Land of the rising sun…

By Jamie Hellewell

Unless you live in bubble, you’ve probably learned that the fate of the Canadian economy is now just as dependent on what happens outside our borders as within. The fallout of the ‘Asian Crisis’ and the Russian currency turmoil made this clear. Therefore, we can no longer aVord to ignore the current plight of the Japanese economy-an economy deeply intertwined with our own.

On Tues., Nov. 3, Shigeru Ise, the Consul-General of Japan gave a public lecture at the University of Calgary to discuss Japan’s economic situation, the Asian markets and monetary system.

"We have experienced very unstable times since 1993," said Ise, who has held numerous positions on economic committees, including several posts with the United Nations. As a result, said Ise, "Japan is undergoing critical changes in its economy and economic structures."

The economic crisis has translated into political instability. From 1948-93, a single party, the Liberal Democrats, retained power. Since 1993, Japan has seen six changes in leadership (some lasting only months), primarily of minority and coalition governments. The current government, led by Prime Minister Keizo Obuchi, has a majority in the lower house, but a minority in the House of Councillors. This has forced them to make compromises in economic policy.

"Such compromising will make it diYcult to make hard economic decisions," said Ise.

Ise outlined four major characteristics of Japan’s present economy. The Þrst: severe depression. He noted that between 1987 and 1992, Japan enjoyed a "bubble economy," characterized by extremely high growth (6­8 per cent).

"Since 1992, the growth rate has been þuctuating severely," said Ise.

In 1997, it hit an all time low of -0.7 per cent. Some economists, he added, are projecting similar numbers for 1998. The result has been a signiÞcant drop in Gross Domestic Product and employment levels.

A second characteristic Ise described is sluggish personal consumption. "All Japanese are very careful consumers now; Japanese people now don’t spend money," said Ise. "They don’t even invest; there is no motivation to put money in the bank or invest it because of low returns."

Such low investment levels bodes poorly for Canadian export companies.

The restrictive lending policies of Japan’s banks is another signiÞcant characteristic of their economy. These new policies come in the wake of the bankruptcies of several major banks and securities since 1996-including the Hokkaido Takushoku Bank, one of Japan’s top 10 biggest banks.

"Some economists speculate in the next few months more banks will bankrupt," Ise added.

The Þnal mark of the Japanese economic situation that Ise described has been its response to its Asian neighbours’ plight. Japan has responded to the crisis by providing $42 billion in export credit, grants and loans to ailing Asian economies. Ise hinted that another $30 billion may be on the way.

What is the Japanese government doing to revitalize its own economy? Ise listed a number of initiatives. Japan has begun reforming various bureaucratic and economic structures, as well as re-evaluating social security and eduction.

"Implementing such reforms is not so easy," said Ise.

The government has also taken measures toward stabilizing the economy, reducing taxes and privatization.

Ise ended his lecture by identifying some of the key socio-economic issues Japan has to address in the future. One is Japan’s national debt, which has ballooned to $254 trillion Yen. Another is the rapidly aging population: in 1997, only 1.4 children were born for every couple. If this trend continues, one-third of Japanese people will be over 65 by the year 2025; and the population of 120 million could drop to 80 million. This creates serious labour shortage problems, and raises social security issues.

"This problem is expected to create serious problems for pension, eduction, health care and labour in 10 to 20 years," said Ise.

Ise was sure not to leave oV on a pessimistic note about Japan’s economy. "Japan’s gdp is still second highest in the world and the government has implemented measures for economic stabilization," he said.

"I believe the bottom is near, if we aren’t there already; so we will begin to climb again soon."

Professor Leslie Kawamura, one of the organizers of the lecture, closed the evening by inviting anyone interested in discussions on other Asian issues to the noon-hour lecture series starting the third week of November at the U of C.