Japan’s snap elections
Shinzo Abe’s decision to call snap elections only two years into his term perplexed many people. Was it simply cover for a U-turn on a planned rise in consumption tax or was the prime minister seeking a renewed mandate for more radical measures to kick-start growth? Ben Hall discusses what the elections mean for the future of the world’s third-largest economy with Ben McLannahan and David Pilling.
Shinzo Abe launching his election campaign on Tuesday © EPA
The ink is barely dry on the first estimate of Japan’s gross domestic product from July to September, which suggested that the world’s third-largest economy shrank an annualised 1.6 per cent over the period. Combined with the 7.3 per cent annualised fall in the three months after the tax increase in April, it implied that Japan had tipped into yet another technical recession – its fourth since the Lehman crisis. Read more
The crew that was dead set against raising consumption tax in Japan will be feeling vindicated. The economy unexpectedly fell back into recession in the third quarter, contracting 0.4 per cent quarter on quarter, or 1.6 per cent on an annualised basis. That makes it highly unlikely that prime minister Shinzo Abe will push ahead with a second round of VAT hikes, from 8 per cent to 10 per cent, after the first increase from 5 per cent in April. At least for now.
Here are seven charts showing the worrying side of Abenomics, and some reasons to be hopeful. Read more
What hopes for detente between Japan and China?
What are the prospects for some form of detente between Japan and China? Ahead of next week’s Apec summit, where leaders of the two countries are expected to meet, Ben Hall discusses the reasons for the strained relations between the two countries with Beijing bureau chief Jamil Anderlini and David Pilling, Asia editor.
By Gideon Rachman
In 1990 Kenichi Ohmae, a management consultant, published a book called The Borderless World, whose title captured the spirit of globalisation. Over the next almost 25 years developments in business, finance, technology and politics seemed to confirm the inexorable decline of borders and the nation states they protected.
Japan’s Government Investment Pension Fund, the world’s largest pool of publicly managed pension assets, is poised to make a change to its investment strategy that has equity markets salivating. Indications are that a review of its allocation guidelines, expected to be wrapped up next month, will raise the percentage of the fund’s roughly Y127tn ($1.3tn) portfolio that is dedicated to Japanese stocks, while reducing holdings of Japanese bonds.
The GPIF’s current guidelines are risk-averse by global standards, with the majority of the model portfolio dedicated to low-yielding Japanese public debt and just 12 per cent given over to domestic equities. Under the new guidelines, the equity level looks likely to rise to 20 per cent – a change that could send trillions of yen flowing into the Topix, the Nikkei and other Japanese share indices. And as of this week, key investment decisions will be made by the fund’s investment board, rather than Takahiro Mitani, its president. Read more
By Gideon Rachman
Atlanta coined the catchphrase that it was the city that was “too busy to hate”. During the past 30 years, the countries of Asia have informally adopted that slogan and transferred it to a whole continent. Since the end of the 1970s, the biggest Asian nations have forgotten about fighting each other – and concentrated on the serious business of getting rich. The results have been spectacular. But there are now alarming signs that East Asia’s giants are pursuing dangerous new priorities, and diverting their energy into angry nationalism and territorial disputes.
Obama’s state visit to Japan
This week, we look at Japan, where President Barack Obama is concluding a state visit. The US leader and Prime Minister Shinzo Abe have vital business to discuss, from Japan’s delicate and rather dangerous relationship with China, to the state of the Japanese economy and hopes for a major new trade deal. David Pilling, Asia editor, and Lindsay Whipp, former Tokyo correspondent, join Gideon Rachman to discuss
If there was a prize for which US president had had the more exclusive and expensive Japanese dining experience, Barack Obama would beat George W Bush hands down.
The incumbent US leader and his Japanese counterpart Shinzo Abe dined in one of Japan’s – and thus the world’s – most exclusive sushi restaurants on Wednesday night – Sukiyabashi Jiro, where only 10 people can squeeze along the counter and there is one choice on the menu – a $300 course of exquisite sushi. Read more
By Gideon Rachman
Ukraine is a distraction. Syria is a distraction. For believers in America’s “pivot to Asia”, the centre of Barack Obama’s foreign policy must remain the region of the future – Asia. The pivoters will be delighted that this week – despite a raging crisis with Russia – the president is embarking on a four-nation tour of Asia, beginning in Japan.
By Jurek Martin
The formal obituaries of Shijuro Ogata, the former deputy governor of the Bank of Japan who has died at the age of 86, will take due note of his policy making roles over a long career, invariably executed with acumen. They will also record that, as he frequently said with affection, he was hardly the most famous Ogata in his own household – his wife, Sadako, was the UN High Commissioner for Refugees for a decade and holder of more than one Japanese government humanitarian portfolio.
What is less well known is the extent to which he was single-handedly responsible for opening up the previously closed Japanese bureaucracy to the western media – and all through the device of a tea party of his own mischievous creation. Read more
♦ Many Iranians see basij– the ideologically-driven volunteer forces of the Revolutionary Guards – as stick-wielding thugs, but they show a softer side as they sip cappuccino and discuss art at Café Kerase.
♦ Although demographic and other factors are against the US Republicans, the Grand Old Party is seeing a strange revival.
♦ It’s not a good time for Japan to put its tax rates up, which is why the government is allowing retailers to act like they haven’t.
♦ Much has changed in Sarajevo since the day in 1914 when Austrian Archduke Franz Ferdinand was shot, providing the spark that lit the flames of the first world war, yet much has remained the same.
♦ The Egyptian army’s gift of land for homes has prompted speculation over a closely guarded secret: the size of the army’s stake in the economy.
♦ A property boom across Germany‘s biggest cities has been dubbed a betongold – literally concrete gold – rush. Read more