What kind of economic shock will Abes resignation cause?

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 What kind of economic shock will Abes resignation cause?


At present, the novel coronavirus pneumonia epidemic in Japan is still grim, especially in the one or two quarter of the year, especially in the case of GDP. Some people believe that Abes resignation at this time will have a great impact on the Japanese economy.

Stock market reaction was obvious, Tokyos two major stock indexes fell

Abes current term will end in September 2021. In September 2006, Abe served as Japanese Prime Minister for the first time; in September 2007, Abe resigned for health reasons; in December 2012, Abe took up the post of Japanese prime minister again, and has been in power since then. Shinzo Abe has been in office for 2799 consecutive days on Monday, breaking the record set by his great uncle, Rongzuo Sato, half a century ago, for the longest consecutive prime minister in Japan.

After the news of Abes resignation, two major Japanese stock indexes fell significantly. The Nikkei 225 index rose slightly at the beginning of the day and suddenly turned down in the afternoon. It quickly fell below the 23000 mark from 23300 points and dropped to 22595.79 points, or more than 700 points. As of August 28, the Nikkei 225 index closed at 22882.65, down 326.21 points, or 1.41%.

The Tokyo Stock Exchange stock index closed at 1604.87, down 11.02 points, or 0.68%. On the same day, most of the 33 industry sectors in the main board market of Tokyo Stock Exchange fell, while those of information communication, storage and transportation, electrical equipment and other sectors fell ahead.

In the foreign exchange market, the exchange rate of the US dollar against the Japanese yen fell sharply from about 106.8 to about 106.0. As of 15:45 Beijing time, the dollar was at 106.03, down 0.5%.

The effectiveness of abenomics peaked and the Japanese economy was hit hard by the epidemic

After taking office at the end of 2012, Shinzo Abe proposed a series of new economic policies, known as abenomics. Abenomics is summarized as three arrows: the first arrow is the financial policy based on quantitative easing, which sets the inflation target at 2% and implements unlimited monetary easing; the second arrow is the fiscal policy focusing on expanding public expenditure; the third arrow is the economic growth policy focusing on revitalizing private investment, and the target proposed at that time is to increase private investment to 70 trillion within three years Yen.

Japans economy has experienced lost 20 years before. Abes first task after taking office is to get Japan out of the situation of economic stagnation and sustained deflation. Therefore, abenomics works very quickly in the early stage of its implementation, especially the first two arrows. It promotes the rapid depreciation of the yen to drive export growth. Since 2012, Japans GDP has shown a sustained positive growth for the first time since the mid-1990s.

However, since 2016, the effect of easing monetary policy has peaked. In 2016, the Bank of Japan launched a negative interest rate policy, which has continued to this day. However, the inflation target has not been achieved, the market confidence is insufficient, and there are few monetary policy measures after the implementation of negative interest rates. Some people think that Japan has fallen into a liquidity trap.

In the case of narrowing the space of monetary policy, the Japanese government has increased fiscal stimulus, but the negative effect of this measure is that the government is heavily in debt. Japan has the highest proportion of public debt at present. According to IMF data, Japans total debt accounted for 236.6% of GDP in 2018 and 238% in 2019, which has exceeded twice the total economic volume.

This year, affected by the new crown epidemic, Japans economy is even worse. On August 17, data released by the Japanese cabinet showed that Japans GDP fell by 7.8% month on month in the second quarter of this year, with an annual rate of 27.8%. This is the third consecutive quarter in which Japans GDP shrank, the largest since records began in 1955. In the fourth quarter of 2019, Japans real GDP fell by 1.8% month on month. In the first quarter of this year, it fell by 0.9% month on month. In addition, the decline of 7.8% in the second quarter was equivalent to erasing most of the growth since abenomics. In its latest world economic outlook released in June this year, the IMF listed Japan as one of the countries with deep recession. It is estimated that Japans GDP will drop by 5.8% in 2020.

In order to combat the economic impact of the epidemic, the Japanese government launched two large-scale stimulus plans in April and may this year, with a total amount of US $2.2 trillion, equivalent to 40% of Japans GDP. The plans include cash payments to families, loans to small businesses hit hard by the epidemic, and massive direct spending. This will undoubtedly further raise Japans debt level, which the IMF expects to increase to 268% in 2020.

What impact will Abes resignation have on Japan and its surrounding economies?

Guan Zhaoyu, an associate researcher at Chongyang Institute of finance of Renmin University of China, told Beijing news that the economic policies implemented by Abe since taking office in 2012 cover a wide range of contents, including macro-economic policies, financial policies and some industrial policies. However, under the background that the global financial crisis in 2008 has seriously impacted most countries, Japan has not actually walked out of the economy The state of the doldrums.

In addition, during the eight years since Abe came to power, his economic policy has been more international in scope. Whether it is the trans Pacific agreement (TPP) vigorously launched by Abe, the free trade agreement signed by Japan, the United Kingdom and the European Union, and the regional comprehensive economic partnership (RCEP), the promotion of a series of inter regional economic cooperation is actually Abes attempt to change Japans external environment to some extent.

Guan Zhaoyu pointed out that the impact of Abes resignation on Japans economy mainly focuses on three aspects. Firstly, in the post Abe era, whether the abenomics policy will be continued; secondly, whether the successor will continue to promote the policy that attaches more importance to international economic and trade strategy like Abe; in addition, we need to pay attention to whether the superimposed impact of political changes and the pressure on Japans economy will be affected when the Japanese economy has been hit hard during the epidemic.

Guan Zhaoyu said that Abes sudden resignation actually brought about a chain reaction. All Abes efforts over the past eight years - the concentration of power created by integrating domestic political forces - may face collapse, and after that, power will face decentralization and transfer. In this case, domestic politics may affect Japans foreign policy-making to a large extent, which is bound to reduce the space for foreign economic policy, and also transmit to the economic and trade relations between Japan and its neighboring countries. This will bring some uncertain factors to RCEP and the negotiation of China Japan South Korea Free Trade Zone, which is the impact of Abes sudden resignation on neighboring countries.

On December 24 last year, the Eighth China Japan ROK leaders meeting was held in China. In an interview with CCTV, Shinzo Abe said that he expected China and Japan to strengthen cooperation. He pointed out that aging and environmental issues are important issues facing both Japan and China, and the two countries must cooperate. In addition, the two sides can also strengthen cooperation in the field of innovation, so as to contribute to the economic development of the two countries and the region.

The total trade volume between China and Japan has also continued to grow in recent years. According to the data of the General Administration of customs, since 2016, the total value of Chinas import and export commodities to Japan has maintained a positive growth, from 1.82 trillion yuan in 2016 to 2.17 trillion yuan in 2019. Japan is Chinas fourth largest trading partner.

After Abes resignation, whether his successor can continue to deepen the economic cooperation between China and Japan and where the Sino Japanese relations will go are also a major issue of concern from all walks of life.

(function(){( window.slotbydup=window .slotbydup||[]).push({id:u5811557,container:ssp_ 5811557, async:true }Source: Lin Qihui, editor in charge of Beijing News_ NB13068