Japan; a look at the growth strategy of the world's 2nd largest economy

Sep 17 (Reuters) - Japan's new government is crawling out of the worst post-War recession ever, but its ability to spend is growing more limited.

Newswire: China and friends! From all around the world

"Chinese officials size up long-term potential in Sino-African
economic collaborations" --
[http://english.people.com.cn/90001/90778/90857/90861/6746690.html]

Although Sino-African trade had weakened during the global financial
crisis, Chinese and African enterprises could strengthen their
collaboration and emerge from the downturn together, Chinese trade
officials said at a trade fair Wednesday. Huang Xiwen, chief of Jilin
Province's Commerce bureau, said at the 2009 China Africa Economic and
Trade Cooperation Seminar that local enterprises had been vigorously
developing business with African companies. He said 19 local companies
had invested ..

China and France seeking to develop bilateral ties --
[http://english.people.com.cn/90001/90776/90883/6746718.html]

"China and France seeking to develop bilateral ties"Vice Premier Wang
Qishan said Wednesday China had always valued its relationship with
France, and said he hoped the two countries could work together to
promote bilateral ties. Wang met Jean-David Levitte, a diplomatic
adviser to French President Nicolas Sarkozy Wednesday. Relations had
developed smoothly on the whole since the two countries forged
diplomatic ties 45 years ago, he said. Wang said he hoped the two
countries could handle the relationship from a strategic and long-term
...

"China, Laos vow to reinforce friendly ties" --
[http://english.people.com.cn/90001/90776/90883/6746699.html]

China and Laos reaffirmed their determination to further advance their
traditional friendly relations as senior leaders of the ruling parties
of the two countries met in Beijing Wednesday. He Guoqiang, member of
the Standing Committee of the Political Bureau of the Central
Committee of the Communist Party of China (CPC), met Sisavath
Keobounphanh, chairman of the Central Committee of the Lao Front for
National Reconstruction. Sisavath Keobounphanh, 81, has visited China
many times over t ...

"Japan-China ties to be further promoted following DPJ takes reins:
senior DPJ official" --
[http://english.people.com.cn/90001/90776/90883/6746694.html]

The Democratic Party of Japan (DPJ) Secretary General Katsuya Okada
said Wednesday that the DPJ will continue to advance Japan-China
relations after taking the reins of government. Okada made the remarks
at a symposium to mark the 60th anniversary of the founding of the
People's Republic of China following the DPJ's landslide victory over
the ruling Liberal Democratic Party in the lower house election
Sunday. "The DPJ has, as always, attached great importance to
Japan-China relations and ...

--
Sent from my mobile device

Japan DPJ Election Win Brings ‘Bloodless Revolution’ -- Bloomberg

Aug. 31 (Bloomberg) -- The Democratic Party of Japan swept to power
for the first time as the nation's voters turned their backs on half a
century of single-party government that failed to reverse economic
stagnation and spiraling welfare costs.

The DPJ, led by 62-year-old Yukio Hatoyama, captured at least 306 of
480 lower-house seats, public broadcaster NHK said. Prime Minister
Taro Aso indicated he would resign as head of the Liberal Democratic
Party, which lost almost two-thirds of its lawmakers in a complete
reversal of the last election in 2005.

"This is a bloodless revolution, the first transfer of power from one
party to another in postwar Japan," said Tomoaki Iwai, a political
science professor at Nihon University in Tokyo. "The DPJ now faces the
tough task of delivering on its promises and showing the Japanese
public it can change the system."

Hatoyama, who quit the LDP in 1993, has pledged to revive an economy
emerging from its deepest recession since World War II by boosting
child-care spending, cutting taxes and curtailing the power of
bureaucrats. His grandfather founded the LDP in 1955 and became the
first of that party's 22 prime ministers.

"This election has been all about changing the government," Hatoyama
said in a nationally televised press conference. "Everything starts
now."

...

To acess the full Bloomberg article please visit:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aAQ0qltevVQI

--
Sent from my mobile device

Newswire: South-South Cooperation

[Peru – Brazil] - Eletrobrás sets sights on Peruvian generator – BNAmericas

Brazilian federal power holding company Eletrobrás (NYSE: EBR) is planning to buy a Peruvian generator to participate in an upcoming hydro auction in Peru, company CEO José Antonio Muniz Lopes told journalists. The executive declined to say which generator Eletrobrás was looking to acquire but said the purchase was essential for the Brazilian holding group to operate in Peru.


[Peru – Brazil] – Brazil, Peru Work Out Details of Hydro Plants – Latin American Herald

Energy ministers from Brazil and Peru announced details of plans for several hydroelectric plants to be built in the Andean nation, saying after a meeting that 80 percent of the energy generated by the stations would go to Brazil and the rest to Peru.

Both partners will have the right to sell their respective energy quotas to other South American countries, Brazilian Mines and Energy Minister Edison Lobao said Friday after a meeting in Rio de Janeiro with his Peruvian counterpart, Pedro Sanchez.

The first five power stations – to be built in Peru’s eastern lowlands at a cost of between $12-15 billion – will generate a combined total of 6,000 megawatts annually once they come on stream in 2015.


[Peru – South Korea] - Peru, S Korea examine tomorrow progress of APEC bilateral agreements – Andina

Peru and South Korea examine on Wednesday the progress of the bilateral agreements achieved by Presidents Alan Garcia and Lee Myung-bak during the summit of leaders of the Asia Pacific Economic Cooperation (APEC) held in Lima in November 2008, the Korean Embassy reported. "The agreement achieved last year includes mutual cooperation in oil, mineral and natural gas sectors", the Ambassy reported.


[Peru – Japan] - Peru, JICA to invest US$ 23.3 million in 6 new docks in Peru – Andina

Peru’s Government and the Japan International Cooperation Agency (JICA) will invest 70 million soles (around 23.7 million dollars) in the construction of 6 new docks located along the Peruvian coast, reported today Production Minister Mercedez Araoz.


[Venezuela – Russia] - Russia Promotes “Energy Alliance” with Venezuela – Latin American Herald

Prime Minister Vladimir Putin said Tuesday he was ready to promote an “energy alliance” of global oil giants Russia and Venezuela, and confirmed his willingness to study Caracas’ requests for additional arms purchases.

Putin told Venezuelan Energy Minister Rafael Ramirez that Russia will employ “the most modern equipment and technologies” to carry out plans for cooperation with Venezuela in the oil and gas sector.


[Venezuela – Brazil] - Brazil To Export Coffee Immediately to Venezuela – Latin American Herald

The accord was struck by representatives of the ministry and the state-run firm Cafe Venezuela last Friday and represents $4.1 million in revenue for small producers and family cooperatives in southeastern Brazil.

Latino Ex-pat workers hit in Japan

[Reuters] -- May 15 - Latino workers in Japan have been offered money by the Japanese government to leave after losing jobs.

Japanese Housewives in control of $14.9 trillion in savings

Japan never ceases to amaze me. When I first traveled to the island I was an angry, impatient New Yorker. I decided to stop over in Japan to visit a old friend of mine on route to Beijing for a semester abroad.

I had no idea what I was getting into. I spoke a bit of Chinese, but no Japanese, and had prepared little else besides a youth hostel in Tokyo for my first week in the country.

I got off the subway at Asukasa, drenched in sweat from some of the worst August humidity I have ever felt in my life—and trust me I have felt bad humidity... The beginning of the Amazon in the province of San Martin, Peru or the swamps of Louisiana do not compare.

After twenty minutes of wandering I was drenched from head to toe in sweat. I walked into a laundry mat and before I could talk three workers quickly helped me inside. They handed me a glass of water, a cold washcloth and offered me a seat.

The workers got on their store computer, found map quest directions and then proceeded to carry my bags for twenty minutes up some intense hills, across ridiculous intersections and all the way to the door of my hostel. They then refused a tip. I did not even know what to say, except, “how do you say thank you in Japanese?”

"Ari-ga-to"

Today, Bloomberg ran a interesting story on the return Yen carry trade, which is when traders in Japan take out cheap loans at Japan's 0.1% interest rate and invest it in higher yielding foreign bonds where the interest rate is higher.

The article talks about the return of “housewives.” Housewives you say? As it turns out, housewives usually manage investing their family savings. Japanese families currently have a incredible $14.9 trillion in savings!

Ron Harui of Bloomberg writes:

“They’re seeking higher returns after the central bank cut its benchmark interest rate to 0.1 percent. Investors who sell the yen against the euro would earn 3.4 percent by year-end, compared with 0.25 percent in one-year yen-denominated deposit accounts, data compiled by Bloomberg show."


Question: If Japan has all this capital sitting on the side lines, would it not be wise to figure out a way to invest a higher portion of it in Japan?

Japan's central bank is essentially stuck in a catch 22. On one side the low interest rate stimulates growth by encouraging lending. However, if the money being lent is invested internationally in foreign bonds that yield a higher rate of return than a Japanese savings account, the true goal maintaining low interest rates is not being achieved.

The way things stand at the moment, Japanese savers are technically helping fund Australia's huge budget deficit through the purchase Australia's higher yielding bonds.

I'm sure the matter is more complicated than my gross simplification. I welcome comments from someone more familiar with Japan's financial sector.

Newswire -- Testing out mobile posting (Go blackberry)

"Argentina’s 2008/09 crop exports forecasted to drop 56%"

Argentina’s cereals and oil seeds exports are forecasted to drop to 13.8 billion US dollars in this 2008/09 crop which means 56% less compared to the 31.9 billion of the 2007/08 crop according to a paper from the Argentine Agrarian Federation, FAA.

Mercopress


"China and India post manufacturing gains"

Surveys of industry executives registered positive results for the first time in months in April, offering evidence the global economy may be through the worst of its sharpest slump in six decades.

FT - Asia Pacific


"China becomes main destination of Brazilian exports ahead of US"

China has become the main purchaser of Brazilian exports during the first quarter of this year displacing United States which held the position undisputed for decades, according to reports in the Sao Paulo press based on the latest statistics.

MercoPress


"China denies anti-Mexican discrimination"

Foreign ministry insists confinement of scores of Mexican nationals over fears of the H1N1 flu are correct procedure, not bigotry.

FT - Americas


"Japan in $100bn aid offer to neighbours"

Japan offered $100bn yesterday in financial help to Asian states hit by the financial crisis in a move aimed at shoring up its regional economic leadership, despite...

FT - Asia Pacific

BoJ revises down growth forecast -- FT Asia

The Bank of Japan expects growth to contract by a significantly greater margin than it forecast just two months ago as the world’s second largest economy continues to suffer from a collapse in demand.
“Economic conditions in Japan have deteriorated significantly,” the BoJ said in a statement on Thursday as it lowered its forecast for the economy to a 3.1 per cent contraction in the year to next March, rather than a previously expected 2 per cent decline in growth.

Click here to access this FT Asia article

Japan's giant stimulus package - Reuters Video

Apr 10 (Reuters) - The Japanese government has announced $154 billion in new spending, in Japan's biggest ever stimulus package.

China's currency swaps help expand yuan's reach -- Caijing

Li Tao and Zhang Man of Caijing, a financial news publication of China report on the rising influence of China's currency the Renminbi (yuan). The two write:

The cross-border exchange of regional currencies has become an important way to defend against the global economic downturn and promote trade. To circumvent a shortage of dollars and other currencies, as well as reduce exposure to exchange rate volatility, developing countries in eastern and central Asia as well as South America have implicitly recognized the Chinese yuan as a currency for settlements and, in some cases, reserves.

China is willing and eager to help ease liquidity in the financial system... as long as it gets some justified financial clout out of it.

So far China has established the following currency swaps:


Dec 12 - China and South Korea sign a 180 billion yuan currency swap framework agreement.

Jan 20 - China and Japan sign a 200 billion yuan currency swap between the People's Bank of China -- and the Honk Kong Monetary Authority.

Feb 8 - China signs a currency swap agreements with Malaysia's central bank for 80 billion yuan

March 11 - China signs a 20 billion yuan deal with the National Bank of Belarus

March 24 - China signs a 100 billion yuan swap deal with the Central Bank of Indonesia

Click here to read more on this topic from Caijing

Not good news people... Japan's exports plunge by 49%

Japan's exports plunged by a whoppin' 49% in February, the sharpest decline since at least 1980 reported Bloomberg.

In response this depressing data, Japan seems to be preparing yet a new stimulus package. Finance Minister Kaoru Yosano said that a new package of as much as 20 trillion yen ($203 billion) is “not out of line.”

Now let me ask you... What would you do if you where a fictional Anime character who's name is Naruto. You come equipped with cool ninja moves just to let you know...

Hopefully you would be able to earn some money showing off those secret skills on the streets because its obvious no one one in the world economy really wants to buy your exports. Good luck and may the force be with you all: Honda, Toyota, Panasonic, Sony, Fuji, etc.

Naruto

Here are some articles from major global news on the release of this depressing economic data from Japan.

Bloomberg -- Reuters -- Wall Street Journal -- AP

Japanese Firms to Develop Products Specifically for Latin America

TOKYO – Several Japanese companies, including Fujifilm and Panasonic, will develop new low-cost products specially designed for emerging markets in South America and Asia, the daily Nikkei said Monday.

Faced with the fall in demand in its principal markets like the United States and Europe, Japanese firms have decided to target middle-class consumers in emerging economies like Brazil as a way of dealing with the global economic crisis, Nikkei said.

Click here to access this full story from the Latin American Herald

Venezuela Launches Joint Venture to Develop Offshore Gas Fields

CARACAS – Venezuelan state energy company PDVSA announced the signing of a multi-billion-dollar joint venture with Portuguese, Argentine, U.S. and Japanese firms to develop massive offshore natural gas fields.

The venture, in which PDVSA will have a majority stake, will design, build and operate two liquefaction plants at the Gran Mariscal de Ayacucho gas industrial complex in the northeastern state of Sucre, as well as pipelines to transport the fuel to those facilities.

Click here to access this full article from the Latin American Herald

Peru and Japan to discuss Free Trade

Peru and Japan will begin free-trade negotiations next month, Peruvian Foreign Minister Jose Garcia Belaunde said yesterday.


After meeting with Japan's Foreign Minister Hirofumi Nakasone in Tokyo, Garcia Belaunde told Lima-based Radioprogramas, "The Global financial crisis won't hinder talks for an agreement."

I'll be sure to keep readers up to date with developments on this topic as they surface in the next few months. The politics of the global crisis aside, it would be a good idea from a macro-economic perspective to encourage economic cooperation between Peru and Japan.

Many people don't realize that next to Japan, Peru has the largest fishing fleet in the Pacific Ocean. Correct me if i'm wrong about this fact for it could be outdated. I believe it still holds true, especially because most official statistics don't account for the fact 2/3 of Peru's fishing vessels are part of the extra-legal economy in Peru, thus not officially included in most economic data.

Russia-Japan inaugurate liquefied natural gas plant on Sakhalin Island on Wednesday

Yesterday, only a few days after agreeing to supply oil to China for 20 years in exchange for $25 billion in loan guarantees—Russia, opened it first liquefied natural plant meant to supply fuel to East-Asia.

Russia... the titan of natural gas has profited handsomely over the years from exporting energy to Europe.

However, tensions between the West and Russia have relatively high since last summer when Georgia and Russia entered a state of war (see map), with each side still debating who started the hostilities.

Map of the Caucasus Region

Much of the tension over Russia's influence in the Caucasus (the region Georgia is located) stems from the fact that Georgia is home to the only pipeline that transports energy to Western Europe that is not “Made in Russia.

After the slew of political and regional disputes with Europe, Russia is turning east for new partners. The move makes logical sense. The economies of East-Asia, for example Japan and South Korea, are powerful consumer states that coincidentally have virtually no natural resources.

New York Times journalists, Andrew E. Kramer describes the moves as being “prompted by both the promise of a marriage of Russian resources with Asian manufacturing, and Russia's financial desperation as interest from Western banks and investors dries up.” (Click here to access Kramer's full article from the NY Times website).

The natural gas plant, build on Sakhalin Island north of Japan greatly expands Russia's natural gas empire. Likewise, Asian resource starved countries like China, Japan and South Korea see this as an opportunity to invest cheaply in natural resources their economies will desperately need once the global economy recovers.


Click here AFP News video on this topic.
"Russia launches major gas project on Sakhalin"

Copper hits 2-month high on China demand hopes -- Reuters

What's weighing on metal prices? -- article highlights

--> China is buying up copper from domestic bonded warehouses
--> Weak economic data reports from Japan and Europe
--> Copper, aluminum stocks on LME continue to rise

Seems as if the China factor outweighs the negative data from Europe. Chinese demand in my opinion will not be enough to push metals, in particular copper back to record setting highs of 8 months ago.

None the less, as reported in this Reuters article people remain cautiously bullish.

Click here to access the full Reuters article

Made in Japan ponzi scheme anyone?

The Straits Times of Singapore reported this morning a Japanese business executive has been accused of defrauding thousands of investors of at least $1.4 billion usd.

Kazutsugi Nami, 75-year-old chairman of now bankrupt bedding supplier L&G K.K., was arrested last week for allegedly swindling at least $1.4 billion by promising 36 per cent annual returns.

Kazutsugi Nami, chairman of now bankrupt bedding supplier L&G K.K. of Tokyo,
speaks to the press before being arrested by police. -- PHOTO: AFP

Nami was able to fool investors by building first gaining their confidence, and then proceeding to introduce his own version of electronic money called 'enten'. Nami was able to manage to get his clients to use the company money to purchase products at bazaars and online shopping centers.

According to the Sports Nippon tabloid in Japan, Nama had hopes to extend his scheme abroad. In Japan many of Nami's victims are elderly people who where happy to see their savings remain at the same level, even if they where spending 'enten.'

"Because of the financial crisis, countries will adopt the enten in three years' time,' he told reporters before his arrest last week. 'I will start shining and become world famous. I will certainly move the world." Said Nami.

Japanese launch job hunt rallies - Reuters

Feb 5 - Cheerleaders are being used to drum up enthusiasm among students poised to enter the jobs market in Tokyo.

Such pep rallies are more traditionally held to drum up enthusiasm and support for political causes and sports teams but several colleges and vocational schools in Tokyo are using them to build up job hunting momentum among their students.

Paul Chapman reports. -- Reuters

Asian stocks advance as Japan and Australia widen efforts to combat recession

Feb. 3 (Bloomberg) -- Asian stocks rose for the first time in three days, led by bank and technology shares, as Japan and Australia widened efforts to revive economic growth and memory- chip prices surged.

Click here to access the full article

China's economic growth slows to 6.8%

According to official data, released from the Chinese statistics bureau in Beijing, gross domestic product grew by 6.8% in the 4th quarter of 2008, a sharp decline from the 9% average gain realized in the first three quarters of 2008.

Goldman Sachs, Thompson Reuters Data Stream PBOC

- China: Total Loans 2008
- China: Industrial Production 2006-08
- China: Real GDP 2000-2009

This is big news for the global economy, especially for commodity markets. Adding to the damages was further news from the region.

Japan saw its exports decline 35% in December, the biggest drop since 1980.

South Korea released official figures, stating its economy has contracted by 5.6% in the 4th quarter of 2008.

Singapore has said it will tap into its reserves from the first time ever, with the president giving his “in-principle approval” to fund a $4.9 billion relief package.

News is not all that good, to say the least. Check out the press from a few major news sources.

China's economy slows sharply, worse yet to come – Reuters
China's economic growth slows – BBC
China's GDP grows by seven-year low of 9% in 2008 - Xinhua
China's GDP growth slowed to 6.8% in fourth quarter (update 2) – Bloomberg
S'pore to tap reserves – The Straight Times
South Korea braces for first recession in 11 years – The Business Times Malaysia
Japan's exports plunge as recession deepens – AP via Yahoo News
Miners to be hit as China's slowdown worsens – The Australian