The actual state of Japan viewed by Japanese Prime Minister Shinzo Abe
Wall Street Journal Editor in Chief Gerard Baker sat down with Japanese Prime Minister Shinzo Abe for an hour-long interview April 5, 2016 at Mr. Abe’s office in Tokyo. Following are excerpts from the interview, and we would like to bring it to the attention of TextileFuture readers
Japan is playing host to the Group of Seven summit of industrialized nations in May of this year in the Ise-Shima region. What can Japan do at the meeting to lead the world economy through its challenges?
Responding to the world economy will be the biggest theme of the Ise-Shima summit. The G-7 countries face the challenge that world growth is slowing. Furthermore, they face the fact that commodity prices have rapidly fallen, that there are large market fluctuations, that volatility has increased, and that productivity is falling across G-7 countries.
We are seeing events that shake economic activity and people, as well as reveal naked nationalism. Now is the time that the G-7 should work together and show leadership, and to clarify the vision and policies for the growth of the world economy.
First, let me talk about the demand side. I think there is significant global demand for strengthening economic foundations and improving quality of life. In developing countries, there is huge demand for industrial infrastructure such as roads, environmentally friendly infrastructure and telecommunications. In developed countries, there is a need to update old infrastructure and invest in infrastructure that takes the environment into account. I also think there is huge demand for infrastructure that can withstand natural disasters, as well as “soft” infrastructure, including the development of human resources. Against that backdrop, Japan can contribute funds and technology to build high-quality infrastructure
On the other hand, let me talk about the supply side. On the investment front, we see the need for improving productivity by promoting investment in innovation. Developed and developing countries need to further increase environmentally friendly investments, keeping in mind the Paris Accord. We need to ask countries such as China, which have excess supply capacity, for structural reforms.
Abenomics had initial successes, but recently the stock market is down, the yen is at its highest level since October 2014 and the Bank of Japan has had to move even more aggressively with negative interest rates. Has Abenomics failed?
Japanese markets have fluctuated significantly as world markets have moved based on fears about an economic slowdown in China, a fall in oil prices and the trend in U.S. interest rates. Japanese economic fundamentals are still solid. These past three years, nominal GDP has risen almost JPY 30 trillion (USD 270 billion). Gross national income has risen JPY 40 trillion. For two years, prices have risen, and the GDP deflator has been positive for eight consecutive quarters.
Looking at the current state of things, the jobs-to-applicants ratio is at its highest in 20 years. The jobs-to-applicants ratio is over one in 46 of the 47 prefectures and at a record high in seven prefectures.
We implemented a lower corporate tax starting this month ahead of schedule, putting it below 30 %. Considering that, and the fact that companies’ profits are at an all-time high, we have achieved a rise in base wages for the past three years straight. Some point out that Toyota gave out a smaller increase this year compared with last year. We have achieved three consecutive years of increase, and, in addition, the rate of wage increases at small and midsize enterprises is now higher than that of large companies. I want to make sure this continues.
In the contentious U.S. election, one thing all candidates from both parties seem to agree is that they do not like the Trans-Pacific Partnership trade agreement made by President Obama. What prospect do you see for getting TPP implemented?
The importance of the Japan-U.S. alliance will not change no matter who becomes president. This is the birth of an economic zone that has 40% of the world’s GDP, one that is protected by free and fair rules. Through it, the U.S., Japan and the other countries participating in TPP will achieve great profit and gain chances for growth.
I will refrain from commenting on the various candidates. In any event, the U.S. is truly the leader of the free world, and I am looking forward to such a leader being elected.
One of the areas where you and Mr. Trump might agree is on Japan’s security. He is saying—and, a lot of Americans agree—that the U.S. spends way too much of its energy and military resources defending other countries. He has said, as you have said, that it is time for Japan to take on a stronger role in its own self-defence. Is that something you could see continuing in the next few years?
The Japan-U.S. alliance has already been strengthened by the establishment of the peace and security legislation and the new Japan-U.S. defence guidelines. By strengthening the Japan-U.S. alliance, we will strengthen deterrence, and that will contribute to peace and stability in the region, not just Japan.
How far could this strengthening of the alliance go? The U.S. still has significant forces in Japan and a strong role in defending Japan and Korea. Could you see a situation someday when the U.S. does not have such a large presence in the region, and is Japan ready to take up responsibilities in that case?
I believe the American presence in the Asia-Pacific is necessary. It is my view that the U.S. emphasis on Asia is the right policy when the security environment is becoming increasingly severe, and I cannot conceive of any situation within the foreseeable future when the U.S. presence wouldn’t be necessary.
Japan provides bases for the U.S. within the framework of the Japan-U.S. alliance, and the Japan-U.S. alliance is the cornerstone for the peace and safety of the Asia-Pacific region.
I believe Japan’s provision of bases and the U.S. presence is benefiting not only the Asia-Pacific, but the U.S., as well as the rest of the world. That is because the peace and stability of the region is maintained by this presence.