited t*ro&%*tec*nolo%ical )ro%re##ion. 1ri-ary )rod&ct#, li%*t -an&act&re#, and cr&de ite-#,w*ic* )redo-inated d&rin% t*e 8!@0#, were %rad&ally ecli)#ed 2y *ea"y indtrial%ood#, co-)le -ac*inery and e&i)-ent, and con#&-er d&ra2le#, w*ic* re&iredlar%e ca)ital in"e#t-ent# and ad"anced tec*nolo%y to )rod&ce.8

Alt*o&%* Ja)an *a# 2een t*e orce to 2e rec+oned wit* in t*e ield o e)ortation,*owe"er, it *a# )&t it# eet #li%*tly on it# 2ra+e# and *a"e 2een e)eriencin% a#o-ew*at #lowdown in it# e)ort# to ot*er co&ntrie# d&e to t*e ri#e o t*e 1eo)le6#Re)&2lic o *ina a# one o t*e /a4or e)orter# o i-itated %ood#.

Background of the Study

T*e &e#tion# t*at t*e re#earc*er *a"e enco&ntered on t*e #aid to)ic i# t*atw*at i# t*e cae, or cae# o Ja)an6# e)ort #lowdown $a# it econo-icallyaected t*e o&ntry

In -y o)inion, t*e cae o Ja)an6# econo-ic #lowdown i# t*e entry o *inain t*e e)ortin% rin%. T*ro&%* t*e year#, -o#t o t*e -an&act&rin% co-)anie# aretran#errin% to *ina d&e to t*eir loor co#t la2or, -eanin% la2orer# are )aid at t*elowe#t rate t*at t*e State allow#. '&-ero article# I *a"e read clai-# t*at non

#+illed actory wor+er# recei"e aro&nd


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$owe"er, I o)ine t*at #&c* #lowdown in t*e e)ortation o Ja)an -ay *a"e#erio con#e&ence# to t*e econo-y. In an Article )&2li#*ed, w*ic* #aid t*at &titB# not clear *i# %o"ern-ent can reco"er ro- t*e late#t new# a2o&t #)&tterin%e)ort#, w*ic* ell =.= )ercent ro- t*e )re"io &arter.3

Analysis

'ow, article# )&2li#*ed online *a"e )ointed t*at Ja)an6# e)ort *a"e 2een in a #*ar)#lowdown #ince *ina *a"e e-er%ed a# an econo-ic )ower*oe not only in

ASEA' co&ntrie# 2&t in t*e w*ole world.

Ja)anB# ann&al e)ort %rowt* #lowed to a crawl in Se)te-2er a# #*rin+in%#ale# to *ina *&rt t*e "ol&-e o #*i)-ent#, rai#in% ear# t*at wea+ o"er#ea#

de-and -ay *a"e )*ed t*e econo-y into rece##ion.

An article )&2li#*ed 2y Re&ter# #tated t*at:

/ini#try o Finance data #*owed e)ort# ro#e 4t 0.5 )ercent in t*e year toSe)te-2er, a%ain#t a 3.= )ercent %ain e)ected 2y econo-i#t# in a Re&ter# )oll.

T*at wa# t*e #lowe#t %rowt* #ince A&%t la#t year, ollowin% t*e )rior -ont*B#3.8 )ercent %ain. T*e wea+ yen *el)ed increa#e t*e "al&e o e)ort#, 2&t "ol&-e ell3.! )ercent, t*e t*ird #trai%*t -ont* recordin% an ann&al decline.

Hedne#dayB# data wa# t*e ir#t -a4or indicator or Se)te-2er and i# )art o

t*e calc&lation o t*ird &arter %ro## do-e#tic )rod&ct. A t*ird &arter contractionwo&ld )&t Ja)an into rece##ion, ollowin% t*e #econd &arterB# ne%ati"e (1 re#&lt,and co&ld orce )olicy -a+er# to oer &rt*er #ti-&l. i"en t*i# data, t*e econo-y)ro2a2ly contracted a2o&t an ann&alied 0.@ )ercent in J&lySe)te-2er. Eternalde-and, ca)ital #)endin% and in"entory in"e#t-ent were a li+ely dra%, w*ilecon#&-)tion )ic+ed &), #aid Koya /iya-ae, #enior econo-i#t at S/ 'i++oSec&ritie#.

*inaB# #lowdown and #ot do-e#tic de-and wei%*ed on actory o&t)&t andt*e 2roader econo-y, alt*o&%* t*e an+ o Ja)an #aw t*e eect# o *inaB##lowdown a# li-ited or now, #tic+in% to it# ro#y %rowt* o&tloo+. Still, wea+ indicator#

will +ee) t*e central 2an+ &nder )re##&re to ea#e )olicy a%ain to *it it# a-2itio ?)ercent inlation tar%et net year. So-e analy#t# e)ect t*e OJ to -o"e at it# Oct.30 -onetary -eetin%, w*en it al#o i##&e# lon%ter- econo-ic and )rice )ro4ection#.Hea+ e)ort# were wit*in t*e OJB# e)ectation# #o t*i# data alone co&ld not 2e a

3 http://www.bloombergview.com/articles/215-!-1"/#apan-e$ports-its-way-to-

irrelevance

3


4/16

tri%%er. &t t*ereB# no do&2t t*at )re##&re will -o&nt on t*e OJ to act i wea+ne##)er#i#t#, #aid Taro Saito, #enior econo-i#t at 'LI Re#earc* In#tit&te.=

Anot*er article 2y loo-2er%@al#o ore#aw t*e decline on Ja)ane#e e)ort# and t*ecae# o it# #low %rowt*:

Ja)an6# e)ort# %rew at t*e #lowe#t )ace in -ore t*an a year in Se)te-2er,wit* a dro) in #*i)-ent# to A#ia all 2&t o"erw*el-in% %ain# in #ale# to E&ro)e andt*e ;.S T*e trade data are one o t*e -o#t cr&cial econo-ic indicator# 2eore t*ean+ o Ja)an -eet# on Oct. 30 to con#ider w*et*er t*e nation need# -ore-onetary #ti-&l to #to+e inlation and econo-ic acti"ity. E)ort# to *ina, India,Indone#ia, T*ailand and /alay#ia all ell a# t*e #lowdown in *ina6# econo-y#a))ed de-and acro## A#ia.

T*e "al&e o Ja)ane#e #*i)-ent# ro#e 4t 0.5 )ercent in Se)te-2er ro- ayear earlier, -ar+in% t*e t*ird #trai%*t -ont* o wanin% %rowt*, t*e inance -ini#try

re)orted Hedne#day. Econo-i#t# #&r"eyed 2y loo-2er% *ad e)ected a 3.9)ercent increa#e. T*e "al&e o i-)ort# #an+ -ore t*an 88 )ercent, &nder#corin% alac+ o de-and in Ja)an6# do-e#tic econo-y a# well a# allin% oil )rice#. T*en&-2er# conir- t*at Ja)an6# econo-y i# in a #ot )atc*, #aid Taro Saito, t*edirector o econo-ic re#earc* at 'LI Re#earc* In#tit&te in To+yo. It6# too o)ti-i#ticor t*e central 2an+ and t*e %o"ern-ent to 2e #ayin% t*e reco"ery i# contin&in%. T*eecono-y contracted in t*e #econd &arter and a #l&-) in indtrial )rod&ction in

A&%t )ro-)ted #o-e econo-i#t# to )redict Ja)an went 2ac+ward# a%ain in t*et*ird &arter.

T*e wea+ne## in e)ort# in Se)te-2er wa# al#o a))arent w*en -ea#&re 2y

t*e "ol&-e o #*i)-ent#, wit* a 3.! )ercent decline ro- a year earlier. A %ra)* ro-t*e #aid article )ro"ided t*e e)ort "ol&-e o 4a)an ro- a 3 year )eriod #*ow t*e#tee) decline o )rod&ct# t*at are 2ein% e)orted ro- Ja)an, to wit:

4 http://www.re%ters.com/article/215/1/21/%s-#apan-economy-trade-

id&'()*'+3,215121w2'i2s00f$gt.9"

5 http://www.bloomberg.com/news/articles/215-1-21/#apanese-e$ports-grow-at-

the-slowest-pace-in-more-than-a-year

4
http://www.bloomberg.com/news/articles/2015-10-20/china-stabilizes-on-shaky-pillar-making-more-stimulus-likelyhttp://www.bloomberg.com/news/articles/2015-10-20/china-stabilizes-on-shaky-pillar-making-more-stimulus-likelyhttp://bbg//people/profile/3524743http://www.bloomberg.com/news/articles/2015-10-20/china-stabilizes-on-shaky-pillar-making-more-stimulus-likelyhttp://bbg//people/profile/3524743


5/16

Anot*er article al#o )ro"e# t*at t*e #lowdown o e)ort# in Ja)an *a"eaected t*e an+ o Ja)an:

1oor data or e)ort# and indtrial o&t)&t *a"e t*e )otential to orce t*e an+o Ja)an into 2ol#terin% #ti-&l later t*i# -ont*, #aid a or-er c*ie econo-i#t ort*e OJ. Hea+ )rod&ction co&ld de#troy t*e )ict&re t*e central 2an+ *a# )re#entedo an econo-y t*at i# )oi#ed to i-)ro"e, #aid $ideo $aya+awa, w*o went on to 2ean eec&ti"e director at t*e central 2an+ 2eore *e retired in ?083.

H*ile data #o ar indicate t*e OJ -ay 2e a2le to lea"e -onetary )olicy&nc*an%ed on Oct. 30, $aya+awa #aid in an inter"iew in To+yo on Friday t*at)olicy-a+er# will )ay %reat attention to trade i%&re# to 2e relea#ed net wee+ andt*en to o&t)&t n&-2er# d&e a day 2eore t*e 2oard -eet#.

o". $ar&*i+o K&roda *a# 2een con#i#tently &)2eat a2o&t inlation, e"en a#do-e#tic con#&-)tion, orei%n de-and and )rod&ction *a"e di#a))ointed #o-eo2#er"er#. A2o&t =0 )ercent o econo-i#t# #&r"eyed 2y loo-2er% oreca#t t*e OJwill increa#e #ti-&l at t*e Oct. 30 -eetin%, w*en it al#o )ro"ide# &)date# on t*eo&tloo+ or inlation and econo-ic %rowt*.

5


6/16

1rod&ction and e)ort# are +ey or t*e 2an+ to %a&%e i t*e econo-y i# inally*eadin% toward reco"ery ater #ta%nation in t*e #econd and t*ird &arter#, #aid$aya+awa, w*o wa# c*ie econo-i#t ro- ?008 to ?007. ro## do-e#tic )rod&ct#*ran+ in t*e A)rilJ&ne &arter, and i# oreca#t to re2o&nd 4t 0.5 )ercent in t*et*ree -ont*# t*ro&%* Se)te-2er. Two -a4or c&l)rit# or Ja)an6# #&r)ri#in%ly wea+

e)an#ion are a low )otential %rowt* rate and a lac+ o cor)orate #)endin% onin"e#t-ent and wa%e#, #aid $aya+awa, w*o i# now at t*e F&4it#& Re#earc* In#tit&te.1ri-e /ini#ter S*ino A2e *a# c*ided co-)anie# or t*eir in#&icient in"e#t-ent in)eo)le and tec*nolo%y at ti-e w*en #o-e o t*e- are -a+in% record )roit#.

T*e OJ will )ro2a2ly lower it# inlation oreca#t or 2ot* t*i# year and net att*e -eetin% at t*e end o t*e -ont*, $aya+awa #aid. $e e#ti-ate# t*e 2an+ willoreca#t 1I o 0.3 )ercent to 0.= )ercent or t*i# i#cal year and 8.5 )ercent to 8.7)ercent or t*e ollowin% 8? -ont*#. T*at i# ar ro- t*e OJ6# tar%et o ? )ercent,w*ic* K&roda #ay# will 2e reac*ed aro&nd t*e #i -ont*# #tartin% in A)ril net year.

Still, t*e 2an+ can )&t t*e 2la-e on oil and #ay t*e inlation trend i# ri#in%,$aya+awa #aid. on#&-er )rice# ecl&din% re#* ood dro))ed in A&%t or t*e ir#tti-e #ince A)ril ?083. Stri))in% o&t ener%y a# well, t*ey act&ally ro#e 8.8 )ercent.Hit* )ro#)ect# di--in% or reac*in% t*e inlation tar%et anyti-e #oon, t*e OJ#*o&ld #witc* roit# &nort*odo a##et )&rc*a#in% )ro%ra- to a )olicy oced onintere#t rate#, *e #aid.5

For t*e )a#t ew wee+#, t*e decline in *ina6# econo-y *a# al#o aectedJa)an6# e)ort %rowt* d&e to t*e act t*at -o#t o t*e E)ort# -ade 2y Ja)an i#t*ro&%* *ina and i *ina6# de-and# wea+en, t*en #o too #*all Ja)an6# e)ort#.

Anot*er article 2y loo-2er%7#*ow# t*e #a-e:

Ja)an6# e)ort %rowt* #lowed or a #econd -ont*, #i%nalin% wanin% o"er#ea##&))ort or an econo-y t*at6# already 2e#et 2y wea+ne## at *o-e. T*e "al&e o#*i)-ent# ro#e 3.8 )ercent in A&%t ro- a year earlier, co-)ared wit* e#ti-ate#co-)iled 2y loo-2er% or a =.3 )ercent increa#e. I-)ort# dro))ed 3.8 )ercent,lea"in% a deicit o @5!.7 2illion yen C


7/16

Foc contin&e# to 2e on *ow -&c* %rowt* will re2o&nd ro- J&ly toSe)te-2er, accordin% to Koya /iya-ae, an econo-i#t at S/ 'i++o Sec&ritie#Inc. /iya-ae, in note 2eore t*e data relea#e, #aid a #econd con#ec&ti"e dro) in%ro## do-e#tic )rod&ct wo&ld -a+e &rt*er #ti-&l ro- t*e %o"ern-ent and an+

o Ja)an -ore li+ely.T*e yen wa# little c*an%ed at 8?0.50 )er dollar at !:0! a.-. inTo+yo w*ile t*e To)i #toc+ inde ad"anced 0.! )ercent.

T*e e)ort i%&re# co-e on t*e *eel# o a c&t to Ja)an6# lon%ter- creditratin% Hedne#day 2y Standard 1oor6#, w*ic* #aid t*ere wa# little c*ance o 1ri-e/ini#ter S*ino A2e6# #trate%y t&rnin% aro&nd t*e )oor o&tloo+ or econo-ic %rowt*and inlation o"er t*e net ew year#.

An article )&2li#*ed in t*e wall #treet 4o&rnal9al#o #ay# t*e #a-e re%ardin%t*e #low e)ort %rowt* o Ja)an and t*e ear o anot*er re#ci##ion:

Ja)ane#e e)ort# to *ina ell or a #econd #trai%*t -ont* in Se)te-2er,&rt*er e"idence t*at t*e -ainland6# #lowdown i# 2&etin% Ja)an6# #)&tterin%econo-y. Fadin% de-and in *inaMw*ere t*e %rowt* rate *it a #iyear lowin t*et*ird &arterM*a# #a))ed -an&act&rin% acti"ity in Ja)an, w*ic* ace# a )o##i2le#econd rece##ionin a# -any year#, w*ile ta+in% a toll on Ja)ane#e co-)anie#.

E)ort# to *inaMJa)an6# #econdlar%e#t -ar+etMell 3.@> in Se)te-2erro- a year earlier, ater a =.5> decline in A&%t, Ja)ane#e %o"ern-ent data#*owed. Total e)ort %rowt* #lowed to a 83-ont* low o 0.5>, well 2elow a 3.=>increa#e e)ected 2y econo-i#t# #&r"eyed 2y T*e Hall Street Jo&rnal. T*e late#te)ort data ca-e a-id inten#e #)ec&lation a2o&t w*et*er t*e an+ o Ja)anwill

&nderta+e additional -onetary ea#in% at it# )olicy -eetin% at t*e end o t*e -ont*.Ja)ane#e indtrial )rod&ction ell in J&ly and A&%t, w*ile t*e )ri-ary -ea#&re oinlation *it ne%ati"e territory in A&%t or t*e ir#t ti-e in -ore t*an two year#,&elin% e)ectation# o additional i#cal and -onetary #ti-&l.

OJ oicial# *a"e )layed down t*e eect# o #lowin% %rowt* in *ina,#tre##in% #i%n# o reco"ery in ad"anced econo-ie#. Net e)ort "ol&-e# to t*e ;.S.ell =.7> in Se)te-2er, a it* #trai%*t -ont*ly decline, d&e to wea+er de-and ora&to )art#, "i#&al e&i)-ent and #e-icond&ctor#. T*e "ol&-e o e)ort# to A#ia al#odro))ed in Se)te-2er, 2y =.?>, a t*ird con#ec&ti"e -ont*ly decline. Hea+er*ine#e de-and or )rod&ct# #&c* a# #teel, co-)&ter# and a&dio e&i)-ent i#

orcin% Ja)ane#e co-)anie# to c&t )rod&ction and )roit oreca#t#.

Indtrial-ac*ine -a+er T#&%a-ior). la#t wee+ #la#*ed it# oreca#t or%ro&) net )roit or t*e #i -ont*# t*ro&%* Se)te-2er 2y -ore t*an *al, to 590

! http://www.ws#.com/articles/#apans-e$port-growth-slows-as-china-st%mbles-

14454243

"
http://www.wsj.com/articles/japans-economy-shrinks-annualized-1-6-in-second-quarter-1439769883http://www.wsj.com/articles/japans-economy-shrinks-annualized-1-6-in-second-quarter-1439769883http://www.wsj.com/articles/china-economic-growth-falls-below-7-for-first-time-since-2009-1445221368http://www.wsj.com/articles/japan-industrial-output-slide-hints-at-recession-1443582684http://www.wsj.com/articles/japan-industrial-output-slide-hints-at-recession-1443582684http://quotes.wsj.com/JP/XTKS/8301http://quotes.wsj.com/JP/XTKS/6101http://quotes.wsj.com/JP/XTKS/6101http://www.wsj.com/articles/japans-economy-shrinks-annualized-1-6-in-second-quarter-1439769883http://www.wsj.com/articles/japans-economy-shrinks-annualized-1-6-in-second-quarter-1439769883http://www.wsj.com/articles/china-economic-growth-falls-below-7-for-first-time-since-2009-1445221368http://www.wsj.com/articles/japan-industrial-output-slide-hints-at-recession-1443582684http://www.wsj.com/articles/japan-industrial-output-slide-hints-at-recession-1443582684http://quotes.wsj.com/JP/XTKS/8301http://quotes.wsj.com/JP/XTKS/6101


8/16

-illion C contraction #een in t*e #econd, /r. 'a%a*a-a #aid. T*at

wo&ld 2e t*e #econd tec*nical rece##ion in two year# or Ja)an. Still, t*e OJ -ay*old it# ire t*i# -ont*, )artly 2ecae o an accelerated %ain in recent -ont*# in a%a&%e o con#&-er )rice# t*at ecl&de# 2ot* ener%y and re#* ood, /r. 'a%a*a-a#aid. &t t*at wo&ld increa#e t*e ri#+ o t*e central 2an+, w*ic* *a# )re"iolye-)*a#ied t*e need or )ree-)ti"e action, allin% 2e*ind t*e c&r"e in it# eort# to#to+e inlation e)ectation#, *e #aid.

F&rt*er-ore, a %ra)* ro- t*e #a-e article #*ow# t*e all o Ja)ane#e e)ort#to *ina, to wit:

!
http://quotes.wsj.com/KBSTYhttp://blogs.wsj.com/economics/2015/08/07/boj-gov-kuroda-acknowledges-possible-delay-in-achieving-2-inflation/http://www.wsj.com/articles/weak-yen-fuels-record-profits-in-japan-1432017381http://quotes.wsj.com/KBSTYhttp://blogs.wsj.com/economics/2015/08/07/boj-gov-kuroda-acknowledges-possible-delay-in-achieving-2-inflation/http://www.wsj.com/articles/weak-yen-fuels-record-profits-in-japan-1432017381


9/16

Anot*er article )&2li#*ed 2y lo2al Trade Re"iew!w*ic* dwell# on t*e *ina#lowdown t*at aected t*e ASEA' econo-y, )artic&larly 4a)an:

*ina6# #lowdown contin&ed to *a"e a dra% on Ja)an6# e)ort#, w*ic* ro#e 2y4t 0.5> in Se)te-2er, t*e wea+e#t %rowt* or -ore t*an a year. H*ile t*e "al&e oe)ort# ro#e d&e to a wea+ened yen G one o t*e corner#tone# o A2eno-ic# G t*e"ol&-e ell 2y 3.!>, w*ic* re)re#ent# a t*ird #trai%*t decline. 1er*a)# t*e *eadlinei%&re i# t*e 3.@> all in #*i)-ent# to *ina, w*ic* i# -ainly d&e to allin% #ale# ina&to-oti"e )art# and ener%y #*i)-ent#.

E)ort# to t*e re#t o A#ia ell 0.!>, t*e ir#t dro) to t*e re%ion or #e"en-ont*# accordin% to t*e Ja)ane#e /ini#try o Finance, )ointin% to #l&%%i#* econo-ic%rowt* acro## t*e continent. 1er*a)# #y-2olically, %i"en t*e 2rea+t*ro&%* inne%otiation# or t*e Tran#1aciic 1artner#*i) CT11D t*i# -ont*, e)ort# to t*e ;Swere &) 80.=>, -ainly d&e to increa#ed car #ale#. T*i# )oint# to a reco"ery incon#&-)tion in t*e ;S, 2&t in )&re "ol&-e ter-#, t*e trade low wa# down, a%aine-)*a#iin% t*e i-)act a wea+ yen i# *a"in% on Ja)an6# trade #ector.

F&rt*er-ore, t*e contin&ed #lowdown in *ina rai#e# &e#tion# a# to t*eecono-ic well2ein% o t*e 'ort* o A#ia. /&c* *a# 2een written a2o&t t*e e)o#&re

9 http://www.gtreview.com/news/asia/china-slowdown-hits-#apans-e$ports/

9


10/16

o co--odity e)orter# in t*e #o&t* C/alay#ia, Indone#iaD, 2&t t*e @.@> %rowt*oreca#t 2y t*e I/F or Ja)an, So&t* Korea, Taiwan and $on% Kon% i# t*e lowe#t#ince ?009.E)ort %rowt* ell #*ort o e)ectation# in Se)te-2er, and t*e tradedeicit narrowed -&c* le## t*an antici)ated, #ay# /arcel T*ieliant, Ja)an analy#t ata)ital Econo-ic#. Ad-ittedly, t*e *eadline i%&re# -a#+ed a re2o&nd in e)ort

"ol&-e#, w*ic* ro#e 8.!> -ont* on -ont* la#t -ont*. $owe"er, i-)ort "ol&-e#4&-)ed 2y a lar%er 3.7>. T*e &)#*ot i# t*at i-)ort "ol&-e# once a%ain o&t)acede)ort "ol&-e# la#t &arter. He e#ti-ate t*at net trade #*a"ed o a# -&c* a# 0.3)ercenta%e )oint# ro- (1 %rowt* in P3.

So w*ile A2eno-ic# -ay ar%&a2ly #*ow #o-e )o#iti"e re#&lt# in )&re "al&eter-#, in real ter-# it i#n6t, wit* Ja)an6# e)ort# #ector #till di#a))ointin% analy#t# andoicial# ali+e. I t*e wea+ne## )er#i#t#, )re##&re or a &rt*er inter"ention ro- t*ean+ o Ja)an will ri#e, wit* t*e central 2an+ already acin% #o-e )re##&re to ea#e)olicy in order to 2oo#t e)ort# and inlation.

(&e to t*e wea+enin% o t*e econo-y o *ina, ot*er co&ntrie# li+e Ja)an aret*reatened to %o into rece##ion. T*, Article# ro- "ario we2#ite# *a"e o)inedt*at Ja)an i# li+ely to %o down t*e drain and %o into rece##ion d&e to it# #low %rowt*.In an article )&2li#*ed 2y '.co-80#tated t*at:

Ja)anB# ann&al e)ort %rowt* #lowed or t*e t*ird #trai%*t -ont* inSe)te-2er, a worryin% #i%n t*at o"er#ea# #ale# contin&ed to dra% on %rowt* la#t&arter, addin% to ear# o a rece##ion.

/ini#try o Finance data #*owed e)ort# ro#e 4t 0.5 )ercent in t*e year toSe)te-2er, a%ain#t a 3.= )ercent %ain e)ected 2y econo-i#t# in a Re&ter# )oll.T*at

wa# t*e #lowe#t %rowt* #ince A&%t la#t year and ollowed a 3.8 )ercent %ain inA&%t ?08@. o-)ared wit* la#t -ont* #ea#onallyad4ted #*i)-ent# declined 8.7)ercent.

Hedne#dayB# data i# t*e ir#t -a4or indicator or Se)te-2er and i# )art o t*ecalc&lation o t*ird &arter %ro## do-e#tic )rod&ct. A t*ird &arter contraction wo&ld)&t Ja)an into rece##ion, %i"en t*e #econd &arterB# ne%ati"e (1 data. *inaB##lowdown and #ot do-e#tic de-and wei%*ed on actory o&t)&t and t*e 2roaderecono-y, alt*o&%* t*e an+ o Ja)an #aw t*e eect# o *inaB# #lowdown wereli-ited or now, a# it #tic+# to it# ro#y %rowt* o&tloo+, 2&t t*at -ay c*an%e at t*eOJB# -onetary )olicy re"iew on Oct. 30. (ata o&t on /onday #*owed *inaB#

econo-ic %rowt* di))ed 2elow 7 )ercent or t*e ir#t ti-e #ince t*e %lo2al inancialcri#i# de#)ite a 2arra%e o #ti-&l -ea#&re#.

1 http://www.cnbc.com/215/1/2/#apan-e$port-growth-down-in-september-

spar8s-recession-fears.html

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11/16

Analy#t# worry t*at a *inaled %lo2al #lowdown co&ld dra% down t*eJa)ane#e econo-y, +ee)in% To+yo &nder )re##&re to de)loy re#* -onetary andi#cal #ti-&l in t*e co-in% -ont*#. E)ort# to *ina ell 3.@ )ercent in Se)te-2erro- a year earlier, down or a #econd #trai%*t -ont* and wei%*ed 2y allin%#*i)-ent# o li%*t oil and car )art#. S*i)-ent# to A#ia w*ic* acco&nt or a2o&t a

*al o Ja)anB# o"erall e)ort# ell 0.! )ercent in t*e year to Se)te-2er. T*at wa#t*e ir#t decline in #e"en -ont*#.

E)ort# to t*e ;nited State#, a -a4or 2&yer o Ja)ane#e )rod&ct#, ro#e 80.=)ercent in Se)te-2er, led 2y 2ri#+ #*i)-ent# o car#. T*at ollowed a 88.8 )ercentann&al %ain in A&%t. Relectin% on%oin% all# in oil )rice#, i-)ort# ell 88.8 )ercentin t*e year to Se)te-2er, lar%ely in line wit* econo-i#t#B e#ti-ate#. T*e trade2alance wa# a deicit o 88=.@ 2illion yen C

T*e #ot i%&re# ollow 4t day# ater t*ird&arter data #*owed Ja)an

#li))ed into it# o&rt* rece##ion in i"e year#, ca#tin% do&2t a2o&t t*e eecti"ene##1ri-e /ini#ter S*ino A2eB# relationary )olicie# +nown a# A2eno-ic#. T*e r&n owea+ data add to do&2t# t*e an+ o Ja)an will 2e a2le to accelerate inlation to it#a-2itio ? )ercent tar%et in t*e latter *al o net i#cal year to /arc* ?087.'onet*ele##, t*e central 2an+ i# widely e)ected to +ee) -onetary )olicy #teady atit# rate re"iew t*at end# on T*&r#day.

Analy#t# e)ect a -ode#t re2o&nd in t*e econo-y o"er t*e c&rrentOcto2er(ece-2er &arter. E)ort# #*ow #i%n# o 2otto-in% o&t, 2&t %i"en declinin%e)ort "ol&-e, t*ey are &nli+ely to 2eco-e a dri"er o %rowt* in t*e c&rrent &artera# eect# o *inaB# #lowdown and allin% co--odity )rice# are #)readin% to ot*er

co&ntrie#, #aid $ideno2& To+&da, #enior econo-i#t at /i&*o Re#earc* In#tit&te.

A #lowdown in *ina, A#iaB# loco-oti"e, *a# c*illed e)ort# and econo-ic%rowt* acro## -any o t*e re%ionB# tradereliant econo-ie#. Ja)ane#e -an&act&rer#

11 http://asia.ni88ei.com/olitics-+conomy/+conomy/apan-e$ports-fall-co%ld-

weigh-on-recovery-from-recession

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12/16

*a"e al#o 2een *it 2y t*e downt&rn in t*e worldB# 'o. ? econo-y. T*e /OF data#*owed *ina2o&nd e)ort# ell 3.5 )ercent yearonyear in Octo2er, down or at*ird #trai%*t -ont* on allin% #*i)-ent# o ite-# #&c* a# #teel and car )art#.

Finally, an article )&2li#*ed 2y Vo.co-8?%a"e an inde)t* analy#i# on w*y Ja)an i#

%oin% to rece##ion. Ot*er t*an e)ort#, t*e#e actor# *a"e *ad an eect in Ja)an6##lowdown:

T*e Ja)ane#e econo-y i# #*rin+in% 2ecae A2e already #&cceeded in iin%Ja)anB# &ne-)loy-ent )ro2le-. Ja)an i# #i-)ly in an odd #it&ation w*ere low andallin% le"el# o &ne-)loy-ent arenBt %ood eno&%* to en#&re econo-ic %rowt*.

Fir#t t*in%# ir#t M Ja)anB# &ne-)loy-ent rate *a# t&-2led, reac*in% a low)oint it ne"er ac*ie"ed d&rin% t*e )re"io %lo2al e)an#ion )*a#e:

/ore Ja)ane#e )eo)le are in t*e la2or orce

And &nli+e in t*e ;nited State#, t*e la2or orce )artici)ation rate o wor+in%a%ead&lt# *a# #oared to a record le"el:

12 http://www.vo$.com/215/11/1"/9"4924/#apan-recession-abenomics

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13/16

A2eno-ic#, in ot*er word#, *a# acco-)li#*ed eactly w*at -acroecono-ic#ta2iliation )olicy i# #&))o#ed to acco-)li#* M w*ile -illion# o a2le2odied

A-erican# and E&ro)ean# #it idly, Ja)an *a# ac*ie"ed #o-et*in% clo#e to &lle-)loy-ent.

So w*y i# t*e Ja)ane#e econo-y #*rin+in% Hell, itB# )retty #i-)le. T*e co&ntry i#r&nnin% o&t o )eo)le:

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In t*e contet o a wor+in%a%e )o)&lation t*atB# #*rin+in% 8.@ )ercent a year,an econo-y t*at i# only #*rin+in% at 0.9 )ercent )er year i# act&ally doin% o+ay. Iyo& deine a rece##ion a# two con#ec&ti"e &arter# o ne%ati"e (1 %rowt*, t*en aco&ntry li+e Ja)an, w*ere t*e )o)&lation i# #*rin+in%, i# %oin% to t&-2le intorece##ion 2a#ically e"ery ti-e anyt*in% e"en #li%*tly 2ad *a))en#. No& -i%*t or

-i%*t not t*in+ t*i# i# a )ro2le-, 2&t eit*er way itB# clearly not #o-et*in% -onetary)olicy co&ld #ol"e

For a w*ile, -onetary )olicy waseecti"e at #ol"in% t*e )ro2le- o&ne-)loy-ent, w*ic* *el)ed -a+e &) or t*e declinin% wor+in%a%e )o)&lation. &tnow t*at Ja)an *a# ac*ie"ed &ll e-)loy-ent, only a #&r%e o )eo)le or a #tainedincrea#e in t*e )rod&cti"ity %rowt* rate can %enerate con#i#tent )o#iti"e (1n&-2er#.

an we 2e #&re t*at A2eno-ic# i# re#)on#i2le or t*e reco"ery in t*eJa)ane#e la2or orce ItB# *ard to )ro"e anyt*in% concli"ely in -acroecono-ic#.

&t we can #ee t*at t*e Ja)ane#e )rice le"el *a# #to))ed allin% e"er #ince A2eca-e to oice deter-ined to -a+e it #to) allin%:

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In tande- wit* t*e ret&rn o inlation, nominal(1 %rowt* M w*ic* i# +ey toen#&rin% &ll e-)loy-ent M *a# #et in:

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ritic# o -onetary #ti-&l in t*e ;nited State# and E&ro)e oten note t*atitB# not a )anacea or e"ery econo-ic )ro2le- t*at ei#t#. Ja)an i# a li"in%, 2reat*in%ea-)le o w*at t*at #lo%an %et# ri%*t and w*at it %et# wron%. y de)loyin%-onetary #ti-&l Ja)an wa# a2le to 2oo#t inlation and no-inal (1, increa#in%de-and or la2or, red&cin% t*e &ne-)loy-ent rate, and increa#in% t*e la2or orce

)artici)ation rate. Relati"e to a year#lon% #)ell o -a## &ne-)loy-ent, t*atB# )retty%oodQ &t ot*er a#)ect# o t*e &nda-ental econo-ic #it&ation -atter, too. In Ja)anB#ca#e, de-o%ra)*ic# i# now de#tiny.

Conclusion

Ja)an *a# 2een an econo-ic %iant ater t*e ?ndHorld Har, d&e to it# -a##i"e ta#tein e)ortation. ar#, tool#, and t*e li+e w*ic* are ed in o&r daily li"e#, Ja)an cane)ort, and at a low )rice. T*at6# w*y we *a"e *ere in t*e 1*ili))ine# (ai#o Ja)an,!! #tore, A&to S&))lie# w*ic* i-)ort Ja)ane#e Factory )art#. $owe"er, t*e decline

in t*eir e)ortation *a"e #i%niicantly aected t*eir econo-y and -ay enter intorece##ion i t*eir %o"ern-ent *a# no ot*er way to -a+e it wor+.

*ina *a# 2een a -o"in% actor in Ja)an6# econo-ic #lowdown d&e to t*e actt*at it *a# 2eco-e an econo-ic dra%on not only in ASEA' co&ntrie#, 2&t in t*ew*ole wide world, and it# decline wo&ld al#o aect t*e econo-y o ot*er #tate# ittrade# wit*.

1

itl final paper

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