April 10, 2020

JAPAN: Japan to Fund Firms to Shift Production Out of China. PM Abe Declared A State Of Emergency Through May 6, Announced A Nearly $1 Trillion Economic Stimulus Package In Response To COVID19


ABC News (Australia) published April 7, 2020: Japan ramps up coronavirus lockdown measures amid outbreak concerns in Tokyo. A state of emergency has been declared in Japan to prevent an outbreak in the capital. The number of coronavirus cases in Tokyo has doubled in the past week, with more than 1,000 cases recorded.
CNBC News
written by Reuters staff
Tuesday April 7, 2020

Japanese Prime Minister Shinzo Abe on Tuesday declared a state of emergency to fight new coronavirus infections in major population centers and unveiled a stimulus package he described as among the world’s biggest to soften the economic blow.

The state of emergency, giving authorities more power to press people to stay at home and businesses to close, will last through May 6 and be imposed in the capital, Tokyo, and six other prefectures — accounting for about 44% of Japan’s population.

“The most important thing now is for each citizen to change our actions,” Abe said in televised comments made at a meeting of a government task force.

“If each of us can reduce contact with other people by at least 70%, and ideally by 80%, we should be able to see a peak in the number of infections in two weeks,” he said.

The government also approved the stimulus package worth 108 trillion yen ($990 billion) — equal to 20% of Japan’s economic output — to cushion the impact of the epidemic on the world’s third-largest economy.

That exceeds the equivalent of 11% of U.S. output for the stimulus package laid out by President Donald Trump and 5% of output for Germany’s package.

Direct fiscal spending amount to 39.5 trillion yen, or about 7% of the economy, more than double the amount Japan spent following the 2008 collapse of Lehman Brothers.

Japan has been spared the big outbreaks of the coronavirus seen in other global hot spots, but a recent, steady rise in infections in Tokyo, Osaka, and other areas led to growing calls for Abe to announce a state of emergency.

Coronavirus infections in Tokyo more than doubled to about 1,200 in the past week, with more than 80 new ones reported on Tuesday, accounting for the highest number in the country. Nationwide, cases have climbed past 4,000 with 93 deaths as of Monday.

Abe has stressed that the state of emergency will stop short of imposing a formal lockdown as seen in other countries.

The emergency gives governors the authority to call on people to stay at home and businesses to close. With no penalties for ignoring the requests in most cases, enforcement will rely more on peer pressure and respect for authority.

Tokyo Governor Yuriko Koike said the city was in talks with the central government to decide what types of facilities it would ask to close or curtail business hours, while reiterating there would be no restrictions on buying groceries and medicine.

Sufficient food

The government would not ask rail companies to reduce the number of trains in operation, Abe said.

Other essential infrastructure like mail and utilities would operate, as will ATMs and banks, public broadcaster NHK said.

Minister of Agriculture, Forestry and Fisheries Taku Eto called on shoppers to stay calm.

“We are asking citizens to buy only what they need when they need it as there is sufficient food supply and no suspension is planned at food factories,” he told reporters earlier, adding there was no sign of disruption to Japan’s grain imports.

But the restrictions will add to pains the virus is inflicting on the world’s third-largest economy, which is seen as already in recession as supply chain disruptions and travel bans chill factory output and consumption.

Metropolitan Tokyo alone accounts for about 20% of Japan’s overall gross domestic product.

Japan will sell a record amount of additional bonds worth more than 18 trillion yen to fund the package, adding to its huge debt which is twice the size of its economy.

While the stimulus could ease the immediate damage from the pandemic, lawmakers are already calling for even bigger spending to prevent bankruptcies and job losses.

Analysts expect the economy, which shrank in the final quarter of last year, to post two more quarters of contraction, piling pressure on the government and the central bank to do more.

“The government will probably compile another supplementary budget soon to stimulate the economy with even more spending,” said Takahide Kiuchi, a former Bank of Japan board member who is now an economist at Nomura Research Institute.
Bloomberg News
written by Isabel Reynolds and Emi Urabe
Wednesday April 8, 2020

Japan has earmarked $2.2 billion of its record economic stimulus package to help its manufacturers shift production out of China as the coronavirus disrupts supply chains between the major trading partners.

The extra budget, compiled to try to offset the devastating effects of the pandemic, includes 220 billion yen ($2 billion) for companies shifting production back to Japan and 23.5 billion yen for those seeking to move production to other countries, according to details of the plan posted online.

The move coincides with what should have been a celebration of friendlier ties between the two countries. Chinese President Xi Jinping was supposed to be on a state visit to Japan early this month. But what would have been the first visit of its sort in a decade was postponed a month ago amid the spread of the virus and no new date has been set.

China is Japan’s biggest trading partner under normal circumstances, but imports from China slumped by almost half in February as the disease shuttered factories, in turn starving Japanese manufacturers of necessary components.

That has renewed talk of Japanese firms reducing their reliance on China as a manufacturing base. The government’s panel on future investment last month discussed the need for manufacturing of high-added value products to be shifted back to Japan, and for production of other goods to be diversified across Southeast Asia.

“There will be something of a shift,” said Shinichi Seki, an economist at the Japan Research Institute, adding that some Japanese companies manufacturing goods in China for export were already considering moving out. “Having this in the budget will definitely provide an impetus.” Companies, such as car makers, that are manufacturing for the Chinese domestic market, will likely stay put, he said.

Testing Times

Japan exports a far larger share of parts and partially finished goods to China than other major industrial nations, according to data compiled for the panel. A February survey by Tokyo Shoko Research Ltd. found 37% of the more than 2,600 companies that responded were diversifying procurement to places other than China amid the coronavirus crisis.

Japan Unveils Record $992 Billion Stimulus Amid Virus Emergency

It remains to be seen how the policy will affect Prime Minister Shinzo Abe’s years-long effort to restore relations with China.

“We are doing our best to resume economic development,” Foreign Ministry spokesman Zhao Lijian told a briefing Wednesday in Beijing, when asked about the move. “In this process, we hope other countries will act like China and take proper measures to ensure the world economy will be impacted as little as possible and to ensure that supply chains are impacted as little as possible.”

The initial stages of the Covid-19 outbreak in China appeared to warm the often chilly ties between the two countries. Japan provided aid in the form of masks and protective gear -- and in one case a shipment was accompanied by a fragment of ancient Chinese poetry. In return, it received praise from Beijing.

In another step welcomed in Japan, China declared Avigan, an anti-viral produced by Japan’s Fujifilm Holdings Corp. to be an effective treatment for the coronavirus, even though it has yet to be approved for that use by the Japanese.

Yet many in Japan are inclined to blame China for mishandling the early stages of the outbreak and Abe for not blocking visitors from China sooner.

Meanwhile, other issues that have deeply divided the neighbors -- including a territorial dispute over East China Sea islands that brought them close to a military clash in 2012-13 -- are no nearer resolution.

Chinese government ships have continued their patrols around the Japanese-administered islands throughout the crisis, with Japan saying four Chinese ships on Wednesday entered what it sees as its territorial waters.

Posted by Princess Mononoke at 7:53 PM

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)