December 31, 2009
Japan Unveils Plan for Growth, Emphasizing Free Trade in Asia
By HIROKO TABUCHI
TOKYO — Still struggling after its worst recession in generations, Japan announced a long-term growth strategy on Wednesday that aimed to tap into the dynamism of its Asian neighbors, create millions of jobs in new industries and drive economic expansion of at least 2 percent a year over the next decade.
The Japanese economy has eked out growth in the last two quarters as its mainstay exports have rebounded amid signs of recovery worldwide, particularly in China, the country’s biggest trading partner.
But a swelling public debt and a persistent decline in prices and wages are raising fears that Japan’s economic recovery could soon run out of steam. Prime Minister Yukio Hatoyama has been under pressure since he took office in September to come up with a practical plan to reinvigorate Japan’s economy.
“Indeed, the consensus view is that the economic recovery will at least stall, if not fall into another recession” early next year, Masamichi Adachi, a senior economist at JPMorgan Chase, said in a recent research note.
Mr. Hatoyama’s short-term remedy for Japan’s economic troubles has been to funnel money to struggling households, including offering new cash subsidies for families with small children and free high school education.
But his government has appeared distracted by a dispute with Washington and a campaign finance investigation. And budget constraints have forced Mr. Hatoyama to backtrack on some promises, hurting his popularity.
“The new government’s ability to take action is being tested,” he said at a news conference on Wednesday. “We will do whatever it takes to achieve this.”
The government’s new blueprint for economic growth in the long run is more global in outlook. The government says that it will push to create a free trade zone in Asia by 2020 to leverage the region’s economic growth, and that it will make Haneda Airport in Tokyo a 24-hour hub for international flights.
Japan also needs to become less reliant on the United States and bolster economic ties in Asia, Mr. Hatoyama said.
“Until now, our connection with the United States has been very strong. Naturally, this will continue to be the case in terms of our national security. But for economic growth, it is necessary to look closely at Asia as a new frontier,” Mr. Hatoyama said.
The plan envisions creating a $540 billion market for environmentally friendly technology and renewable energy that would employ 1.4 million people. It seeks to create 2.8 million jobs in the health and care-giving sectors to serve Japan’s aging population.
The new strategy calls for efforts to more than triple the number of foreign visitors to Japan, to 25 million by 2020, and create new jobs in a bid to support the country’s ailing tourism industry.
The plan aims to expand Japan’s economy at an average rate of 2 percent over the next 10 years, with a goal of increasing gross domestic product to 650 trillion yen, or $7 trillion, from the 473 trillion yen projected for the current fiscal year.
The government will bring the unemployment rate to the 3 percent range in the “medium term” from 5.2 percent in November, Mr. Hatoyama said.
Analysts say those goals are unrealistic, however, given Japan’s shrinking population and low rate of immigration. The government has also offered scant details on how its economic plan would be financed.
“A lack of government willingness to tackle the severe challenges of fiscal consolidation, and an aging population, prevents firms and households from feeling confident about the future beyond the next fiscal year,” Mr. Adachi said.
“the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all” -- Joan Robinson
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