Week of August 29, 2016
Politics:
Politics:
- "I cannot help but say that it is an unnatural state of affairs that the important neighbours of Russia and Japan, which surely have unlimited potential, have to this day not yet concluded a peace treaty,” PM Shinzo Abe said yesterday.
"Putting an end to the unnatural state of affairs that has continued these 70 years, shall we not together carve out a new era for Japan and Russia going forward?," the premier said. Japan and Russia, or better PM Abe and President Putin. Both men met at Vladivostok last night and it seems that there is at least a serious effort to come to a peace treaty with a solution for the islets held by Russia since 1945 (Nikkei). - The G-20 started today in Hangzhou, China and obviously all is geared by the Chinese government to have a smooth summit without political fall-out. So Chinese foreign Minister Wang visited his counterpart Kishida on August 24 in preparation. "Wang maintained a fixed expression on his face while being photographed. When he faced reporters after the meeting, however, Wang showed a gentle expression with a shadow of a smile”, according to the Nikkei. It symbolises the uneasiness between China and Japan when every gesture and word is scrutinised for a meaning. In this article also a summary of the Chinese - Japanese developments when it comes to the territorial dispute of the Senkaku islands.
- Meanwhile Japan’s Defense Ministry has asked for a record spending budget for 2017, with an increase of 2.3%. North Korea that launched a rocket from one of its submarines and that reached the Sea of Japan, but above all a very assertive China are the main drivers behind this increase. Expected budget will be JPY 5 trillion or EUR 43 bln (Bloomberg). Just to compare, the Dutch spending on defense is EUR 347 mln. Dutch nominal GDP is EUR 762 bln, Japan: EUR 3.9 trillion.
- In Japan capital expenditure ex software rose 3.1 percent from a year earlier (forecast 5.5 percent), company profits slid 10.0% during the second quarter, the biggest drop since 2011. Domestic demand is sluggish but that seems to be the only way the economy could make pace again.
- And there are more worries as it becomes clear that Japan’s biggest investor in its listed stocks is … the government by means of the Bank of Japan and other institutions like to Government Pension Investment Fund, the world’s largest pension fund. "The BoJ’s JPY 6 tln buying programme (since July 29, 2016), which was limited to just JPY 450 bln per year when it began in 2010, makes the central bank larger than any other investor bloc on the Japanese market." See in this Financial Times article also some of the names of companies the BoJ invested in: semiconductor test equipment maker Advantest, apparel maker Uniqlo, electronic parts maker Taiyo Yuden: all “blessed” with a firm government stock holding.
- For those who are looking for a deep analysis of what is happening Japan’s economy, here a super long read on debt development, the BoJ’s balance sheet, negative interests and the result of the fiscal stimulus programs … not very upbeat reading but useful anyhow.
- Fintech is making its inroads into Japan, in nearly every aspect from cattle growers to white collar employees looking to get a better insight in their monthly budgets, fund raisers, bitcoin applications: Japan is getting used to new forms of financing and the new tools that are part of it (Nikkei).
- This is also true for Japan’s megabanks. MUFG, Mizuho Financial Group, Sumitomo Mitsui Financial Group: they are all in a rapid process of transformation by using Fintech. "Japan passed legislation in May to let banks buy fintech businesses. As major banks with huge customer bases and abundant funds tap the creativity and speed of innovative startups, the Japanese fintech market could undergo exponential growth”, according to the Nikkei.
- What happened with TEPCO or Tokyo Electric Power Company that suffered heavily from the Fukushima disaster? The company has net debt of over 5 times its earnings before interest, tax, depreciation and amortisation, and a shaky credit rating; its shares have suffered heavily, the company received massive government support and now there is the deregulation of the electricity market since some months, that made 4% of its private consumer leave. Actually, the company may be doing better than expected if it knows how to cope with the new electricity law and since there is a chance that some of its nuclear installations will be put into action again (Financial Times).
- In this Japan Times article I read about the public cost of dealing with the aftermath of the March 2011 nuclear accident at Fukushima: by the end of March 2016 JPY 4.2 tln (or 85% of Japan’s new defense budget.) "The cumulative total at the end of last March, including costs for radioactive decontamination, reactor decommissioning and compensation payments to affected people and organisations, translate into about ¥33,000 per capita”, (The Japan Times).
- Marriage in Japan ... the Economist has an article about it. The decline of marriage has been accompanied by a big rise in the number of unmarried couples living together, only around 1.6% of Japanese couples cohabit in this way. So in Japan fewer marriages means fewer babies - a calamity for a country with a shrinking and ageing population. Only 2% of Japanese children are born outside marriage, compared with over 40% in Britain and America.
- Where do the Japanese people come from? Perhaps a strange question considering the above, but I mean: what is their origin? Big question for many Japanese but now there is some evidence that can trace the Japanese people back. A new DNA research supports the conventional theory that the origins of modern Japanese are a mix of people who lived in Japan during the Jomon Pottery Culture (c. 8000 B.C.-A.D. 300) and those who later came from continental Asia. And the Jomon people have DNA-wise a correlation with the people from Hokkaido (the Ainu) and from Okinawa (Ryukyu) (Asahi Shimbun).
- And where does the Chinese civilisation come from? Highly decorated Chinese scientist Sun Weidong thinks from … Egypt, reports Foreign Policy. If true that would be a remarkable discovery that would rewrite the Chinese history at least for a part. You see: the world is more and longer interconnected than we often think.