A United States trade delegation has just been in Tokyo, urging the Japanese government to reflate its domestic economy and allow more foreign imports.
A United States trade delegation has just been in Tokyo, urging the Japanese government to reflate its domestic economy and allow more foreign imports. Japan has a huge surplus in her balance of trade with the rest of the world, and the Japanese yen is rising day by day against the United States dollar. This is a situation many other industrial countries many envy-but it still does not prevent Japan from depressed industrial production, rising prices and unemployment at home.
SYNOPSIS: Officials at the Bank of Tokyo are dealing in a currency that is steadily increasing in value. Japan's ten-billion dollar trade surplus is piling up her foreign currency and, with them, the price of the yen.
Since January this year, the United States dollar has fallen by more than 20 percent against the yen. Four months ago, it took 265 yen to buy a dollar; two weeks ago, 249 was enough; this week (November 22) under 242.
According to economic theory, this should encourage imports-which become cheaper in terms of the yen-, discourage exports, and so correct the surplus. Luxury imports, like high fashion goods, jewellery, cosmetics and watches are entering the country, and are available in Tokyo stores at a high price. But would-be exporters to Japan Complain that, when they try to sell more popularly-priced goods, them run into a maze of restrictions.
Tourism is booming in Japan. The high value of the yen makes a foreign holiday seem relatively sheap. In this respect, theory is working. Japanese tourists are helping to spend some of the surplus abroad.
But it is not doing much to cut down exports. Japanese manufacturers-cars, radios, television sets and electronic goods-are still competitive and pouring into overseas markets. To protect their own industries, the United States and West European governments are being pressed to introduce tariffs to keep out the Japanese goods. So, to prevent a trade war, the Japanese government has called for voluntary restraint from its own exporters.
Despite its apparent strength, the Japanese economy is far from booming. Like the Western world, Japan is suffering from industrial stagnation. Small businesses are going bankrupt at the rate of 1,500 a month.
Reflecting fears of worse to come if the rising yen does cut down exports, prices on the Tokyo stock exchange fell on Monday (November 21) to their lowest level this year.
Because of the world recession, Japanese Shipbuilding has been cut back drastically since the boom of 1973-4. This has reduced the demand for steel.
Leading steel producers are already making substantial losses; and if car exports fall off, either through voluntary restraint or because of the rising yen, this situation is likely to get worse. In its turn, unemployment would increase. It is now about two percent.
Prices are high in Japan, and still rising. Inflation, at just over 7???? percent, is fairly modest by European standards; but wages have not kept pace, and the ordinary citizen is hard pressed. Internationally, Japan is financially strong, and is being urged to reduce her trade surplus. To do so without laying new burdens on her people at home will be a major problem.