What does Japan want from Africa?

3-25-japanafricaOne of the most profound changes to the world in the past decade has been vast Chinese investment into Africa. It has exceeded 100 billion US dollars and the money has stimulated development across the continent, lifting millions of Africans out of extreme poverty.

Yet Chinese state media says that the country’s investment into Africa declined by 40 percent last year. That is partly as a result of slowing economic growth in China but also because of lower commodity prices.

So could Japan step in to fill the shoes of China? The Chinese investment still far exceeds that of Japan. But this year, Japan is promoting projects in Africa which will benefit its own international businesses.

For example, Marubeni recently announced that it plans to build a new power station in Egypt – a classic example of a big infrastructure project backed by loans by the Japanese government. It is also the kind of project where Japan and China are seen as rivals.

Foreign expertise in power generation is welcome in Africa, where electricity shortages are a serious problem.

Shinzo Abe will talk about Japan’s role in Africa when he visits Kenya later this year. And in late August, Japan will host the TICAD (Tokyo International Conference on African Development) in Nairobi.

This Japanese activity in Africa can annoy China. There have been occasions where the Chinese have tried to stir up anti-Japanese sentiment among the Africans. And as the Japan Times recently pointed out, China’s propaganda ministry tries to use the African media to present China in the best possible light.

However, both the Japanese and the Chinese want peace and stability in Africa because that helps safeguard their investments. Japan places special emphasis on quality growth and human security.

This week, I asked the CEO of Sumitomo Corporation for Europe and Africa, Mr Kiyoshi Sunobe, if the Japanese view on Africa was changing because of the slowdown in Chinese investment.

He told me that fall in commodity prices was a much more significant influence on Japanese investment decisions.

His answer reminded me that the prices of oil and metals such as iron ore, copper, and platinum all declined substantially last year and the people who will feel the impact the most are the people living in sub-Saharan Africa.

The World Bank Economic Outlook report for the region says its economic activity decelerated from 4.6 percent in 2014 to 3.4 percent in 2015, the weakest performance since 2009.

Sadly for the Africans, that means the gains in income from abroad they have enjoyed in recent years will be very hard to maintain, regardless of any actions by China or Japan.

Leading economist tells Shinzo Abe of challenges to Abenomics

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Not many leaders call on international experts to bring them bad news. Yet Japan’s prime minister Shinzo Abe this week invited one of the world’s leading economists to talk to him “candidly” about Japan’s situation in the world.

The message from the Nobel Prize winning economist Joseph Stiglitz was not encouraging.

“A few years ago, no one would have anticipated that the global economy would be as weak as it is today,” he said at the prime minister’s office. “When economic circumstances change, you have to adapt your policy.”

Professor Stiglitz also urged Mr Abe not to raise Japan’s consumption tax, or sales tax. That is a contentious issue as it is closely linked to Abenomics. A higher consumption tax should mean more government income. But it can become a drag when the economy is close to recession.

Mr Abe’s meeting with Professor Stiglitz was not primarily about tax or domestic Japanese politics. It was more about how the changes to the global economy will affect Japan. In particular, the slowdown in Chinese growth and the knock-on effect of low energy prices.

Mr Abe was not the only person listening to Professor Stiglitz. The Economic and Fiscal Policy Minister Nobuteru Ishihara, the Chief Cabinet Secretary Yoshihide Suga and the Bank of Japan Governor Haruhiko Kuroda all attended the seminar.

More experts are due in Japan for similar top levels meetings soon, including another world-class economist, Paul Krugman.

Japan’s leaders may be prepared to listen to the opinion of foreign experts but they do not find it easy to change their policies in the wake of their advice. That is partly because the the civil service is so slow at implementing policy change.

Foreigners who study Japan’s economy nearly always prescribe reform – sometimes radical reform. But resistance to reform is strong, particularly among elderly conservative Japanese people who support Mr Abe and his ruling party, the LDP.

The Economist magazine uses its voice to encourage more reform in Japan. This week, its analysis of Mr Abe’s political challenges warned that voters will blame him if the economy does not recover as he has promised.

The Economist believes that Mr Abe’s primary political goal is the reform of the constitution, in particular Article Nine which commits Japan to pacifism. It says in order to change this, Mr Abe needs the overwhelming support of both the upper and lower houses of the Japanese parliament. He could then put the issue to the country in a referendum.

But the Economist says that such a move would cause deep alarm among many Japanese people. That may not be a point of view that Mr Abe wishes to hear.

Fukushima anniversary leads to fresh debate on nuclear power

la-fg-japan-fukushima-robots-20160310-001“There is a saying in Japanese: put a lid on something that smells. Loosely speaking, that means hide a problem rather than deal with it.”

That was the comment made on a TV programme by Olivier Fabre of Reuters Television. His view, as an experienced journalist covering Japan, is that it is difficult to persuade people to speak openly on camera about painful experiences.

No recent experience has been more traumatic for Japan than the Great Eastern Japan Earthquake which occurred five years ago.

A reluctance among the Japanese to speak openly about the trauma has presented a challenge for the foreign journalists seeking to cover the event’s anniversary. What human stories can they tell if the humans don’t want to tell them?

In one report, the BBC’s Rupert Wingfield Hayes chose to focus not on the humans, but on animals.

He entered a home that had been deserted after the nuclear disaster and found it has been attacked by wild boars. The desolate scene looked like something from a horror movie. The boars were not shown on camera but the report showed the mess they had caused as they looked for rotten food in a broken refrigerator.

Other reporters spoke to people who had lost relatives or were forced to abandon their homes because of the nuclear disaster. CNBC interviewed Noshiyuki Kouri from Namie, a town just 10 km from the Fukushima Daiichi plant.

“I don’t know what to do,” he said.

“My kids and their families have no plans to return but my ancestors are buried here. I need to keep coming back to honour them and keep my home intact.”

The main issue covered by the media was Japan’s relationship with nuclear power.

A few days before the anniversary of the disaster, a court ordered the shutdown of two nuclear reactors which had previously been declared safe.

Naturally, this disturbed the Japanese, whose trust in the authorities was undermined by a series of mistakes and cover-ups at Fukushima.

The new shut down was especially worrying because the reactors in question had been restarted relatively recently. Their owner insisted they comply with rigorous safety standards.

Despite this setback, the Japanese prime minister Shinzo Abe told a press conference: “Our resource-poor country cannot do without nuclear power to secure the stability of energy supply while considering what makes economic sense and the issue of climate change.”

He said the government would “not change its policy”.

The New York Times showed some sympathy for Mr Abe’s position, pointing out that Japan is a rather small, mountainous country that has always been short of natural resources on its own.

Japan is the biggest importer of natural gas in the world and that is why the alternative of homegrown nuclear was always so attractive—before Fukushima.

However, the rebroadcasting on television of the terrible events five years ago will be a stark reminder to the Japanese of the risks involved with nuclear power in a country prone to earthquakes and tsunamis.

Japanese journalists claim they are bullied by the government

Japan's Prime Minister Shinzo Abe speaks during a news conference at his official residence in Tokyo, Japan, October 6, 2015. REUTERS/Yuya Shino

The prime minister of Japan is bullying journalists, according to one of the most experienced foreign correspondents in Tokyo.

Richard Lloyd Parry of the Times, who has written about Japan for more than twenty years, said Shinzo Abe and his government’s intimidation is causing newspapers and broadcasters in Japan to become “timid”. He said the situation is becoming worse.

His comments follow the departure of several leading broadcast journalists – Ichiro Furutachi, Hiroko Kuniya and Shigetada Kishii – who were noted for their tough line of questioning of politicians.

Mr Lloyd Parry told the Japan Now conference that the government has “been spinning pretty hard to get things reported their way. It’s the government’s job to try to tell the story their way – but it’s the job of the media to resist that.”

Another British paper, the Guardian, said the departure of the television reporters followed a warning by minister Sanae Takaichi that broadcasters which repeatedly failed to show “fairness” in their political coverage, despite official warnings, could be taken off the air.

“This is nothing but intimidation against broadcasters,” the Japan Federation of Commercial Broadcast Workers’ Union said in a statement. “[Takaichi’s] remarks represent a glaring misinterpretation of the law and we demand that she promptly retract her remarks.”

Richard Lloyd Parry of the Times said: “As a British reporter, you aim to heap embarrassment and shame on someone in authority and if you do so, you win admiration of your colleagues. In Japan, some reporters, as individuals, want to dig dirt and want to challenge power. But that is generally not true of the big media companies. They explain power rather than challenge power.”

However, scandals revealed by the press have led to two high level political resignations in Japan so far this year.

Firstly, Japan’s Economy minister Akira Amari stepped down after allegations of corruption appeared in the weekly Japanese magazine Shukan Bunshun.

A few weeks later, the same magazine reported that a politician Kensuke Miyazaki was having an extramarital affair days before his wife gave birth. That ruined his image as a caring family man, who was calling for laws to protect fathers who want to take time off work to care for their wives and young children.

Both resignations received extensive media coverage in the Japanese mainstream press and were picked up by the international media.
So although most respectable people say they do not believe all things they read in gossipy magazines like Shukan Bunshun, they hold considerable influence.

And their reporters cannot be described as timid when it comes to revealing the shady side of powerful people.

Watching Sumo can tell us about Japan’s economy

1200x-1Watching sumo on television can provide an insight into how the economy is faring, according to one of Japan’s top economists.

He senses positivity and optimism, in contrast to the negative and pessimistic reports about the economy elsewhere in the media.

The economic analysis of the sumo starts with the wrestling itself. Forbes informs its readers that last month, a sumo wrestler named Kotoshogiku became the first Japan-born wrestler in a decade to win a tournament after domination by Mongolian fighters.

“It was a great day for all people in Japan”, a Tokyo-based real estate dealer told Forbes.

The theory is that sporting success raises people’s spirits and makes them more willing to spend and invest. Plausible, but not particularly scientific.

However, the advertisements which are shown during a sumo match, appear to provide an indication of how companies spend their money.

Sumo is most widely watched on NHK, the national broadcaster which does not show advertisements. However, it does relay pictures from the wrestling ring, which show people parading around with banners.

Those banners, which are rather old fashioned, carry ads for comics, snacks and beer. They cost around $500 dollars each. NHK allows them to be seen on TV, even though it does not receive any income from them.

Akiyoshi Takumori, an economist at Sumitomo Mitsui Asset Management, believes that by counting the number of advertisements, investors can gauge whether executives are bullish on the economy and willing to spend their companies’ cash.

“The ads are like supplementary traffic lights to the main ones, regular economic indicators,” Mr Takumori  told Bloomberg. “If you watch them, you can tell whether the main lights will turn red or not.”

Away from the wrestling ring, the red lights were being flashed by Nomura, the leading bank. Its latest report clearly predicts another downturn in the Japanese economy, pushing it back towards recession.

Nomura says that although it expects the negative interest rate policy adopted by the Bank of Japan last month to have some effect in terms of weakening the yen, it is unlikely to provide a major boost to the economy, given such factors as the negative impact on earnings at financial institutions.

Do the Japanese live long lives because they are obedient?

B7uS1XYCIAASNlSWe know that the Japanese live long lives, with many people surviving beyond a hundred years of age. Is one of the reasons that they heed advice on how to live well?

Very often, articles in the international media present Japan’s ageing population as a problem. Some writers complain about Japan for its weak and feeble elderly, pointing out that the rising cost of healthcare for the old is an economic problem which leaves Japan with enormous debts.

So it was refreshing to read a much more positive editorial comment piece in the Times this week, entitled In 21st-century Japan, 90 is way too young to retire.

The article begins: “If you are still alive and fit at 93, you might as well do something with your time. This is part of what compels Jun Takahashi to keep taking his Cessna on joyrides round Mount Fuji.”

There’s a compelling portrait of the pilot in a series called Spirit and Spine ‘(Kitohone’) which provides in English the personal histories of Japanese seniors who continue to work actively.

Mr Takahashi is a lovely example of what I call Japan’s Powerful Old – a subject I made a series about for the BBC.

When it comes to the very old, Japan boasts 61,000 centenarians – four times as many as Britain. This longevity is an achievement that has followed the Second World War. Since, 1950 the proportion of people surviving to 100 has risen 600 fold. In Britain it has risen by a much lower factor of 140.

One of the things that struck me about the Times article was its suggestion that the Japanese may live longer than the British not because of genes but because of wise lifestyle choices.

The Times says “The Japanese are more willing than most to be lectured on public health.” It points out that in the longest lived prefecture in the country, Nagano, farmers have been asked to cut the salt content in their pickled vegetables, known as  tskemono.

Messages about having a healthy diet seem to be heeded, because Japan has a low obesity rate, even though there are an abundance of sugary snacks and potato chips on sale in vending machines and kiosks.

The value of regular exercise was entrenched in the Japanese mindset during the post war industrial boom with morning movement classes obligatory for workers of every grade. When Japanese firms tried to adopt such practices in their foreign plants, most westerners scorned and refused to comply.

And in Britain, when faced with advice to slim down and do more exercise, the resistance to being “lectured” remains strong. For example, the papers this week reported a study by Boston University which suggested losing weight in middle age would help people avoid Alzheimer’s disease in later life.

In an opinion piece in the Daily Telegraph that is designed to be amusing and ironic, Charlotte Leather says she will ignore the advice from the medical researchers because people who do exercise in their 40s are “airheads”.

“So, must I now, while I can still remember, get up at the crack of dawn, don the padded cycle pants and start spinning like a washing machine on full blast? Or do I take my mother’s advice and grow old gracefully, accepting that middle-aged spread is a little part of life and, well, a large part of my middle. Even if it ups my chances of dementia?”

The columnist is skilful in identifying the way in which many British people think about such issues.

One area where health advice does not seem to be particularly effective in Japan is smoking. The smoking rate among Japanese men is more than 30 percent (it is much lower among women). In the UK, it is about 19 percent.

However, while smoking in public places is allowed in Japan, here in Britain another step to reduce the level of addiction takes place next month, when tobacco branding is banned and cigarettes are sold in plain packaging instead.

European trouble may prevent prime minister Cameron’s trip to Japan

HMA-Official-Photo-website-348x448“If there is one thing that I want you to remember from this talk it is that the UK wants to have healthy growing partnerships with both Japan and China.”

That was the core message of the lecture which the British ambassador to Japan Tim Hitchens made to the Japan Society hosted by Nomura in London this week. He is an excellent communicator and his message was reinforced by an effective Power Point presentation.

The slides contained no words or numbers – only pictures. Many of them were pictures of Japanese people but Ambassador Hitchens also chose one very striking and famous image of a Chinese person: President Xi shaking hands with the Queen on his visit to London in the summer of 2015.

Prime Minister David Cameron said at the time that this was the start of a “golden era” in the relationship between Britain and China.

That caused disquiet in Japan, which has more in common politically with the UK than China. However, trade with China is far more important to the British economy.

The Ambassador announced that Prime Minister Cameron, the Foreign Secretary Philip Hammond and the Chancellor George Osborne are all planning to visit Japan in 2016. He did not give a date.

Mr Hitchens did not say this but my view is that at the moment, it would be difficult for Mr Cameron to leave Europe, where he is battling with other European leaders. He is also battling with cabinet colleagues over whether Britain should remain an EU member.

If a referendum goes in favour of a withdrawal, Mr Cameron’s credibility will be damaged and he may resign, according to the Financial Times. Most people expect the referendum to take place in June.

Britain’s politicians have little time to worry about Asia. Japan’s attention will also be elsewhere as Prime Minister Abe hopes President Xi of China and President Park Guen-Hye of Korea will visit Japan soon.

There may even be a trilateral summit but at prime minister level not at presidential level. If so, this would involve Mr Abe, Prime Minister Hwang Kyo-ahn of Korea and the Chinese premier Li Keqiang.

Ambassador Hitchens applauded Mr Abe’s efforts to improve relationships within the region. He himself will leave office at the end of the year but he has promised to return to the Japan Society to give an update on progress in 2017, by which time the political situation in Britain may look very different.

Minister quits and BOJ takes extreme steps to fight deflation

_87969094_87969093The resignation of Japan’s Economy minister Akira Amari has revealed the considerable influence of Japan’s gossipy weekly magazines.

Mr Amari told a press conference in Tokyo on Thursday that he is resigning.

He was under pressure following allegations of corruption made by the Japanese magazine Shukan Bunshun.

Shukan Bunshun is one of a number of weekly magazines which specialise in scandal. Most respectable people say they do not believe all things they read in them but a good story will be picked up by the quality newspapers and the Japanese broadcaster NHK.

In this case, the allegations, which were published last week, were that Mr Amari and his aides were given money and gifts worth twelve million yen by a construction company in return for favours linked to land ownership.

Mr Amari’s denial was less than robust. He said he did receive money but denied it was a bribe.

The international press concluded Mr Amari’s departure is a blow for Prime Minister Shinzo Abe, although some Japanese journalists wonder if it was part of a power struggle.

“This is possibly the biggest scandal the Abe administration has faced,” said the BBC’s Mariko Oi.

It turned out that Mr Amari, who said he was trying to fight deflation, resigned just a day before the Bank of Japan picked up another weapon in that ongoing battle.

On Friday it announced it would introduce negative interest rates for the first time.

That move is designed to persuade the commercial banks to lend more money to businesses and to encourage Japanese people to spend some of their savings.

This policy will run alongside the Bank of Japan’s existing programme of buying Japanese government bonds.

The problem is that as it does so, it amasses more public debt.

Professor Masanaga Kumakura from Komazawa University complained about this in an article, published in East Asia Forum, saying that Japan is sinking “in a sea of money”.

The Bank has already bought more than 300 trillion yen (about US$ 2.5 trillion) of bonds and has pledged to go on buying more until the rate of inflation rises to two per cent.

Professor Kamakura said that this misguided policy is based on an inaccurate view of deflation.

Elsewhere, in an article for Forbes, Bryan Rich suggested that the Bank of Japan now holds the steering wheel of the global economy.

He claimed its policies will be beneficial to investors because it wants Japanese stock prices to rise and it is also aiming for a weaker yen.

But like Professor Kamakura, he is concerned that Japan will run up more debt without a credible plan to repay it.

 

Chocolate taxis promise exam success

taxi2Japanese taxis are not actually made of chocolate but a few are painted in the colours of Kit Kat, the famous chocolate biscuit made by Nestle.

Kit Kat in Japanese sounds like kitto katsu, which could be translated as “sure to succeed”.  Nestlé Japan has teamed up with the Nishitetsu taxi company in Fukuoka Prefecture, Kyushu, to provide a lucky cab service called the Juken ni KitKat model, or the “Sure to Succeed in the Exam” model.

The driver offers chocolate snacks to passengers although he cannot answer all exam questions.

Still, it is a fun marketing approach and it reminded me of a promise made by another taxi firm, Hailo, that using their cabs will help passengers spend more time with their family.

Hailo encourages working mothers to use its cabs to quickly travel from work to home or to pick up their children from school. The company says this is part of its corporate social responsibility. It is also a way to expand its customer base.

Japan has a huge number of taxis, most of which are safe, clean and quiet. The driver is usually courteous. The doors open automatically and there is normally a box of clean tissues (or, if you are lucky, a Kit Kat).

Yet I have found many drivers who do not know the routes to famous destinations, such as the Ministry of Foreign Affairs or the Imperial Hotel.

To my eye, it also looks like a very inefficient business with long lines of empty taxis waiting outside stations or idling in entertainment districts.

This over-capacity means I have never had any difficult hailing a cab in Japan but apparently, many people prefer to use a smart phone to book because they think it is cheaper or more efficient.

So Hailo has developed a smart phone app to connect with the taxi fleet. It launched in London in 2011 and expanded to Osaka two years later. The CEO of the Japanese operation is Ryo Umezawa.

Umezawa san was born in Tokyo but spent ten years in the Philippines where he learned English. He became an entrepreneur at a young age and sometimes people tell him they do not believe he is a CEO and ask him to bring an older colleague.

“Studying abroad and learning English helped me see Japan as a foreign country,” he said and this perspective makes him a useful partner for the British.

“Japan is an island country and in many ways it is closed. So outsiders coming in need to show to the Japanese that they are committed,” he said.

“Japanese people tend to see foreign companies coming into Japan as black ships,” he explained, in reference to the black ships of the US General Perry which sailed into Tokyo Bay in 1853 and which forced Japan to trade with America – a classic example of gunboat diplomacy.

What about the language gap with the managers from his British partner company?

“I do not think it is necessary for everyone in Japan to speak English. After all, you can use the services of a professional translator although I do think relationship building may be harder if there is a language barrier,” he said.

“A lot of foreign companies turn to English-speaking Japanese people to help them. Yet those English-speakers may not keep up with their professional skills. Their skill set is more important than language.”

I met Umezawa san through Export to Japan, part of the British government’s Department of Trade and Industry. Its webcast was hosted by Steve Crane, CEO of Business Link Japan, who helps British companies enter the Japanese market.

Mr Crane said: “I spent the first six months telling Japanese people how they should do things because I thought I could teach them. Then I realised that I really needed to listen more and understand how they do things. When I started to listen more, business became much more successful.”

Tabloid paper claims elite Shinzo Abe is out of touch with real people

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Shinzo Abe does not understand what it is like to be poor, according to an influential tabloid newspaper in Japan.

It was dismayed by his comments about low-income families made in parliament this week. This added to the debate over the prime minister’s credibility at a time when experts are taking stock of his attempt to revitalise the economy.

Abenomics was examined in a special report called Japan and the World, jointly produced by the Financial Times and its owner, the Nikkei.

The FT’s respected economics correspondent Martin Wolf asked if the three arrows of Abenomics will deliver the revival Mr Abe promised. “It is, alas, unlikely,” he replied.

Mr Wolf believes that weak private demand within Japan itself is the main problem and he urged companies to use the profits they make overseas to stimulate the domestic economy. He also said an increase in consumption tax could encourage Japanese individuals to spend their savings.

That is not a view shared by Mr Abe’s political critics. They say raising the sales tax further would be discourage spenders and push Japan back towards recession. Mr Abe plans to increase the consumption tax to 10% in the spring of next year and according to NHK, he has said he will do this “as planned, irrespective of the business environment.”

Mr Abe’s apparent “lack of understanding” of the economic situation of ordinary people was a discussed in the popular magazine Nikkan Gendai. It reported Mr Abe’s comments in parliament about how a low income couple could be entitled to a tax break by combining the earnings of the husband with the salary of the wife’s part-time job. The magazine said his answer suggested he is out of touch with how much money real families earn. It said that Mr Abe is an elite and wealthy politician who does not understand his citizens.

Masamichi Adachi, an economist at JP Morgan, believes “Mr Abe is doing Abenomics 2.0 because Abenomics 1.0 was not going well at all. He should have started with Abenomics 2.0 first because the most crucial issue is the population issue”.

That is a reference to Japan’s falling population. One theory is that many Japanese people resist having children because they are so expensive, according to research by the University of Pennyslvania. It also says many people think motherhood can harm the professional status of women.

However, there was encouragement for Mr Abe in the Nikkei Asian Review.

It said that in the three years since the prime minister’s economic policies were rolled out, corporate Japan has achieved record earnings. Furthermore, unemployment has dropped to about three percent, the lowest of any developed country in the world.

The magazine says that: “Abenomics has given foreign investors plenty of reasons to be interested in Japan.”

The former head of the US Treasury Larry Summers agrees that Abenomics has made Japan a better place, although Mr Summers remains concerned about the lack of a normal inflation environment and he suggests that the Bank of Japan should now halt to its expensive quantative easing programme.

Mr Summers told the FT: “The next decade will be pivotal for Japan. We all hope that Abenomics – to borrow from Winston Churchill – will not even be the beginning of the end but the end of the beginning of Japanese renewal in the 21st century.”