Can “Abenomics” Save Japan’s Economy?
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Can “Abenomics” Save Japan’s Economy?

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Shinzo Abe campaigned on taking Japan back to the future. Have the nation’s voters got what they wished for with the Liberal Democratic Party’s (LDP) stunning election victory on Sunday, delivering the 58-year-old his second stint as leader?

For the defeated Yoshihiko Noda of the Democratic Party of Japan (DPJ), the poll was a devastating electoral backlash against, among other things, his push to increase the consumption tax. Noda’s defeat is therefore reminiscent of the one that befell conservative Ryutaro Hashimoto in 1997.

In a landslide for the party which was ousted from power in 2009, the LDP and its likely coalition partner, New Komeito, are expected to win a combined 325 of the lower house’s 480 seats, providing the two-thirds “supermajority” needed to force legislation through both houses of the Diet.

For the DPJ, the election is likely to reduce the Party’s parliamentary seats to just 53, down from its previous 230 seats. Noda has resigned to take responsibility for the electoral pummeling. Meanwhile, a third force, the rightist Japan Restoration Party led by nationalist former Tokyo governor Shintaro Ishihara, secured 54 seats, only three less than the center-left DPJ.

Noda was forced to call an election as part of a deal with the opposition to get through a consumption tax hike, which will rise to 8 percent in April 2012 and 10 percent in October 2015.

The DPJ’s electoral prospects were also damaged by party infighting, its handling of the March 2011 disasters, foreign policy rows with Japan’s neighbors and an intransigent opposition-controlled upper house.

Abe will be installed next week as Japan’s seventh prime minister in six years, and the first LDP leader since its decades-long rule ended in 2009. He has vowed more government spending and monetary expansion to drag the economy out of its deflationary downturn.

Comments
95
Allsfair
February 20, 2013 at 13:43

It looks like 2013 may be the year Korea outexports Japan.  Korea will maintain a healthy trade surplus this year while Japan will run a 200 billion dollar trade deficit.  Further yen devaluation will only add to Japan's trade deficit prompting more quantitative easing which will quicken Japanese debt default. It looks like Abe will not last the year. 

Anon
December 28, 2012 at 05:18

It seems whenever staunch Sinophobes encounter points they are unable to refute they take refuge in ad hominems Mao's propaganda army, etc….like some withered croaking Cold War relics pontificating at obviously articulate and compelling arguments raised by ethnic Chinese posters. I take it as a sign of times – it demonstrates the contempt and disdain from a position of weakness, and I applaud the persistence of my fellow Chinese in driving their point home despite the attempts at subterfuge. Excommunicated from NATO and the ISS, China developed its indigenous space program which propelled it forwardby leagues. Let Japan and the US come test China's mantle and its resolve – after all, it isn't China that is encroaching on their territory, but Japan, the ever useful US proxy, determined to contain China within the "first island chain" to ensure China's access to the Pacific is blocked. Of course such drastic hostile measures are taken only against a worthwhile rival, so China's rise must have really rattled some nerves. Does Japan really expect the Chinese to back down? Japan will find itself and its strength tested in return. Unfortunately for Japan, it is caught in one of the most brutal crossfires.
China and much of the rest of the world are simply sick of buying up useless Treasuries to sustain debt addiction, and are looking for a way to secure their own interests until the US and its Central Bankers assure the world that it will act in a fiscally responsible manner. The DPJ represented similar sentiments in Japan. Unfortunately, the US sees fit to use its military might to ensure more worthless USDs are accepted in exchange for the wealth of others, which is why US fleets are now patrolling and encircling China and Asia, the most economically productive region in he world. Trillions of Debt and the most powerful army in the world leads naturally to extortion.
I don't think Russia and China are without recourse. Japan will be expected to deliver the ultimate sacrifice on behalf of Uncle Sam, of course.

Scums On The Net
December 25, 2012 at 01:01

Look, a pot calling the kettle black. Who you're trying to kid, you Pentgon/CIA paid troglodyte?  Your lack of originality reflects your Neanderthal brutishness and genes. He who can't think, fights and slanders without originality.  Go back to your cave, troll, and erase whatever names you call yourself here on the blog.

petrt
December 24, 2012 at 09:24

As I see, a lot of people leaving messages here, must paied by Chinese gov. It is very interesting that some can have a full time job like this. The only thing I can feel is that these people has a lot of information, but does not know how to put them to together, because they don’t have any valuable points. That is too bad.

Tom F
December 24, 2012 at 06:43

Merry Christmas and a Happy New Year to every one. Although cliche, I wish for world peace and hope that China and Japan sees better light during this festive period and uses their strength and power to better the lives of the Asia Pacific (and the world) and bring forth a spirit of friendship and mutual respect.

Liang1a
December 24, 2012 at 05:57

Jean-Paul wrote:
 
December 23, 2012 at 12:50 am

Please Liangia do not bother responding to me as I won't read your schizophrenic nonsense response. Your grammar and massive walls of text are painful to read and all the points you make are complete fantasy.
======================================
I respond to this not to convince the Japnese and the Westerners and general anti-Chinese bigots but to hearten the patriotic Chinese and friends of China.  The truth is the world is changing rapidly with the Japnese and the American and European white peoples falling while China rises steadily.  Over the last 30 years China has undergone significant advancements in spite of many serious mistakes – the most serious of which is the reliance on cheap labor exports and FDI for China's economic development.  But the Chinese people and leadership have come to realize the fallacy of exports and FDI dependent economic development since all the developed countries have collapsed and can no longer increase their imports of Chinese products.  Consequently, China's growth rate has fallen drastically and will fall even more unless domestic development based on indigenous technological advancement, the urbanization of the rural residents and self-sufficiency of energy is instituted.  There are many signs that the Chinese leadership is finally ready to make a serious shift toward domestic development and phase out foreign trade and FDI.  This will then allow China to grow rapidly over the next 30 years until it becomes the richest and the most powerful nation on earth.  Therefore, the Chinese people should be heartened to understand this.  They can help the progress of China by spreading the message of domestic development.  And friends of China can also be heartened by the rapid development of China because they can have help to protect them from aggressions. 
Therefore, the Japnese and the Westerners can ignore my posts to their own doom.  I don't care whether they read my posts or not.  I write to rally the patriotic Chinese and hearten the friends of China.

 

Liang1a
December 24, 2012 at 04:57

Samurai X: The reason why Chinese have fewer Noble prizes than Chinese-American or Japanese is simple: Under the CCP regime, the fundamental science are not taking seriously.
 
Liang:  Chinese science and technologies are developing very fast.  Just because Nobel Committee does not recognize the achievements of the Chinese scientists does not mean they are not doing great science.  This is why China is developing magnetic catapult for its future carriers even though the Americans have so far failed to accomplish this.  Chinese laser technologies are also caught up with the Americans.  And China's space plane Shenlong is just as advanced as America's X-37B.  The Chinese 6th generation fighter will probably be deployed before the Ameican 6th generation fighters. And the list goes on and on.  Japan is not even in the same league.  
The fact that Chinese science is not now as advanced as the japnese and Americans in all fields is due to many reasons.  The most fundamental reason is the very low level of science from which China must start.  It is simply not possible to develop cutting edge technologies in a year or two.  It will take decades and even generations.  Given the progress China has made over the last 30 years, it is very impressive since it has not only caught up in many fields but have leapfrogged over Japan in some fields.  Given the trajectories of both countries in science and technology development, it is obvious that China will systematically and inexorably overtake Japan going into the future.  In another 10 years, Chinese science and technologies will be on a par with America.  And in another 20 years Chinese science and technologies will be the most advanced in the world no matter how many Nobel prizes Chinese scientists have or have not received.

Liang1a
December 24, 2012 at 04:28

Samurai X
 
December 23, 2012 at 7:48 pm
 
 

Liang: Chinese people can institute a corruption free and competent government.
 
Samurai X: And don't be racist. People aren't that different if they are provided same opportunities, disciplines, and living conditions. The reason why Chinese have fewer Noble prizes than Chinese-American or Japanese is simple: Under the CCP regime, the fundamental science are not taking seriously.
Liang: People are indeed similar.  But there may be significant differences in the brain that controls the thinking process.  As to no Nobel Prizes for mainland Chinese scientists, the reason is simple.  It is prejudice against China by the Nobel Committee.

Samurai X: I don't want you to repeat writing your dream you saw last night. So I keep it simple. CCP is the reason why China has no future. Have a courage and try to revolt. We don't want to have another cold-war, hyperinflation, food-shortage, and mass-immigrations, which might happen before 2017 if you Chinese don't stand up. If you succeed, then maybe you'll start getting along with others.
Liang: CCP is evolving.  I see it becoming more enlightened and trustworthy in each succeeding term of leadership.  The CCP knows that it must serve the Chinese people or lose their support.  It can no longer suppress the Chinese people in order to maintain its own dominance.  Because suppressing the Chinese people will make the Chinese nation weak and unable to resist foreign aggression.  And if China were invaded and colonized then the CCP will be overthrown anyway.  Therefore, for CCP to continue to rule China, it must make the Chinese people rich and the Chinese nation strong.  Then the Chinese people will support the CCP willingly so that its enlightened policies will continue to allow them to be rich.  And knowing this and also knowing that China's economic development cannot be sustained by cheap labor exports and FDI, the new CCP leadership is now trying to shift the mode of economic development from cheap labor exports and FDI to domestic development based on indigenous technological advancement and the urbanization of the rural residents and energy self-sufficiency.  But over the last 30 years, there has grown up a group of traitors and compradors who rely on the foreigners for their immoral incomes.  These traitors need to sell out China in order to maintain their incomes.  Therefore, there will be a struggle to rid China of these traitors.  But I'm sure with the patriotism of the vast majority of the Chinese people these small group of traitors can be easily rooted out.  Then China will be resurging even faster.  And all the hyperinflation,  food shortage and mass emigration will be happening in Japan.  Even now Abe has announced his plan to devalue the yen and institute inflation of at least 2%.  And as China phases out cheap labor exports to Japan  while strengthening the RMB, it will cause hyperinflation and stagnation in Japan as consumer goods become more costly while wages decrease in Japan like never before.  And the Japnese people cannot survive in Japan and must get out and go somewhere else.  In the meantime, you have a very unstable government as witnessed by 7 prime ministers in as many years.  Once your economy collapsed, there will be total chaos.  By 2017 China will have a much bigger economy based on domestic development with its people earning significantly higher wages than now.  The Chinese navy will be twice as powerful as Japan and the Chinese air force will be 5 times more powerful than Japan.  And a hot war will see the Japnese military smashed.  Will Japan even be able to export anything then?  And without exports can there be imports of essential energy and raw materials?  Obviously not.  So what will happen to Japan?  I'm sure you will see it in your nightmares.
 

Liang1a
December 24, 2012 at 03:48

Samurai X wrote:
 
December 23, 2012 at 7:48 pm

Liangia, can you figure out why you aren't able to convince anyone on this forum…by now?
==================================
For the same reason that religionists cannot be convinced that there are nothing supernatural.  No matter how much evidence you show to someone who believes in the supernatural that supernatural things are inconsistent with verifiable scientific facts they will still think supernatural things exist.  This is because they have been brainwashed into accepting the supernatural and indeed need the supernatural.  Without the supernatural they lose all meaning of their lives which terrifies them.  Therefore, the Japnese and the Westerners need to believe in the inferiority of the Chinese because if the Chinese are not inferior then they themselves are not superior and that terrifies them.  Therefore, they will not accept the possibility of the many evidence I provided here to demonstrate the resurgence of the Chinese people and the increasing wealth and power of the Chinese nation.  But the truth is the truth.  Your denial of the truth does not make the truth any less true.  That is to say, no matter how you deny it China is still resurging.  Its technologies advance every year.  Its productivity expands every year.  Its wealth increases every year.  Its leadership is competent and efficient and trustworthy every term.  And above all, its military is more powerful every year.  Obviously, the Japnese and Westerners cannot accept this and so they prefer to deny what I say.  But in the end, China will still resurge whatever you enemies of China deny.  All it means is that you will be even more surprised when you get your nose bent out of shape when you attack China. And even before that, China will systematically phase out its cheap labor dependent exports as it increases the incomes of its workers and turn inward to develop its own domestic economy for the benefit of its own people.  Then there will be stagflation in the Japnese and Westerns countries to crash their economies even more.  And you people will become poorer and poorer and weaker and weaker even as China becomes richer and richer and more and more powerful.  So deny it all you want.  China will still resurge in spite of your denial because you no longer control the Chinese destiny!

 

Samurai X
December 23, 2012 at 19:48

Liangia, can you figure out why you aren't able to convince anyone on this forum…by now?
 
>> Chinese people can institute a corruption free and competent government. 
Yeah then. Revolt against Communist Party and install Democracy. Until then, Nothing you are dreaming is going to happen. And don't be racist. People aren't that different if they are provided same opportunities, disciplines, and living conditions. The reason why Chinese have fewer Noble prizes than Chinese-American or Japanese is simple: Under the CCP regime, the fundamental science are not taking seriously.
 
I don't want you to repeat writing your dream you saw last night. So I keep it simple. CCP is the reason why China has no future. Have a courage and try to revolt. We don't want to have another cold-war, hyperinflation, food-shortage, and mass-immigrations, which might happen before 2017 if you Chinese don't stand up. If you succeed, then maybe you'll start getting along with others.
 
 
 
 
 
 

Liang1a
December 23, 2012 at 03:36

CC wrote:
 
December 22, 2012 at 4:50 pm

Just like to remind you that China's GDP during the Qing dynasty was 35% of the world GDP & more than twice Britain's GDP at the time, but it was defeated & humiliated by the British & other western countries. Thus, a country with the largest GDP is not necessarily the most powerful nation in the world. In the case of China, even when it becomes the world's largest economy (maybe in 2030 ?), its per capita income is still a fraction of other developed countries' due to its sheer size of population. It's still just a poor third world country not yet a developed country like the US, Japan, or UK, etc. That's the painful stark reality for your China in the coming decades, whether you like it or not, Liang1a!
===============================================
That was then and this is now.  Do you know China has developed not one, not two but three 5th generation stealth fighters?  They are the J-20, the J-21/31 and the new J-18.  China has deployed many DF-31A with multiple independent targetable nuclear warheads.  China has more than twice the 4th generation fighters most of which are J-10 which are indigenously developed.  China has at least 4 SSBN of Type 094 and developing even more advnced Type 096 which is just as good if not better than American SSBN.  In another 10 years China will have at least 6 Type 094 and 6 Type 096 capable of carrying thousands of nuclear warheads.  China's army is as well equipped as the American army and is far bigger.  China's tanks, attack helicopters and everything else are all as good if not better than American army equipment.  If America tried to attack China today, it will be smashed.  But America can't even land any troops on Chinese soil because its ships would have been sunk by Chinese anti-ship ballistic missiles such as DF-21D and DF-25 which has even longer range of some 3,000 km.  And China is developing even more advanced arms such as 6th generation fighters, laser guns, rail guns, etc.

All you Japnese and Americans can do is talk about what happened hundreds and thousands of years ago while China has changed significantly since 10 years ago.  And GDP in nominal terms is misleading.  China's per capita GDP now is only 37,000 yuan (50 trillion divided by 1.35 billion population).  At 6.25 yuan per dollar of nominal exchange rate this is only $6,000.  But in real purchasing power terms this is actually more than doubled at $12,000.  This is still low by the Japnese standard but not that much lower.  And in 10 years by 2022 China's GDP will double to 100 trillion yuan and its per capita GDP in PP terms will be $25,000 and total GDP of $33 trillion.  So doubling that yet again by 2032, China's per capita GDP will be $50,000 and a total GDP of $70 trillion.  So in another 20 years China's per capita GDP will have caught up with America and surpassed Japan.  Japan's per capita GDP is only some $35,000 in PP terms now and will shrink as it devalues its yen.  By 2032 it will have shrunk to just $28,000 or less.  And by 2043, China's per capita GDP will have risen to $66,000 with a total GDP of $100 trillion or more while Japan's per capita GDP would have shrunk to just $20,000 or less as the yen is devalued to 150 yen per dollar.
And with the most advanced technologies and the biggest economy in the world by twice as much and a government that is patriotic China will have the most powerful military that will be twice as big and much more powerful than the rest of the world combined.  Anybody who keep thinking China has not changed since 200 years ago is an ignorant fool who lives in a drug induced fantasy. 

http://seekingalpha.com/article/1074121-time-to-profit-from-the-decline-of-the-japanese-yen

According to the article at the link above, Abe will try to institute an inflation rate of 2% with "unlimited" monetary easing.  This will lead to a serious devaluation of the yen and a sustained decline of the Japnese GDP.  Japan will also earn much less foreign exchange thus making its imports much more expensive in yen terms.  And in order to compete globally, Japan must also lower the wages of its workers.  And the whole thing adds up to a seriously degraded standard of living.  Already Japan's per capita GDP in real terms is lower than that of Taiwan – $35,000 to $38,000.  In 10 to 20 years it will go lower while China's will rise higher.  Ultimately, China's standard will be 2 to 3 times higher than Japan.

Deng
December 23, 2012 at 01:38

Liang1a & John Chan,
Hope you'd learn something about the reality in China. Pay attention from frame 07:25. You two young men should do more walking, instead of kept talking about all those nonsense theories. Let's walk shall we?
China's Ghost Cities and Malls

Your uncle Deng

Jean-Paul
December 23, 2012 at 00:50

@ CC
 
Good point, these Chinese posters all keep saying GDP this, GDP that but GDP is only ONE measure of a countries performance overall. GDP matters very little when it comes to technology, quality of life, politcal influence and diplomatic influence.
 
In terms of diplomacy and political influence China is not very powerful at all. Just look at the allies that China has, North Korea, Iran, Pakistan, Cambodia. All these are very weak countries that have no presence on the international stage at all. Also, China is very behind in terms of science and education. All the rich Chinese citizens go to educate themselves in Western universities and the trend is only increasing.
 
Please Liangia do not bother responding to me as I won't read your schizophrenic nonsense response. Your grammar and massive walls of text are painful to read and all the points you make are complete fantasy.

CC
December 22, 2012 at 16:50

Just like to remind you that China's GDP during  the Qing dynasty was 35% of the world GDP & more than  twice Britain's GDP at the time, but it was defeated & humiliated  by the British & other western countries. Thus, a country with the largest GDP is not necessarily the most powerful nation in the world. In the case of China, even  when it becomes the world's largest economy (maybe in 2030 ?), its per capita income is still a fraction of other developed countries' due to its sheer size of population. It's still just a poor third world country not yet a developed country like the US, Japan, or UK, etc. That's the painful stark reality for your China in the coming decades, whether you like it or not, Liang1a!

Liang1a
December 22, 2012 at 10:54

Since the beginning of the recorded human history, China had been the most advanced and the richest by far in the world.  Chinese wealth and technologies and culture were the richest and the most advanced down to the end of the Ming Dynasty when Chinese ship building technology was by far the most advanced in the world.  But after the invasion by the Manuchu, China collapsed.  And for several hundred years after that China continued to decline.  Since 200 years ago, China was only an empty shell compared to its former glory.  But there are many signs to indicate a rapid resurgence by the Chinese nation is at hand.  Chinese people can institute a corruption free and competent government.  Singapore, Hong Kong and Taiwan have demonstrated this.  Oversea Chinese are among the richest in the world.  Even in America and in spite of severe discrimination, Chinese-Americans have achieved higher education and higher incomes than the white-Americans.  Chinese people still respect scholarship.  They are good businessmen willing to take risks and work hard.  There are just as many, if not more, Chinese physics Nobel Prize winners than Japnese.  Given these and other preconditions such as abundant mineral resources and self-sufficiency for food and energy for rapid development, it is only logical that once an enlightened set of policies is implemented in China, the economy of China will surge ahead rapidly. 
Many in Japan and the West think China must continue to do exports based on cheap labor.  This is just ignorance.  Chinese have realized that their economy can no longer grow if it continued to rely on exports.  Therefore, there is a call in the Chinese business community and the government to shift Chinese economy to domestic development based on urbanization and indigenous technological advancement while making China energy self-sufficient.  And once China's mode of development shifts to domestic development, then it can develop sustainably until it is fully developed with a per capita GNP of some 200,000 yuan and $66,000 at 3 yuan per dollar (2011 PP) for a total GNP of $100 trillion.
For those who can only see the current state of China which is dependent on exports, China's future seems dim as its export markets have all collapsed.  Especially the Japnese and the Americans think China must kowtow to them to be allowed to continue to export to them.  But once China has built a firm foundation on domestic development then it will not need japan and America and can simply kick them aside.  Therefore, those who really want to know what China's future will be better pull their heads out of the hole and use their logic.  You can continue to treat China with contempt but you will be surprised when China kick you aside and go on to be much richer and more powerful  than you are.

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