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Japan concerned with slowing China economy: white paper

  • July 23, 2019
  • , Kyodo News , 10:36 a.m.
  • English Press

TOKYO – Japan is on the lookout for any negative impacts the slowing Chinese economy and U.S.-China trade tensions are having on its economic recovery, a government report said Tuesday.

 

China’s slowdown has already impacted Japanese domestic production and exports to the world’s second-largest economy, according to the white paper on the economy and finances for fiscal 2019.

 

China, hit by contracting demand for smartphone parts, remains in a trade dispute with the United States and the spat between the world’s two biggest economies is threatening to curb global growth, the annual paper said.

 

“Special attention should be paid to uncertainties over overseas economic policies and situations, including the slowing Chinese economy, the impact of U.S.-China trade issues and Britain’s (planned) exit from the European Union,” it said.

 

In an economic assessment earlier this year, the government said that the world’s third-largest economy was likely in the midst of its longest expansion phase since the end of World War II on the back of improving labor and wage conditions. But the white paper makes no reference to the view.

 

The paper recommended that Japan should improve productivity to raise wages and address its serious labor shortage, both of which should help boost consumer spending.

 

In April, the government went some way to dealing with the labor issue by introducing new visa statuses to allow companies to hire more foreign workers. It is also seeking to increase women’s participation in the labor market and is encouraging elderly people to remain in the workforce.

 

Japan’s ingrained work culture and employment system, including excessive working hours and seniority-based salary system, should be reviewed to attract more foreign workers, the paper said.

 

As the consumption tax is scheduled to be raised to 10 percent from the current 8 percent in October, the report said it is imperative to closely monitor what impact the tax increase will have on household income and spending, key pillars of domestic demand.

 

Given that spending by people in the 39 and younger age bracket remains weak, raising their salaries and increasing opportunities to spend more money by reducing long working hours are also necessary to spark consumption, it said.

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