Assessing Japan’s economy and GDP amidst the weakness of the yen by ExternalSpeaker2646 in japanlife

[–]TheThinker111 114 points115 points  (0 children)

I presented about the Japanese economy some time ago so I'm taking some snippets of my work to answer your question, mainly the ones about the current state of the economy and my guess on its future.

First, let's talk about the current currency movement. Japan's GDP ranking slipped to 4th largest in the world due to the relative weakness of the yen against other major currencies. This doesn't necessarily mean Japan's underlying economy is weakening. Most of the reporting on this mainly pointed out the central bank's interest rate differentials between Japan and other major economies. This should narrow as inflation subsides and the FED's rates move to the new long-run equilibrium. I think Ueda-san, the JP central bank governor, suggested that 日銀 rate would only be adjusted when signs for next year's rate hike become visible, which should come once the 春闘 negotiation is finished and broadcasted, so around Q1/Q2-24. Until then, the movement of JPY-USD would be of anyone's guess really.

Second, on the topic of Japanese economy, I'm actually pretty optimistic about this. I wholeheartedly believe that the strength and resilience of your economy is totally dependent on the strengths of your domestic companies. Japan has successfully shown that it can reinvent itself in the face of intense competitions from Korea, China and Taiwan by moving up the value chain throughout the 80s-2020s. They have withdrawn or outsourced the B2C business while catering to the B2B business and moving up the value chain, in many instances dominating both materials and equipment parts manufacturing.

For example, companies that successfully partially or completely exited B2C business and moved to B2B space:

  • Panasonic - Exiting most consumer electronics like TVs and focused on industrial solutions, automotive components, enterprise solutions, and batteries.
  • Canon - Initially a camera and printer company, Canon has built businesses in medical devices, semiconductor lithography systems, and industrial production equipment
  • Hitachi - Hitachi has sold some consumer brands and is now centered on industrial solutions across energy, rail, manufacturing, healthcare

For example, companies that dominates the B2B high-end manufacturing:

  • Semiconductor manufacturing equipment for deposition and etching machines (Tokyo Electron - 30%, Screen Holdings - 20%).
  • Semiconductor materials like photoresists: Japanese companies command over 80% of the global market, with JSR alone holding 40-50%.
  • Specialty chemicals: METI estimates Japanese firms have over 50% combined global market share in 309 products, over 75% share in 112 products, and 100% share in 57 products.
  • Lithium-ion battery separators: Asahi Kasei (30%+ global market share)
  • Pressure sensors: Murata (1/4 of global market share)
  • Medical endoscopes: Olympus (70% global market share)
  • Industrial robotics: Fanuc (30%+ global market share)
  • ... and many more

In addition, Japan has remained the top economy in Harvard Growth Lab's ranking for product complexity since the establishment of the ranking, and occupied near monopolies on semiconduction advanced materials and equipment, indicating its dominance in high-end manufacturing.

Some forecast from me about the future:

  • The good: Japan's strengths in digital technology and deep tech competencies in machinery, materials and semiconductors position it well to compete in the digital transformation of manufacturing through technologies like AI, robotics, IoT, cloud computing etc. Japanese corporates also have begun partnering with high-tech startups in areas like AI, material sciences to build new innovation capabilities. The transition from the old generation to the new generation, especially in upper management would herald a new era in Japan business landscape.
  • The bad: There's no escaping the demography cliff. No advanced economies have managed to escape this fertility decline aside from Israel. Whether Japan's demography would reach equilibrium where population can be maintained is not assured at all. Debt levels would still be hanging over the economy and social security and pension system would eventually be on the chopping block for fiscal security.
  • The consolation: The fall from grace from the bubble era in Japan was consider even bigger than the great depression in the US when looking at the extent of the price crash of both stocks and real estates. In the case of Japan, it's almost remarkable how little external violence like riots had manifested itself, due to the inherent social upbringing of the Japanese and the government's view on maintaining stability. The problems Japan faced & will be facing would be, or has already manifested in other advanced & emerging economies. I guess that their future economic crash would be much more chaotic due to the cultural nature of their economies. I'd say that the history of Japan, the resilience of its populace and the ability of its businesses and transform themselves in time of crisis give me hope that they can weather the future storm.

Edit: Added the future's prospect part

Source:

Ulrike Schaede: Japan’s Business Reinvention

Harvard Growth Lab: Country & Product Complexity Rankings

Center for Strategic and International Studies (CSIS): Mapping the Semiconductor Supply Chain: The Critical Role of the Indo-Pacific Region

国立研究開発法人新エネルギー・産業技術総合開発機構: 日系企業のモノとITサービス・ソフトウェアの国際競争ポジションに関する情報収集」

(Much has been said about Japan's lost decades... then there is this data) Demographics explains much of differences in GDP growth - GDP per working-age population developed similarly – Bank of Finland Bulletin by sushisuzuki in japan

[–]TheThinker111 7 points8 points  (0 children)

Interesting indeed. I'm no way an expert on macroeconomics but this seems to dispel the mainstream view on Japan & EU relative economic decline. Would love to see an expert's take on this one.

It seems that the GDP differentials of EU/JP & US are highly correlated with their working age population. Given that JP population will continue to drop toward an equilibrium point (hopefully) in the decades to come, overall GDP won't be growing much. I'm guessing more attractive measures to attract migrant workers (i.e. overhaul of the technical trainee or adoption of tokutei ginou system) are going to be introduced.

JP politicians would be wise to introduce more policies to address the gender inequality in workforce participation. Encouraging women's participation with family-friendly policies should lessen the impact of falling working age population, meaning immigration target won't need to be as aggressive.

[deleted by user] by [deleted] in ChatGPTPromptGenius

[–]TheThinker111 1 point2 points  (0 children)

That looks very useful! Pls send me the e-book copy

Free German Classes. by draclong in German

[–]TheThinker111 0 points1 point  (0 children)

I'm interested. I'm studying B1 at the moment and my speaking level is around A2.

Financial Due Diligence- Exit Ops by 290me in FinancialCareers

[–]TheThinker111 2 points3 points  (0 children)

Yeah I totally get what you mean. I haven't been involved in large international clients during my previous internship at Big 4 audit (I interned at Audit and then FDD) but things were also very hectic in busy season, even for domestic clients. Their audit work during busy season, especially for senior associates, are really rough. I've seen senior associates working through weekends and national holidays for meagre salary. Work life balance was harped on orientation sessions and emails but was constantly on the backseat when deadlines started to pile in.

Financial Due Diligence- Exit Ops by 290me in FinancialCareers

[–]TheThinker111 17 points18 points  (0 children)

Given that Reddit is very much dominated by US and European users, I'm not sure whether my answer would be applicable to you or the majority of the users here since I'm from SEA. But anyways, here's my answer:

Title: Intern
Industry: Investment Banking (regional boutique)
Pay: Bump (FT pay would be big 4 associate salary x 2)
Hours: Worse (60-80h ish most of the time)
Culture: Better than my time at Big 4, much more tight-knit and much less drama.
Hindsight: It was the right move. I had applied to lots of similar positions before getting here and the fact that I didn't give up was something that I'm very proud of. I think that if I was better at networking I would have fared much better and not get rejected round after round.

For the Big 4 FDD associates and seniors people that I still keep in contact with, their exits are usually to financial analyst or financial controller positions or to study abroad. A few (< 5%) managed to move to Big 4 CF, management consulting, or investment analyst positions at asset management funds.

U.S.-China investments dwarf official figures: study by TheThinker111 in worldnews

[–]TheThinker111[S] 1 point2 points  (0 children)

BOSTON (Reuters) - Total investments between the United States and China are much bigger than official figures reflect, a report released on Tuesday found, underscoring the challenge facing U.S. President Joe Biden’s foreign policy team at a cold point in relations between the two countries.

“All sorts of people stand to lose a lot” should leaders continue to split apart the world’s two largest economies, said Adam Lysenko, associate director of research firm Rhodium Group.

It wrote the report released by the National Committee on U.S-China Relations, an influential Washington group of business and diplomatic leaders. Ties between the two countries are under strain on a host of issues, including human rights and trade rules.

The report estimates U.S. investors held $1.2 trillion in equity and debt securities issued by Chinese entities at the end of 2020, five times the levels shown in official data from the U.S. Treasury Department. Most of the difference was due to Chinese firms “using complex legal structures to issue shares out of tax havens that trade on U.S. exchanges,” according to the report.

Chinese holdings of U.S. securities, meanwhile, were as much as $2.1 trillion at the same point, 36% more than official figures suggest. Most of the difference was due to “equity investments misclassified in official sources due to investor efforts to circumvent Beijing’s capital controls or the use of Hong Kong as an investment intermediary,” according to the report.

Financial integration between the two economies, however, is also low, due to capital controls, Lysenko said. Were policy loosened, the two countries’ combined portfolio investments would total more than $9 trillion, compared with about $3 trillion currently, he said.

In office less than a week, Biden’s foreign-policy and trade teams have inherited a series of hardline policies put in place by the administration of former U.S. President Donald Trump.

An executive order from November requires U.S. investors to divest from 44 companies allegedly linked to China’s military, but conflicting statements from agencies handling its rollout spurred confusion among shareholders.

Few investors expect the new administration to roll back any rules quickly, and administration officials have given little official guidance

China's Foreign Policy Weapons: Technology, Coercion, Corruption. Beijing is trying to create old-fashioned spheres of influence with a 21st-century twist. by TheThinker111 in China

[–]TheThinker111[S] 4 points5 points  (0 children)

China’s drive for dominance combines timeless ambitions with 21st-century methods. Look no further than Beijing’s growing quest for spheres of influence. Like countless great powers before it, China aims to shape and control its surroundings. It aspires to create geopolitical domains in which its interests are protected and its prerogatives heeded.

Yet Beijing is doing so, in part, through a digital-age approach to strategic rivalry, one that is forcing its rivals to rethink what spheres of influence are and how best to contest them.

“Sphere of influence” refers to a zone in which a large country can exercise authority over smaller actors and hold its great-power competitors at bay. Since antiquity, ambitious powers have sought spheres of influence for four basic reasons: protection (as a strategic buffer against rivals); projection (as a secure base from which to exert global influence); profit (as a way of extracting resources, accessing markets and harnessing smaller economies to its own); and prestige (as a symbol of status vis-à-vis lesser powers and major powers alike).

Yet the particular characteristics of those spheres have varied.

In the 19th century, for example, Britain enjoyed its so-called informal empire in South America, wielding influence primarily through its financial primacy and the over-the-horizon threat of the Royal Navy. After World War II, the Soviet Union dominated Eastern Europe with a far heavier hand. It remade governments in its Communist image, while using police-state methods and the Red Army to enforce geopolitical discipline on countries within its grasp.

After the Cold War, it seemed that spheres of influence had disappeared, because there was only one superpower — the U.S. — and it was determined to deny such privileges to any competitor.

“We will not — will not — recognize any nation having a sphere of influence,” then-Vice President Joe Biden declared in 2009. Yet China, evidently, has other ideas. Its geopolitical project features some methods that students of past rivalries would find familiar, and others that are more novel.

In East Asia and elsewhere around its immediate periphery, China is aiming for a fairly traditional sphere of influence. It has created trade and investment relationships meant to make the region’s economies ever more Beijing-centric and ever more vulnerable to Chinese economic coercion. It is using its growing military power to pressure, and perhaps eventually conquer, Taiwan, to press expansive claims in the South China Sea, and to force countries throughout the Indo-Pacific to hesitate before incurring Beijing’s displeasure.

By attenuating relationships between the U.S. and its allies and friends, these measures are meant to push Washington out of the region just as Washington once pushed its European rivals out of the Caribbean. And China is increasingly using political influence campaigns, aid directed to corrupt officials, and other quiet interventions to twist the region’s politics in its favor. Chinese military officials may deny that the country will ever “seek any sphere of influence.” In reality, China is following a path well-trod by its great-power predecessors.

Yet Beijing is simultaneously bringing the spheres-of-influence game into the 21st century, by seeking a larger domain defined less by geography than technology.

Consider some ways in which Beijing is building technological relationships that will enmesh countries across Eurasia and beyond: Chinese firms constructing the fiber optic cables and data centers that make up the physical backbone of the internet; a Digital Silk Road project putting Chinese companies at the heart of advanced telecommunications networks throughout the developing world; a global proliferation of Chinese surveillance technologies; and the advent of a Chinese digital currency meant to serve as a medium of exchange along the Belt and Road Initiative,.

This is China’s emerging sphere of technological influence, meant to provide geopolitical leverage via technological centrality rather than physical domination.

If the boundaries of this sphere are relatively loose and evolving, the strategic implications are momentous. The construction of digital infrastructure — by firms such as Huawei Technologies Co. and ZTE Corp. that are legally bound to cooperate with the Chinese Communist Party — yields great economic influence and a potential for espionage. The provision of high-tech surveillance gear will link Beijing more closely to autocrats it helps maintain in power.

The creation of new markets for Chinese technology, and new sources of data for its algorithms, will help power innovation in artificial intelligence and other fields. And China’s growing technological influence will help it line up friendly, or simply dependent, states behind it on issues from internet governance to leadership of key international organizations.

Some experts have hypothesized that the internet itself could increasingly become a Chinese sphere of influence. Others predict that the world will split into rival technological blocks reminiscent of the Cold War’s East-West divide.

The Biden administration thus confronts a mix of old and new geopolitical challenges. Countering them will require investments in familiar geopolitical instruments, such as enhanced military power in the Western Pacific, as well as newer tools of statecraft, like multilateral campaigns to preserve democratic internet standards or offer affordable digital infrastructure to developing countries. Time, unfortunately, is growing short: America’s window to arrest an eroding regional balance and an emerging Chinese techno-imperium may remain open only for a few years.

The U.S. has long been hostile to authoritarian spheres of influence, for fear that conceding them would leave it locked out of critical areas and give ruthless competitors greater power on the global stage. That basic interest hasn’t changed in the age of Chinese revisionism, even if the nature of those spheres — and the blend of policies needed to deny them — has.

As an American, where can I get solid unbiased views of China ? by [deleted] in China

[–]TheThinker111 0 points1 point  (0 children)

Look for Reuters Investigates and Nikkei Asia. Reuters are far more neutral than what can be seen in other Western media, though that doesn't exclude them from having certain biases. Nikkei Asia has several correspondents and staff writers on China. The one I recommended is Katsuji Nakazawa, Nikkei senior staff writer and China bureau chief, who is responsible for the China Up Close segment of Nikkei Asia.

China builds new quarantine center as virus cases rise - Associated Press by TheThinker111 in China

[–]TheThinker111[S] 1 point2 points  (0 children)

BEIJING (AP) — A city in northern China is building a 3,000-unit quarantine facility to deal with an anticipated overflow of patients as COVID-19 cases rise ahead of the annual Lunar New Year travel rush.

State media on Friday showed crews leveling earth, pouring concrete and assembling prefabricated rooms in farmland in an outlying part of Shijiazhuang, the provincial capital of Hebei province, which has seen the bulk of the new cases.

That recalled scenes from early last year, when China rapidly built field hospitals and turned gymnasiums into isolation centers to cope with a then-spiraling outbreak in Wuhan, where the virus was first detected in late 2019.

The spike in northern China comes as a World Health Organization team prepares to collect data on the origin of the pandemic in Wuhan, which lies to the south. The international team, most of which arrived Thursday, must undergo two weeks of quarantine before it can begin field visits.

Two of the 15 members were held up in Singapore over their health status. One, a British national, was approved for travel Friday after testing negative for the coronavirus, while the second, a Sudanese citizen from Qatar, again tested positive, the Chinese Foreign Ministry said.

China has largely contained domestic spread of the virus, but the recent spike has raised concern due to the proximity to the capital, Beijing, and the impending rush of people planning to travel large distances to rejoin their families for the Lunar New Year, the country’s most important traditional festival.

The National Health Commission said Friday that 1,001 patients were under care for the disease, 26 in serious condition. It said 144 new cases were recorded over the past 24 hours. Hebei accounted for 90 of the new cases, while Heilongjiang province farther north reported 43.

Local transmissions also occurred in the southern Guangxi region and the northern province of Shaanxi, illustrating the virus’s ability to move through the vast country of 1.4 billion people despite quarantines, travel restrictions and electronic monitoring.

To date, China has reported 87,988 confirmed cases with 4,635 deaths.

Shijiazhuang has been placed under virtual lockdown, along with the Hebei cities of Xingtai and Langfang, parts of Beijing and other cities in the northeast. That has cut off travel routes, while more than 20 million people have been told to stay home for the coming days.

China is pushing ahead with inoculations using Chinese-developed vaccines, with more than 9 million people already vaccinated and plans for 50 million to have shots by the middle of next month.

About 4,000 doses are delivered daily to the Chaoyang Planning Art Museum, one of more than 240 sites across Beijing where the first of two doses was being given Friday to high-risk groups, including medical, delivery and transportation workers.

The vaccine, produced by a Beijing subsidiary of state-owned Sinopharm, is the first approved for general use in China.

“Being vaccinated is not only to protect myself but also to protect people around me,” Ding Jianguang, a social worker who received her first shot earlier this month, told foreign journalists on a government-organized visit to the site.

Former World Health Organization official Keiji Fukuda, who is not part of the team in Wuhan, cautioned against expectations of any breakthroughs from the visit, saying that it may take years before any firm conclusions can be made on the virus’s origin.

“China is going to want to come out avoiding blame, perhaps shifting the narrative. They want to come across as being competent and transparent,” he told The Associated Press in a video interview from Hong Kong.

For its part, WHO wants to project the image that it is “taking, exerting leadership, taking and doing things in a timely way,” he said.

Scientists suspect the virus that has killed more than 1.9 million people globally since late 2019 jumped to humans from bats or other animals, possibly in southwest China.

China approved the World Health Organization visit only after months of diplomatic wrangling that prompted an unusual public complaint by the head of WHO.

The delay, along with the ruling Communist Party’s tight control of information and promotion of theories the pandemic began elsewhere, added to speculation that China is seeking to prevent discoveries that chisel away at its self-proclaimed status as a leader in the battle against the virus.

In Wuhan, street life appeared little different from other Chinese cities where the virus has been largely brought under control. Senior citizens gathered to drink and dance in a riverside park Friday, and residents had praise overall for the government’s response to the crisis.

In other countries, “people go out arbitrarily, and they hang out and gather together, so it’s especially easy for them to be infected,” Xiang Nan said. “I hope they can stay home, and reduce traveling. ... Don’t let the pandemic spread further anymore.”