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William Pesek
William Pesek is a Tokyo-based journalist, former columnist for Barron’s and Bloomberg and author of “Japanization: What the World Can Learn from Japan’s Lost Decades”. Twitter: @williampesek
Japan has squandered its chances to properly raise interest rates, abandon the weak yen policy and put strong reforms in place.
China’s struggles are injecting uncertainty into its neighbours and forcing reassessments when the geopolitical scene is already strained.
The bet global punters made was that winning a third term in a landslide would catalyse Modi-the-reformer as never before. That’s now moot.
Joe Biden’s decision to double down on Donald Trump’s China tariffs harks back to policies that might have worked in the 1980s, and is a loser. He was on the right track with building US economic muscle at home, and he and the country would be better served by focusing on that.
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Wall Street is talking up India’s emergence as a key engine of global economic growth, amid high hopes for Modi’s third term. On Xi’s watch, China’s self-inflicted wounds from “zero Covid” chaos to the tech crackdown have only added to India’s appeal
Nothing would stabilise China’s economy faster than a weaker yuan. But this risks triggering a currency war across Asia and beyond, and setting back China. Let’s hope Xi resists the urge.
Donald Trump, the presumptive Republican nominee for president, is already indicating his return to the White House would make life even worse for China. Japan would deeply feel these shock waves and be at risk of Trump tariffs itself, and its frenzy to get out ahead of this possibility is telling.
Beijing has shown no urgency at its NPC meeting to reboot or stimulate its economy in a way that would support its target, dashing the hopes of its neighbours worried about the drag from an economic giant fighting decline.
The Japanese economy is a study in contrasts, with a roaring stock market and record corporate profits set against stagnant wages and shrinking GDP. Decades of prioritising a weak yen over structural reform have deadened Japan’s animal spirits and hurt its attractiveness as an investment destination.
Embroiled in political scandal, deeply unpopular and increasingly irrelevant, Kishida cannot push the economic reforms Japan needs to be a counterweight to China.
In 2015, Xi’s men pulled out all the stops to halt the financial haemorrhaging. This time, amid debt and property crises and doubts over reforms, investors wonder why Beijing has been dragging its feet.
China risks making the same mistake as Japan in treating the symptoms of the economy’s descent into deflation, rather than the causes.
While Fumio Kishida’s approval rating has dipped dangerously, the lack of a capable opposition means he is unlikely to lose his premiership. However, expectations for his time in office are low as a looming recession, inflation and absence of needed reforms are sapping what little political capital he has.
If Beijing wants to get growth back on track, it needs to succeed in key areas where Japan failed following its bad-loan crisis. These include being bold, treating the causes not the symptoms, avoiding policy blunders and having the political will to act
Stand-offs between Japan and currency traders over a weak yen are nothing new, but the stakes now are higher than ever and have global implications. If Tokyo policymakers aren’t careful, their dithering could spark devaluations across Asia and a backlash from US politicians struck with election fever.
Between China’s property crisis, continued monetary tightening by central banks, surging oil prices amid the Israel-Hamas war and US political dysfunction, it’s hard not to wonder if next year might already have been written off by investors.
For all the talk of China’s urgent need to take action to avoid Japan-like lost decades, Japan itself should take heed of lessons from the past 25 years. Both Tokyo and Beijing must boldly undertake reforms, encourage consumption over saving and tackle inefficiencies to weed out ‘zombie’ companies and sectors.
With the Dow giving up its 2018 gains, the stock market is fizzling as proof that Trump’s policies are winners
One of the first rules of investing is never to put every egg in one basket, especially one whose designs for the future conflict with yours
Indian economist Raghuram Rajan, who correctly called the subprime crisis, is worried about growing imbalances and the possibility of another global shakeout
A spike in US debt yields is contributing to chaos from India to Indonesia to the Philippines, where currencies are cratering.
Shinzo Abe is poised to become Japan’s long serving prime minister on Thursday, a chance to fulfil his dream to revise the pacifist constitution. Yet Donald Trump’s trade war and slowing demand may get in the way, writes William Pesek.
