japanese economy & energy by wang haiyan zhu shufang deng hao

Japanese Japanese Economy & Energy Economy & Energy

By Wang Haiyan Zhu Shufang Deng Hao

JapaneseJapanese Economy & EnergyEconomy & Energy

• This Presentation mainly discuss Japanese economy, energy demands and some related information. It is appropriate for high school students who have interest in Japanese Energy Policy.

GeographyGeography• Area: 377,864 sq. km.

(145,902 sq. mi.); slightly smaller than California.

• Cities: Capital--Tokyo.• • Other cities--Yokohama,

Osaka, Nagoya, Sapporo, Kobe, Kyoto, Fukuoka.

•Terrain: Rugged, mountainous islands.

•Climate: Varies from subtropical to temperate.

PeoplePeople• Population (2007 est.): 127.5 million.

Population growth rate (2007 est.): -0.088%.

• Language: Japanese.• Education: Literacy--99%.

• Health (2007 est.): Infant mortality rate--2.8/1,000. Life expectancy--males 78 yrs., females 85 yrs.

• Work force (67 million, 2003): services--42%; trade, manufacturing, mining, and construction--46%; agriculture, forestry, fisheries--5%; government--3%.

Introduction to Introduction to Economy (1)Economy (1)

• GDP (2007 est.): $5.103 trillion (official exchange rate); $4.34 trillion (PPP).

•Real growth rate (2007 est.): 1.9%. Per capita GDP (2007 est. PPP): $33,800.

• Natural resources: Fish and few mineral resources.

• Agriculture: Products--rice, vegetables, fruit, milk, meat, silk.

• Industry: Types--machinery and equipment, metals and metal products, textiles, autos, chemicals, electrical and electronic equipment.


• Japan's industrialized, social market economy is the world's third-largest, adjusted to purchasing power parity (PPP), after the United States and People's Republic of China. Also, Japan is the world's second-largest economy by real GDP, nominal GDP and by market exchange rates. Its economy is highly efficient and competitive in areas linked to international trade although productivity is lower in areas such as agriculture, distribution, and services. Government-industry cooperation, a strong work ethic, mastery of high technology, and a comparatively small defense allocation have helped Japan advance with extraordinary speed to become one of the largest economies in the world. Its reservoir of industrial leadership and technicians, well-educated and industrious work force, high savings and investment rates, and intensive promotion of industrial development and foreign trade have produced a mature industrial economy. Japan has few natural resources, and trade helps it earn the foreign exchange needed to purchase raw materials for its economy.


• Distinguishing characteristics of the Japanese economy include the cooperation of manufacturers, suppliers, distributors, and banks in closely-knit groups called keiretsu; the powerful enterprise unions and shuntō; cozy relations with government bureaucrats, and the guarantee of lifetime employment (shushin koyo) in big corporations and highly unionized blue-collar factories. Recently, Japanese companies have begun to gradually move away from some of these norms in an attempt to increase their global competitiveness and profitability (the latter due mostly to their increased reliance on equity rather than debt financing).


• For three decades, Japan's overall real economic growth had been spectacular: a 10% average in the 1960s, a 5% average in the 1970s, and a 4% average in the 1980s.


• Sliding stock and real estate prices marked the end of the "bubble economy" of the late 1980s, and ushered in a decade of stagnant economic growth. These problems may have been exacerbated by domestic policies intended to wring speculative excesses from the stock and real estate markets. Real GDP in Japan grew at an average of roughly 1.5% yearly between 1991-1999, compared to growth in the 1980s of about 4% per year. Growth in Japan throughout the 1990s was slower than growth in other major industrial nations, and the same as France and Germany. Government efforts to revive economic growth have met with little success and were further hampered in 2000 to 2001 by the slowing of the global economy. However, GDP per worker has increased steadily even through the nineties, given that from 1993 to 2007, 10% of the population distribution moved from the "working age" to "elderly age."


• Starting in 2003 Japan's economy began to grow strongly, growing at 2.0% per year in 2003 and 2004, and 2.8 percent in 2005. Unlike previous recovery trends, domestic consumption has been the dominant factor in leading the growth. As predicted, the economic recovery continued in 2006 and 2007. Former Prime Minister Shinzo Abe, who was working on Japan's economic revival, signed a treaty with Saudi Arabia and UAE about the rising prices of oil.


• The Japanese economy began to see signs of trouble again in 2008. In January, Ota Hiroko, the Minister of State for Economic and Fiscal Policy, announced that Japan's economy can no longer be considered 1st class economy due to a number of facts including: a decline in the country’s per capita gross domestic product, resulting in the fall of Japan's GDP per capita to 18th among the 30 member nations of the Organization for Economic Cooperation and Development (OECD) in 2006 and the reduction of Japan’s share of aggregate world income to below 10% for the first time in 24 years.

Economy 1: Economy 1: AgricultureAgriculture

• Only 15% of Japan's land is arable. The agricultural economy is highly subsidized and protected. With per hectare crop yields among the highest in the world, Japan maintains an overall agricultural self-sufficiency rate of about 40% on fewer than 5.6 million cultivated hectares (14 million acres). Japan normally produces a slight surplus of rice but imports large quantities of wheat, corn, sorghum, and soybeans, primarily from the United States. Japan is the largest market for U.S. agricultural exports.

Economy 2: MineralsEconomy 2: Minerals• Deposits of gold, magnesium, and

silver meet current industrial demands, but Japan is dependent on foreign sources for many of the minerals essential to modern industry. Iron ore, coke, copper, and bauxite must be imported, as must many forest products.

Economy 3 : Economy 3 : Industries(1)Industries(1)

• Industries: Manufacturing, construction, distribution, real estate, services, and communication are Japan's major industries today. Agriculture makes up only about 2% of the GNP. Most important agricultural product is rice. Resources of raw materials are very limited and the mining industry rather small.


• Japan's industrialized, free market economy is the second-largest in the world. Its economy is highly efficient and competitive in areas linked to international trade, but productivity is far lower in protected areas such as agriculture, distribution, and services. After achieving one of the highest economic growth rates in the world from the 1960s through the 1980s, the Japanese economy slowed dramatically in the early 1990s, when the "bubble economy" collapsed, marked by plummeting stock and real estate prices.


• Japan's reservoir of industrial leadership and technicians, well-educated and industrious work force, high savings and investment rates, and intensive promotion of industrial development and foreign trade produced a mature industrial economy. Japan has few natural resources, and trade helps it earn the foreign exchange needed to purchase raw materials for its economy.

Economy 4: Economy 4: ExportsExports

• The Japanese economy is one of the strongest in the world. Only the USA has a higher GNP. The Japanese currency is the Yen.

• Exports: Japan's main export goods are cars, electronic devices and computers. Most important single trade partner is the USA which imports more than one quarter of all Japanese exports. Other major export countries are Taiwan, Hong Kong, South Korea, China and Singapore.

Economy 5: Economy 5: ImportsImports

• Imports: Japan has a large surplus in its export/import balance. The most important import goods are raw materials such as oil, foodstuffs, and wood. Major suppliers are the USA, China, Indonesia, South Korea, and Australia.

Giant consumer Giant consumer market (1)market (1)

• Despite its struggles, the Japanese market is still the world's giant. The ratio of imports of raw materials and fuel, including mineral fuels such as crude oil and textile raw materials, to total value of imports was 26% in 2001. Considering that raw materials and fuel accounted for 66% of total imports in 1960, this is a great drop. Conversely, the ratio of finished goods, such as machinery, equipment, and textile goods, has increased.

Giant consumer Giant consumer market(2)market(2)

• The ratio of imports of finished goods to total imports exceeded 50% in 1989 because of increases in imports of machinery from European countries and the U.S., and of home electric appliances and textile goods from Asian countries. This ratio, lower than the 75-80% of Western countries, has led to criticism that Japan's market is closed. In fact, Japan's large imports of natural resources and agricultural products statistically lower the finished-product import ratio.

Product type Value % of total

Foodstuffs 431.31 12.4

Fish and shellfish 133.61 3.8

Meat 83.81 2.4

(Beef) 22.97 0.7

Fruits and vegetables 61.55 1.8

Grains, processed grain products 46.82 1.3

Textile raw materials 8.29 0.2

Raw cotton 3.44 0.1

Wool 1.7 0.0

Metal ores and scrap metal 77.16 2.2

Iron ore 30.7 0.9

Copper ore 20.35 0.6

Other raw materials 126.26 3.6

Lumber 49.42 1.4

Pulp 13.2 0.4

Value of Imports by Product (2001) :1Value of Imports by Product (2001) :1

• (Units: USD100 million, %)

Mineral fuels 702.03 20.1

Crude oil 388.64 11.1

Liquefied natural gas 131.24 3.8

Coal 61.9 1.8

Petroleum products 74.51 2.1

Chemical products 256.38 7.3

Pharmaceuticals 50.33 1.4

Plastics 29.91 0.9

Metal products 149.52 4.3

Non-ferrous metals 84.22 2.4

Iron and steel 28.35 0.8

Machinery and equipment 1,088.64 31.2

Computers 223.96 6.4

Semiconductors, ICs 153.97 4.4

Automobiles 64.29 1.8

Communications equipment 43.7 1.3

Textile products 238.03 6.8

Clothes and accessories 190.92 5.5

Total 3,491.92 100

Value of Imports by Product (2001) :2Value of Imports by Product (2001) :2

Finished-Product Import Ratio Trend

(Unit: %)

Source: Ministry of Economy, Trade and Industry

Note: Finished-product import ratio=value of finished product imports ÷ total value of imports x 100. Number of countries constituting ASEAN

was six in 1985, seven from 1990 through 1996, nine in 1997 and 1998 and ten from 1999.

Finished-Product Import Ratio Trend by Country

(Unit: %)

Source: Ministry of Economy, Trade and Industry

Note: Germany in 1985 denotes West Germany.

For more detailed data, click here

Raw MaterialRaw Material

• The extent and nature of Japan's economic vulnerability to an interruption in the supply of imported raw materials.

Raw Materials: 1Raw Materials: 1• Deposits of gold, magnesium, and silver

meet current industrial demands, but Japan is dependent on foreign sources for many of the minerals essential to modern industry. Iron ore, coke, copper, and bauxite must be imported, as must many forest product

Raw Materials: 2Raw Materials: 2

• The Japanese steel industry depends entirely on imports for iron ore and coal, the main steelmaking raw materials.


• Iron ore imports in 2005 totaled 132.31 million tons, down 1.9%, or 2.57 million tons, from the previous year. Among major suppliers, Australia shipped 81.29 million tons, down 4.9%, accounting for 61.4% of all imports. Brazil supplied 27.68 million tons, up 15.6%, for a 20.9% share, followed by India, with 10.40 million tons, down 14.3%, for a 7.9% share.


• Coal imported in 2005 amounted to 62.79 million tons, down 3.5%, or 2.27 million tons, from the previous year. Imports from Australia reached 43.21 million tons, up 3.0%, representing 68.8% of all imports. Canada shipped 6.55 million tons, up 22.4%, for a 10.4% share, China supplied 5.26 million tons, down 30.8%, for an 8.4% share, and Indonesia shipped 1.28 million tons, down 16.3%, for a 2.0% share.


• Regarding ferrous scrap, Japan's exports have exceeded its imports since 1996, making the country a net exporter. Ferrous scrap exported from Japan in 2005 totaled 7.58 million tons, hitting a record high for the second straight year. Nearly all of this tonnage was supplied to three countries: China, South Korea, and Taiwan.

Raw Materials: 6Raw Materials: 6• With steel demand growing in China and

other BRIC markets, steel production is increasing worldwide, making raw materials supply and demand tight. In order to ensure stable supplies of steel products in this situation, Japanese steelmakers are striving to secure raw materials by taking such measures as concluding long-term quantity contracts and acquiring mining rights and interests.


• With supply and demand continuing tight, efforts were made to secure stable supplies of raw materials.

Japanese Gas Market

Why are Japanese so anxious Why are Japanese so anxious about about energy securityenergy security??

• 1: Japan’s energy consumption is enormous, due to its massive economy;

• 2: Japan is one of the world’s poorest countries in terms of natural resources.

What should be What should be done to secure a done to secure a

stable stable energy security?energy security?

Energy Energy SecuritySecurity

• Given its heavy dependence on imported energy, Japan has aimed to diversify its sources. Since the oil shocks of the 1970s, Japan has reduced dependence on petroleum as a source of energy from more than 75% in 1973 to about 57% at present. Other important energy sources are coal, liquefied natural gas, nuclear power, and hydropower. Demand for oil is also dampened by higher government taxes on automobile engines over 2000 cc, as well as on gasoline itself, currently 54 yen per liter sold retail. Kerosene is also used extensively for home heating in portable heaters, especially farther north. Many taxi companies run their fleets on liquefied gas with tanks in the car trunks. A recent success towards greater fuel economy was the introduction of mass-produced Hybrid vehicles.

The New Direction of

Japanese Energy Policy and

the Role of Gasification

Energy Efficiency

What else do you think What else do you think can be done to secure a can be done to secure a stable energy security?stable energy security?

japanese economy & energy by wang haiyan zhu shufang deng hao

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