Asian Economy and Regional Economy in What is the situation of industrial structure? ■国土のモニタリング

GDP (by industry)

GDP and Employment data shows that the share of the service sector has increased in resent years. The share of manufacturing and construction sector has decreased in term of GDP, and been flat in term of employment number.

GDP (by industry) Employment (by industry)

100% 100%

75% 75% other sector

service sector

50% 50% construction sector

manufacturing sector 25% 25%

0% 0% （year） 1970 1980 1990 1995 2001 2002 2003 （year） 1970 1980 1990 1995 2001 2002 2003 Asian Economy and Regional Economy in Japan What is the situation of industrial structure? ■国土のモニタリング Employment growth rate (by industry)

The number of employed persons throughout all industries has continued to decline since 1995 in both the rural and the three metropolitan areas. In particular, the number of persons employed by the manufacturing sector in both the rural and the three metropolitan areas has been decreasing since 1990s and the number of persons employed by the construction sector in both the rural and the three metropolitan areas has been decreasing since 1995. In contrast, although its growth has been dulled recently, the service sector has continued to hire since 1995 in both the rural and the three metropolitan areas. Number of employed persons in both the rural and the three metropolitan areas

（％） All industries （％） Manufacturing sector

20 20 15 the three major urban economic spheres 15 10 10 5 the rural economic 0 5 spheres -5 建設業 0 the rural economic -10 -5 -15 spheres -10 -20 the three major urban economic spheres （％） 1985→1990 1990→1995 1995→2000 -15 （year） 1985→1990 1990→1995 1995→2000 （year） （％） Construction sector （％） Service sector

20 the rural economic 20 the rural economic 15 spheres spheres 15 10 10 5 0 5 the three major urban economic spheres -5 the three major urban economic 0 spheres -10 -5 -15 -10 1985→1990 1990→1995 1995→2000 （year） -15 Note: 1985→1990 1990→1995 1995→2000 （year） The term three major urban economic spheres refers to the Tokyo ( Prefecture, Prefecture, Tokyo Metropolis, and Kanagawa Prefecture), ( Prefecture, Aichi Prefecture, and Mie Prefecture), and the Kansai (Kyoto Prefecture, Prefecture, Hyogo Prefecture, and Nara Prefecture). The term rural refers to any prefecture outside the three metropolitan areas. Asian Economy and Regional Economy in Japan What is the situation of the international competitiveness of Japanese manufacturing sector?

Growth rate of product shipment and number of establishments for manufacturing sector ■国土のモニタリング Product shipment data shows that both the rural and three major urban economic spheres indicate the same trend. Number of business offices in the manufacturing sector indicates that the number has declined in the three metropolitan areas and other urban employment areas. When it comes to the number of business offices by type of facility, the number of “factories, plants, and mines” has declined sharply in the rural and three metropolitan and rural areas since 1990s.

Growth rate of product shipment in the rural and three Number of new establishment in the manufacturing sector in the major urban economic spheres rural and the three metropolitan areas （％） （number） 10 12000 8 the three major urban economic spheres 6 10000 4 8000 the three major urban economic 2 0 6000 -2 Metropolitan Employment Areas in Rural area -4 4000 the rural economic -6 2000 Micropolitan Employment Areas in Rural -8 spheres -10 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 （year） 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 （year） Number of establishment in the manufacturing sector by type of facility Three major urban economic spheres Rural area （x10,000） （x10,000） 50 50 others

40 40 business office 30 30 which looks like a house 20 factories, plants, 20 and mines 10 10 business offices

0 0 1981 1991 2001 （year）1981 1991 2001 （year） Note: The term “urban employment area” is based in the definition of Kanemoto and Tokuoka’s “Metropolitan Area Definitions in Japan”. For this study, the term “Metropolitan Employment Areas" defines the DID population of the core is at least 50,000. The term “Micropolitan Employment Areas” defines the DID population of the core is at least 10,000 and less than 50,000. Asian Economy and Regional Economy in Japan What is the situation of the international competitiveness of Japanese manufacturing sector?

Proportion of value for import and export to for gross product by prefecture. ■国土のモニタリング

With the exception of Chiba and Saitama, net exports of the three metropolitan areas are positive, especially in Tokyo. Net export of the rural area is negative, which implies dependence on other region’s product and service.

Proportion of value for import and export to for gross product by prefecture (2002) (%) 120 Proportion of 100 value for export 80 60 40 20 0 -20 -40 -60 -80 Proportion of Export － import -100 value for import -120 Hokkaido Iwate Miyagi Yamagata Fukusima Ibaraki Tochigi Gunma Saitama Chiba Tokyo Knagawa Ishikawa Yamanasi Gifu Aichi Mie Shiga Kyoto Oosaka Hyougo Nara Shimane Tokushima Kagawa Ehima Kouchi Ooita Okinawa

（Note）The data of Aichi Prefecture is not open to the public. Asian Economy and Regional Economy in Japan What is the situation of the international competitiveness of Japanese manufacturing sector?

Growth rate of Asian countries. ■国土のモニタリング

After overcoming the economic crisis of 1997, Asian countries continued to expand, with China leading the way in investment, Korea and Taiwan in consumption, and Thailand in export. It is expected that a relatively high level of economic growth will continue until the year 2020. China, in particular, continues to be an attractive consumer market that is likely to exhibit 7 to 8 percent growth, and to achieve GDP per capita approaching the present level of Turkey by 2020. GDP growth rate in Asia (US＄) （％） GDP per capita in Asia (compared with 2001 levels for other countries) Expectation 100,000 14.0 HONG KONG LUXEMBOURG JAPAN USA 12.0 UNITEDKINGDOM 10.0 SINGAPORE CHINA 10,000 8.0 MEXICO ASEAN４ KOREA TAIWAN 6.0 NIES TURKEY 4.0 MALAYSIA JAPAN 1,000 2.0 THAILAND 0.0 Possibility CHINA （year） 100 86-90 91-95 96-00 01-05 06-10 11-15

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2005 2010 2015 2020 (year) 1981-85 16-2020 Contributions to change in GDP (by country) ％ THAILAND CHINA KOREA ％ TAIWAN ％ 15 ％ 15 15 12.0% 15 10.3％ 10 8.6％ 8.3% 9.1% 10 7.9% 7.3% 10 9.5% 10 0.4％ 7.5% 7.1% 5.7% 3.6％ 4.9% 5 4.7% 0.6% 5 5 5 0

0 0 0 -5

-10 -5 -5 -5 85-90 91-95 96-00 01-02 86-90 91-95 96-00 01-02 86-90 91-95 96-00 01 86-90 91-95 96-00 01-02

Private corsumptior ret Exports Ircrease ir stocks Gross fixed capital formatior Goverrmert corsumptior Statistical discreparcy Experditure or GDP

Note: 1. GDP growth rate for the NIES and the ASEAN4 were calculated using an exchange rate for the US dollar in the year 2000. (NIES: Korea, Hong Kong, Taiwan, and Singapore; ASEAN4: Indonesia, Malaysia, the Philippines, and Thailand) Predictions are from the Japan Center for Economic Research (except for the years 2001 to 2004) and “Asian Development Outlook 2003”(Asian Development Bank). 2. Predictions for GDP per capita are compiled on US dollar figures for GDP and United Nations predictions of population growth. Asian Economy and Regional Economy in Japan What is the impact of developing regional partnership between Asian economy and regional economy in Japan?

Amount of direct inward investment in Asian countries ■国土のモニタリング

Since the end of the 1990s, direct inward investment in China has outstripped that of other Asian countries, with leading investment coming from Hong Kong/Macao, United States, Japan, Taiwan, and the Virgin Islands.

Amount of direct inward investment in Asian countries Countries investing in China (accumulated from 1979 to 2002) （hundred （hundred million US$） million US$）700 600 600 ASEAN China 500 500 Others

400 Korea 300 400 Virgin Islands 200 300 Taiwan 100 NIEs Japan 0 200 1989909192939495969798990001022003(year) U.S.A.

Hong 100 Kong/Macao Major countries investing in China (based on actual implementation ’79-’02) （year） Hong Kong/Macao 0 2106 1990 1995 2000 2002 2003 U.S.A. Note: Japan 1. Figures for China given on actual implementation basis. Figures for other Taiwan countries and regions given on the basis of approved basis. Virgin Islands 2. All figures in all denominations have been converted to US$. 4492 403 3. Figures for Hong Kong/Macao and China shown separately Korea 366 U.K. 333 244 German 80107 150 oters

（ hundred million US$） What is the impact of developing regional partnership between Asian economy and regional Asian Economy and Regional Economy in Japan economy in Japan?

Amount of Japanese direct outward investment to Asian countries ■国土のモニタリング Although Japanese direct outward investment to Asia has declined since 1998, investment to China has been increasing. The number of M&A with Japanese-affiliated or Chinese company has also increased rapidly for entering the Chinese market. In recent years, we also begin to see cases where Asian companies acquire or invest in Japanese businesses. Figure2: Mergers and acquisitions by Japanese businesses Figure1: Japanese direct outward investment to Asia CHINA in China and Korea number of M&A （100 million US$) 0 5 10 15 20 25 30 35 40 45 50 55 60 65 14000 （year） 1998 12000 1999 2000 10000 2001 2002 8000 KOREA 0 5 10 15 20 25 30 35 40 （year） （件） number of M&A 6000 1998 1999 4000 2000 2001 2000 2002

（legend） M&A of Japanese company by Japanese company (including capital 0 participation) （year） M&A of local company by Japanese company M&A of Japanese company or Japanese-affiliated Company by local 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 company M&A of Japanese company or Japanese-affiliated company by the third ASIA-NIES ASEAN４ CHINA OTHERS country-owned company (such as Taiwan). Figure3: M&A activity of Japanese company by sector in China (2002)

Note: company to purchase(55companies) company to be purchased （30companies） Figure1: Since 1996 official data have been released by yen base, which is converted to （Five higher types of industry） （Rate％） （Five higher types of industry） （Rate％） dollars using the midterm average Interbank rate from the Bank of Japan. Machine 10.3 Electrical machinery 16.7 Figure2: Both items (a) and (b) indicate direct investment by Japanese companies general trading 8.8 Machine 10.0 seeking to enter the local market. Fiber 7.4 Iron and steel 10.0 Electrical machinery 7.4 Food 10.0 Carrier device 7.4 general trading 10.0 What is the impact of developing regional partnership between Asian economy and regional Asian Economy and Regional Economy in Japan economy in Japan?

International Trade in Asian countries ■国土のモニタリング

Throughout Asia, increased direct inward investment has led to increases in imports and export as well. In China, increased direct inward investment in electronics and telecommunications facilities has led to an increased proportion of imports and exports of those products. In Korea, increased direct inward investment in electric and electronics as well as in transportation equipment has resulted in increased exports of electrical appliances and automobiles.

electron an d communication Electrical facilities machinery China Metal 19% Korea and Chemical raw materials & 5% chemistry product paper Others appliances Breakdown of 13% 7% manufacture electron Breakdown of accumulated Fiber Others Machine accumulated direct inward / wood 33% 6% Foods 8% direct inward investment in 60% 4% Medicine 8% machine investment in the Chemical raw 12% 2% Machinery the manufacturing sector Exclusive facilities materials / manufacturing sector for for transport for 1999 to 2002 2% chemistry 1996 to 2002 9% product export・1990 export ・2001 export・1990 export ・2001 Electric apparatus Clothes / Fiber Fiber 14.2% 26.9% 22% Communication machinery Other production clothes / Fiber Electric 25.7% 10.6% 5.9% Others Others apparatus Others Others 38.4% Communicatio Electric apparatus 47% 12% 45.8% 59.3% 9.8% Automobile machinery Communicatio 4.2% 10.2% n machinery Electric apparatus Communication machinery Clothing / Fiber 3.1% er production Office machinery 8.9% Office Automobile 10% Office machinery 8.3% 8.9% Office machinery 10.1% machinery 5% 06% 9.0%

import・1990 import・2001 import・1990 import・2001

machine part Fiber Electric apparatus Oil / oil products Oil / oil products 11.1% 10.2% 16.4% 11% 17% Machines Communication 11% Electric apparatus machinery Fiber Electric apparat Others 14% 4.8% 7.0% 9% Machine Oil Others 48% Electric apparatus Others Others 56% Iron and steel 5% 3.8% 6.6% Office machinery 65.3% 53.5% 4% Synthetic resin Organic chemistry 4% product Synthetic resin product Natural gas 2.8% 5.7% 4% Communication O ffice machinery 3% Oil Communication machinery Communication 2.0% machinery 2% Iron and steel 5.5% Natural gas Machine parts 2% Organic chemistry machinery 1% 3% 5.4% 3% 3%

Note: Breakdown by industrial sector was not disclosed in China for 1998. Figures shown for China are accumulated direct inward investment from 1999 to 2002.