The Impact and Effects of Changes in China's Economy
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119 TH YEAR NO. 41,672 ISSN 0289-1956 ©THE JAPAN TIMES, LTD., 2015 ‘Summer Davos’ Special Wednesday, September 9, 2015 Clockwise from top; The World Economic Forum’s Annual Meeting of the New Champions, dubbed Summer Davos, took place in Tianjin, China, in 2014. This year’s forum will take place in Dalian from Sept. 9 to 11. More than 1,500 participants from business, government, research and media from over 90 countries will gather to hold discussions on “Charting a New Course for Growth”; Dalian is a major city and seaport in the south of Liaoning Province; The venue for the forum, Dalian International Conference Center in Donggang CBD; Since 2007, Dalian has been hosting the Summer Davos in alternating years with Tianjin. istOCK, FLICKR/WORLD ECONOmiC FORUM The impact and effects of changes in China’s economy said. Additionally, the number of Chi- Kong have come to Japan, but less than Despite economic slowdown, experts predict nese tourists to Japan or the amount of 1 percent of Chinese have. As Chinese money they spend may decrease. get to know the quality of Japan, they upside for some areas of Japanese business Numbers of Chinese tourists have will visit and tell their friends about it, increased dramatically over the past he added. Minoru Matsutani it began consistently falling and has couple of years because of various fac- “Therefore, Japanese department STAFF WRITER hovered roughly between 7 and 8 per- tors such as increasing Chinese wealth, stores and the tourism industry as a cent since the middle of 2012. This year, the Tokyo Olympics in 2020, the desig- whole should continue to strengthen Since late August, China’s economy and the growth rates for the first two quar- nation of washoku Japanese food, as a hospitality geared toward Chinese,” stock prices have dominated headlines ters from January were 7 percent each. UNESCO Intangible Cultural Heritage Zhou said. worldwide. To back up Zhou’s argument that 5 or and the Japanese government’s efforts Both Seki and Zhou believe China is Chinese stocks plummeted about 6 percent growth is substantial, the esti- to promote Cool Japan. on course to become a mature econ- 30 percent over the course of a week mated growth rates for Japan, the U.S. Another risk is that investors may sell omy, amid new normal policies, and in late August, affecting bourses and the eurozone for this year are 1.1, assets in yuan and buy them in other thus what people spend money on will around the world. Investors, brokers 2.7 and 1.5 percent respectively, accord- currencies too quickly, causing the yen shift from home appliances, cars and and strategists hold a poor outlook for ing to the Global Economic Prospects to rapidly appreciate against the yuan, other hardware to entertainment and a China’s economy, something that will June 2015 Edition by the World Bank. Seki said. more comfortable standard of living. likely be a major topic of discussion To achieve new normal, China needs On China’s recent move in mid- Given such a situation, Japanese mak- during the Annual Meeting of the New to become a “normal” economy by August to reverse its currency policy ers may want to withdraw or scale down Champions, dubbed “Summer Davos,” international standards. Xi knows it from promoting a strong yuan to weak- their manufacturing operations in in Dalian. and is aggressively taking measures to ening the yuan, Seki said it is probably China, and Japanese service companies However, a plunge in stock prices and eradicate corruption and reform because China wants to dodge accusa- may have a chance to succeed if they slumping capital investment and con- national companies. tions of manipulating the currency mar- provide desired services, such as online sumption are “growing pains” for China, Such measures are partially blamed ket to keep the yuan strong. He also said shopping, Seki said. which, as Chinese President Xi Jinping for the economic downturn because China’s economy and stock prices have dominated headlines worldwide since the secondary reason is probably that Zhou said restaurants, hair salons said, is entering a state of “new normal.” eradication of corruption reduced con- August. AFP China wants to help exporters. and other life and culture-related Considering China’s huge economic sumption of luxury goods and reform- In this situation, what should Japa- industries will see increased demand in potential, Japanese companies should ing national companies increased constantly even with aggressive mone- on June 12, the index plunged about nese companies do? For example, major China, and Japanese companies have not panic and make a hasty decision of bankruptcies. tary easing as companies don’t know 42 percent. Japanese department stores, such as opportunities there. withdrawing or scaling down their Chi- Still, “this is a good thing in the long what to do with excessive amounts of Both Zhou and Seki agree that stock Mitsukoshi, Takashimaya and Isetan, Demand for extreme luxury goods nese operations, economists have said. run,” Zhou said, praising Xi. These cash except to use it to buy stock or other prices were excessively overvalued. have seen huge increases in sales from and services may not increase now The new normal is China’s economic moves work favorably to foreign compa- financial products, he added. “In my mind, exceeding 4,000 points Chinese tourists over the past year. To because they do not fit what the new state of maintaining a growth rate of nies, including Japanese ones operating “When companies with huge debts was dangerous territory,” Seki said. accommodate them, they have normal is aiming for, Seki said. around 7 percent. It is expected that in China, he added. start cleaning their balance sheets, they “Company earnings were getting worse increased their numbers of Chinese- Japanese carmakers will probably China’s economic growth will dip under Shinichi Seki, vice senior economist reduce capital spending and the econ- and stock prices kept going up only speaking employees, put up more signs succeed because Chinese demand will 7 percent this year. in the Economics Department at The omy will stagnate more and more,” he because there was nowhere else for the in Chinese and stockpiled products shift from large, expensive cars to safe, “OK, GDP growth may not be 7 per- Japan Research Institute Ltd., also mir- said, adding that this would follow the money to go.” favored by Chinese. Should they con- easy-to-drive cars, something Japanese cent this year. So what? 5 or 6 percent rors Zhou’s praise for Xi and his new same pattern as the bursting of Japan’s Chinese market overreaction spread tinue to do these things? carmakers excel at producing. would still be very substantial growth,” normal policies. He also believes China bubble in the early 1990s. to the world and Japan’s stock prices Both Seki and Zhou said yes and Zhou said manufactures still have a said Zhou Muzhi, a professor in the Fac- still has major economic growth poten- Amid these economic conditions — also plunged. The Nikkei 225 Stock Aver- agreed that Japanese companies should chance to succeed if they focus on ser- ulty of Economics at Tokyo Keizai Uni- tial, but the world’s most populous even though economists were predict- age dropped to 17,806.7 on Aug. 25, never stop taking such measures. vice. For example, Hitachi group is mak- versity. “Do Japanese companies still country has a risk of going through stag- ing the slump would be short-lived and down from 20,620.26 on Aug. 17, and The two economists said Japan is ing a great deal of money in its elevator have a chance to succeed in China? Yes. nation in the short term. necessary for future reform — it is fair to had hovered in the range between still a minor destination for Chinese business, and Chinese people choose Do more and more Chinese come to The biggest problem is an excessive say investors overreacted. 17,600 and 19,200 until Sept. 4. tourists and overseas travel itself is a Hitachi instead of domestic makers Japan for binge shopping? Maybe not in amount of debt in local governments The Shanghai Composite Index, the The negative impact on the Japanese minor entertainment option for them. because Hitachi has better maintenance the short term, but they definitely will in and companies, Seki said. benchmark index for Chinese stocks, economy may be short lived, but it will As they become wealthier, overseas services, he said. the long term.” “China is now in a situation similar to floated around 4,000 points in mid- definitely be felt. travel will become more and more “Not every manufacturer will slump China’s growth rate peaked at over 12 Japan’s right before the burst of bubble August and fell to around 2,927.29 on Japanese makers of factory equip- popular, they said. in China. Japanese companies must percent on a quarterly basis in 2010 fol- economy (in the early ’90s),” he said. Aug. 26. It had hovered around 3,000 ment and electrical components may Zhou pointed out that more than 10 become smarter as Chinese consumers lowing the global recession in 2009. But Capital investment has been declining until Sept. 4. From a peak at 5,166.35 experience sales drops in China, Seki percent of people in Taiwan and Hong will become smarter,” Zhou said. PAGE: 1 B2 THE JAPAN TIMES WEDNESDAY, SEPTEMBER 9, 2015 ‘Summer Davos’ special Will AI become a threat to future white-collar workers? Sayuri Daimon nies hope to take away technology that STAFF WRITER can help improve voice-agent apps, such as Shabette Concier or Siri, which Can a robot get into the University of answer verbal questions using informa- Tokyo, Japan’s most prestigious univer- tion culled from various sources, sity, by 2021? including Wikipedia.