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Welcome at WView.net!
WView.net is the place in the Web of Martin Schulz and Mariko Atsumi.
Since we are living as professionals in Tokyo, the news, pictures, and articles on this page have a strong bias towards Japan.
But you will also find some stories from the rest of Asia, Europe, and the world.
BTW: Have a look at our photo-stories about (diving in) Micronesia (Kosrae, Yap, Palau), and some great places for skiing in Japan.
Mariko Atsumi, ARD East Asia Studio
Martin Schulz, Fujitsu Research Institute
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Article: The Fukushima Meltdown and the Global Renaissance of Nuclear Energy |
Posted by
Martin
Thursday, March 24 @ 01:33:32 CDT (92 reads)
Never before has a nuclear power plant exploded in front of the eyes of the world. This, and the fact that it has happened in one of the most technologically advanced countries with a sterling reputation for reliability and safety will certainly cause a major setback for the development of nuclear power as a low-carbon technology. Japan’s nuclear disaster struck at a time of international renaissance in nuclear power generation. Major emerging countries, with China and India at the forefront, were counting on the technology to better balance their huge energy needs while keeping CO2 emissions as low as possible. Developed countries have unearthed their mostly dormant nuclear development plans in order to use nuclear power as a “bridge technology” until sustainable alternative energy sources are widely available and more cost-efficient. The nuclear disaster at Fukushima will not only caused many of these plans to be put on the backburner, it will most likely stop the expansion of nuclear power generation in many countries, including Japan and the USA, and restart a major debate about the safety and controllability of nuclear power anywhere. These debates will have to take a wide range of factors into consideration, including national security strategies, the availability of other power sources, and the problems with traditional power sources such as coal, which produce all sorts hazardous emissions too. The debates will also evolve very differently along the lines of historical experiences with hazardous technologies and the ability of governments to control technology and industry in general. This article will therefore provide a short overview of the main factors that might influence the debate – starting with the “irrational side” of risk perception, before further investigating additional challenges in emerging countries and the direct lessons to be learned from Fukushima. Link to: The Fukushima Meltdown and the Global Renaissance of Nuclear Energy
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Papers: Japan's Research Agenda - Driving Forces |
Posted by
Martin
Wednesday, April 18 @ 03:10:48 CDT (580 reads)
During the 1990's Japan's research policy has added a significant focus on basic research to the traditional strength on applied research and development. Now, globalization and industrial restructuring require new concepts. The focus of reform startegies therefore shifts to industry - basic research linkages. Click below to open the PDF file:
Science and Research in Japan
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Economy: Japan's Tankan and the Outlook for the Economy and Economic Policy |
Posted by
Martin
Monday, December 18 @ 03:30:51 CST (613 reads)
Friday's Tankan showed strong positive corporate sentiment across the board, but stocks hardly budged. What is the problem with Japanese investors? All eyes remain on the household sector and overseas economies. So the large picture looks less promising than the perspectives of single companies. But the optimism of Japan's corporate leaders is not unfounded. Stocks will likely be strong again after the current slowdown has been digested. Especially small caps are underperforming in Japan. Is deflation still squeezing the sector, or are this year's scandals in Japan's New Economy the main culprit? The scandals at venture investment companies and consumer loan companies have further put off major retail investors and funds. Governance issue are still a very sensible topic in Japan's market. But we also had a shift from small caps to large exporters because of the weak Yen and underperformance of the domestic economy. At current prices, I think that there are many excellent companies and ventures that might be worth a second look. The Yen is at its weakest to the Euro. Will current economic data keep the BOJ from raising rates not only at its meeting today and tomorrow but also well into next year? There is little chance for a rate hike today. The BOJ has been stressing throughout the year that sound communication with other market players is at the top of its agenda. So we will have to watch the speech of Mr. Fukui for hints on a rate hike in January closely. But if market sentiment remains as weak as today, there is little chance for a rate hike even in January. With no inflation and slow domestic growth, what encourages the BOJ to seek an early interest rate hike? There is continuing strong concern about Japan's huge public debt within the BOJ, and the household sector will not increase its consumption unlike it sees higher income from its financial assets. A rate hike might also stop the continued weakness of the Yen. The negative impact on the corporate sector would also likely be limited. The government in Japan is planning to extend capital gains and dividends tax breaks for another year. Do you think that economic policy in Japan is finally getting on a right track? The tax break will have very little impact because it will terminate in 2008 while Japanese households are looking for long-term investment opportunities. Economic policy of the new government still looks pretty murky, but the government at least seems to try to not to make any major economic mistakes. Especially the continued pressure on budget and bond issuance cuts leaves room for optimism. Although there are many signs that “old-style” LDP polices are returning, it needs to be pointed out that “old style” LDP policies, despite the 90’s policy disaster, have rarely been a direct obstacle to corporate performance. The more general and rather long-term problem is that “old-style” LDP policies won’t be able to revive Japan’s household confidence and solve the – many – remaining structural problems.
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Strange World: U.S. Wins Vietnam and Stays Course in Iraq |
Posted by
Martin
Sunday, November 19 @ 19:59:14 CST (763 reads)
Sometimes you have to admire President Bush... 
from the Herald Tribune 2006.11.17
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Economy: Tankan, Investment, Domestic Demand and the BOJ |
Posted by
Martin
Monday, July 03 @ 02:26:29 CDT (859 reads)
The Tankan survey improved as expected today. Especially plans for capital investment have beaten earlier forecasts. What is driving the optimism in the corporations? Confidence is at high levels already, so there is little room for further gains in the diffusion index. Especially capital investment plans at large manufacturers are extremely strong. The companies expect continued strong demand from Asia and the U.S. This optimism is reinforced by the fact that an expected Yen appreciation has not materialized so far. The companies are now more optimistic that external demand remains strong while the domestic economy improves gradually. Business conditions for Small and Midsize Companies in the domestic economy still fall short of strong gains at the large exporters. Is the business environment finally improving? The companies are gaining from long-delayed replacement investments. The IT sector is booming for example. The companies also start to see the effects of increasing household demand at restaurant and the department stores. Also, real estate investors still try to lock in current low interest rates. Finally, financial and employment conditions are still positive for small corporations, so the companies remain optimistic that the strong economy will continue to tickle into the household sector and stronger demand. With increasing investment but slow domestic demand, aren't there serious risks of overheating on the horizon? Investment at the large manufacturers is very strong. But much of this investment is still driven by replacements in capital stock and overseas investment. Non-manufacturers and smaller companies tread much more carefully. Since companies also see little chance to increase output prices, the risk of general overheating remains limited. What are the main risk factors for the corporations this year? Since companies focus on external demand and investment, the exchange rate and interest rates are the obvious risk factors. But both risks are rather limited. Bond demand remains strong, inflation low, and the BOJ careful; so interest rate hikes are not a major risk. The Yen can appreciate at anytime. But corporations now have a much more balanced international production network; so exchange rate risks look limited as well. The companies will be strongly taxed by high raw materials prices and tax hikes, however, so their profits remain sensible to any changes in demand conditions. As a reaction to increasing inflation and a possible investment overheating, the BOJ might end its Zero Interest Rate Policy as early as next week. How likely is such an early step? The BOJ has warned that it would react early on any sign of investment overheating. On basis on stronger inflation and investment data, an early interest rate step has become much more likely. But the situation is more complicated. Inflation pressures and investment plans are still strongly linked to overseas demand, not the domestic economy. So the BOJ needs to be very careful to not harm domestic demand while deterioration of overseas demand remains to be a risk factor. A likely current scenario is that the BOJ comments on an end ZIRP as early as next week, moves in August or September, but keeps rates surprisingly low.
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Economy: Growth Worries about to Return to Asia |
Posted by
Martin
Tuesday, April 18 @ 00:55:15 CDT (863 reads)
Do you expect current oil price spikes to increase inflation fears in Asia? Central banks have been on their toes to increase interest rates this year. This was possible because the economies are booming. But I expect concerns about the negative impact of oil price hikes to return from now. So central banks from Korea to China and Japan will have a close eye on domestic demand and growth as well. Further rate hikes might come later than expected. In Japan benchmark interest rates have already increased much faster then expected. Do you think this will dampen optimism about the economy? Current interest rate hikes have focused on an early end of ZIRP. The 10-year benchmark bond is already overshooting average loan rate movements. I do not think that the BOJ is happy with this development and will not allow interest rates to increase too fast. Most economists in Japan now expect an end of Zero Interest Rates in Japan as early as July. What would be the impact? Most economists are now very bullish about the economy. I rather think that inflation risks remain limited and that the BOJ is becoming increasingly concerned about the fast hike of benchmark interest rates. It will rather wait and see if the economy remains strong into the second half of the year. September-October remains to be a good time for its first interest rate step. The G7 will discuss oil prices and growth risks. Do you expect any market impact from the meeting? Besides the usual declaration about international imbalances, the concern will be about growth risks from oil prices and interest hikes. This might help to end automatic interest hikes internationally, and induce central banks to further watch the economies before venturing into further interest steps. China's president is in U.S. as well. But Washington seems to have little hope that he will offer more foreign exchange concessions? Policy in China seems to be well on the way towards further market reform. Capital account regulations will be relaxed further and investment possibilities expanded. This won’t weaken the Dollar, however. The main offer that might come from Mr. Hu is therefore to expand domestic demand further. This is risky because the economy is still at the edge of overheating. But it is also what investors really like to hear.
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Economy: Risks of an Early Monetary Policy Change in Japan |
Posted by
Martin
Monday, April 03 @ 03:10:15 CDT (966 reads)
The FED and the ECB continue to increase their policy rates. Many economists now expect the BOJ to hike rates already this summer. What are the chances for an early end of Zero Interest Rates in Japan? If inflationary pressures are building up in Japan, as they do in the U.S. or Europe, the BOJ will certainly react early. But with inflation pressures still limited in Japan because of low household demand, the BOJ will rather remain busy with mopping up liquidity and technical adjustments in the money market before they increase policy rates. It also seems smart to keep the government happy by waiting until it announces the end of deflation in September for its election campaigns. Ten-year benchmark rates have been increasing faster than you expected when the BOJ ended its Quantitative Easing Policy. Given the strong outlook, don't you expect interest rates to increase even faster? We finally got some dynamism into the bond market. Interest rates have certainly risen faster on back of the strong economy and overseas tightening. But current sell-offs in the bond market also reflect a spillover of inflation expectation from the U.S. and EU. Inflation risks are still quite low in Japan, so demand for bonds will likely remain strong. Pension funds will pour more cash into bonds after stock market valuations are already quite high, and banks will start buying again to allow for higher interest rates on savings accounts.
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Economy: Tankan remains Strong in Japan |
Posted by
Martin
Monday, April 03 @ 03:09:03 CDT (1033 reads)
The Tankan business confidence survey fell short of expectations today. But the Nikkei has rallied in the morning. Are you optimistic about the outlook as well? Confidence is at high levels already, so there was little room for further gains. Companies are carefully weighing risks, which is a positive development. Production continues to increase, investment is firm, and conditions for midsize corporations are improving. All this adds to a positive outlook for the domestic economy. Additionally, the Yen remains weak, while demand in Asia is increasing. So there is lots of room for optimism. Japan is heading for the longest expansion after WWII and corporations are still planning to increase investment. Aren't there any risks of overheating on the horizon? Domestic demand is increasing gradually, overseas demand in Asia remains strong, and inventories have come down a little. But companies still see little chances to increase output prices, so risks of overheating are rather limited. On the contrary, companies are still focusing on a rather careful mix of expansion. They still have high cash balances and are increasing dividends to keep investors happy. And they continue to expand overseas in Asia where demand is increasing faster than in Japan. What are the main risk factors for the corporations this year? Corporations see a tight labor market, and oil prices are still weighing on profits. All corporations also remain sceptical about the sustainability of the low Yen exchange rate, and they expect increasing interest rates. It also seems unlikely that household demand will increase significantly any time soon. Coming tax hikes might even result in a significant fall of domestic demand. The companies will certainly be kept on their toes.
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Finance: Asia's Currencies Start Rising Again |
Posted by
Martin
Monday, January 16 @ 05:08:22 CST (1072 reads)
Do you expect monetary tightening to have a strong impact on the Yen-Dollar rate? The impact of the interest rate differential is limited. But QEP has fueled Yen outflows to the U.S., which drove the Yen exchange rate down. So the Yen will likely recover further when the BOJ stops forcing money into the economy, the outlook for the domestic economy improves, and domestic credit demand keeps rising. Actually, the stronger Yen might be one reason to delay the end of QEP, if the Yen goes beyond 108 to the Dollar already early this spring. In this case the BOJ might want to delay monetary tightening to counter-balance the exchange rate impact on exporters and deflation. The Dollar is much weaker to other Asian currencies as well. Do you expect governments to start major interventions again? Governments in Asia are already complaining about the weaker Dollar of course, but they will rather focus on ending their interest rate increases than on starting a major intervention cycle. This is because they are expecting a slower U.S. economy anyway, try to push domestic demand, and could gain from lower material input prices. The key is U.S. policy however, when domestic demand slows, U.S. companies will become more interested in exporting and investing abroad. So the U.S. government might want to talk the Dollar down more readily. I think we already see the beginning of such a trend. A weaker Dollar means even more pressure on China to revalue the Yuan exchange rate further. Is it likely that another revaluation happens anytime soon? China continues to focus on domestic demand and has an increasing problem to manage its vast currency reserves. In the current situation, with a declining Dollar but not much Yuan speculation, the government might therefore want to do another currency step.
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Economy: The End of Deflation and of Quantitative Easing in Japan |
Posted by
Martin
Monday, January 16 @ 05:05:46 CST (1039 reads)
Today's figures show that the Current Account Balance, Export Prices, and Producer Prices are up in Japan. Do you expect the BOJ to upgrade its outlook on the economy later this week? Yes. Not only producer prices are up, domestic demand continues to increase, which will further increase consumer prices. In today’s producer price report the disaggregate figures for demand levels show, that final and consumer goods prices are growing strongly. This comes on top of strong capital spending and export demand, so the Japanese economy seems to have entered a very healthy cycle. The BOJ might therefore upgrade its forecast for real growth this fiscal year beyond the current to 2.2%. It will stop short of ending its quantitative easing policy at the next meeting, however. BOJ has been rather aggressive in commenting it will end Quantitative Easing Policy on its own terms - meaning rather earlier than later. How soon do you expect monetary tightening? As early as April. The business cycle looks rather strong, so long-term expectations and long-term interest rates are the key for BOJ policy. Few people are talking now about Japan's 160% public debt, but to keep this mountain of debt manageable, the BOJ needs to keep interest rate expectations at the long end low - and the government on its toes to continue spending cutes. Though tighter monetary policy might increase rates at first, it would help to keep long-term expectations and interest rates from increasing too fast. So the BOJ will probably want to end QEP a bit earlier than absolutely necessary, but continue with ZIRP.
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Japan's Growth and Exchange Rate Outlook |
Posted by
Martin
Monday, December 12 @ 02:29:03 CST (1069 reads)
Japan's stocks have rallied over the last weeks. Do you think that this week's Tankan report will backup these gains? Over the year, Japanese corporations have focused on the slow recovery of domestic demand. But now the low Yen exchange rate and the enormous liquidity that is flowing into the stock market are giving corporations a second wind. So optimism is likely up by 4 points for Large Mfg and 2 points for Large Non-Mfg. This keeps capital investment high while inventory adjustments have likely run their course after Christmas. Basically, Japan is currently driven by what it can do best: exporting and capital investment. Export-driven rallies in Japan have often faded fast. How about the situation of the domestic economy? Do you expect a major shift in Japanese household demand next year? I have been optimistic throughout the year, and there is no reason to be less optimistic now. Consumer demand has continued to recover gradually on higher wages and employment. This trend will likely continue because Japan's non-manufacturing sector has not only increased employment but also greatly improved its profitability, which now matches the long-term levels of the mfg sector. Furthermore, Japanese households have become fundamentally more optimistic because the long reign of deflation has greatly increased the attractiveness not only of Japan's products but of the entire economy in the meantime. For the first time in recent memory, Japan's PPP, or the overall domestic price level, now matches U.S. and European levels, for example. The central bank governor, Mr. Fukui, has mentioned last week that the end of Quantitative Easing Policy might be close. Do you expect the BOJ to sent stronger signals in this direction during this week's policy meeting, which might spoil the party? The outlook for the economy will remain basically unchanged with positive comments on capital spending and a gradual end of consumer price deflation. The BOJ focus on an end of Quantitative Easing is intended to remind the government and the market that this policy is only an emergency measure, which should not be used to drive down the Yen or to produce a liquidity-driven boom in the stock market. It is important to keep in mind that BOJ policy has always had a strong structural policy element. So the BOJ keeps reminding everybody that it will only keep playing ball as long as structural reforms in Japan continue. But the BOJ is not hostile to growth, and remains optimistic about corporate and public restructuring efforts. So it will likely phase out Quantitative Easing as early as April, but will stick to a zero-interest policy throughout next year. Is it likely that the Yen will finally start to recover on a strong Tankan report or signals of monetary tightening from the BOJ? The low Yen rate is still driven by high liquidity in Japan and a more encouraging interest rate environment in the U.S. But investors are waiting to tip the lever. The Tankan is only one positive element in a long line of good news from Japan - the Tankan and the signals for monetary tightening in Asia will therefore remind investors that they have to sttle their carry trades in Yen at some point.
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Policy: WTO and the East Asia Community |
Posted by
Martin
Monday, December 12 @ 02:23:22 CST (1213 reads)
What is the outlook for the WTO talks in Hong Kong this week? Do you expect main Asian players like Japan, China, and Korea to push for more agriculture policy concessions that might break the deadlock? There is not much optimism about the Hong Kong meeting. Japan has offered some additional ODA funds as carrots, but the important step would be to put the cards on agriculture policy on the table. The good news is that Japan as well as China are working hard behind the scenes to get to some results, and they seem to be willing to open their agriculture markets further. One of the big problems of the current negotiations is that the EU Commission might be willing to play ball, but that it seems to be lacking the necessary support from the European member states, which seem to have almost no interest in WTO policy and further concessions right now. Leaders of East Asian Countries have already started to gather in Kuala Lumpur to found an East Asian Community together with Australia, New Zealand and India. Will this have a positive impact on future trade talks in Asia? Though there won't be any direct result and because everybody has different and often opposing interests in such an East Asian Community, it helps to push bilateral FTA talks. So far progress depended on talks between Japan, China and Korea with the AEAN group, which basically have been stuck over the year. Some competition and the involvement of India and Australia might help here, and might also increase the interest in the more general WTO framework again.
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Policy: U.S. China Policy |
Posted by
Martin
Monday, November 21 @ 03:43:31 CST (1068 reads)
In China, President Bush focused more on freedom and human rights than on trade and exchange rate issues. Does the Chinese government feels off the hook concerning a revaluation of the Renminbi? Some commentators have been frustrated because the U.S. foreign policy towards China seems to be not focused and stable enough – they would have liked to see continued exchange rate related statements instead of general comments about (religious) freedom, which might rather please the religious right in the U.S. before Thanks Giving. But behind the scenes, the pressure towards a revaluation continues. From a U.S. perspective, it was important to show that its policy has not been narrowed down to forex issues, but that trade liberalization, market liberalization in general, and the WTO Doha round in particular remain to be top notch issues. In Asia, the broader approach is welcome because China needs to work on all these issues in parallel. Is another revaluation of the Renminbi now less likely to emerge anytime soon? China has to expand the trading bands towards other currencies than the Dollar soon. Since monetary policy in China is now much more expansionary than last summer, and since China's trade surplus is about to triple this year, there seems to be a good chance that the Chinese government might throw in another revaluation to the Dollar early next year.
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Economy: APEC Meeting and Japan's Agriculture Policy |
Posted by
Martin
Monday, November 21 @ 03:42:32 CST (1101 reads)
The APEC meeting last week effectively singled out the EU as the culprit for a possible failure of WTO talks next month, but did not offer any new initiatives. Is it likely that Japan and other APEC will agree to further cuts in agriculture subsidies during the Hong Kong meeting next month? Japan will probably never become a frontrunner on liberal agricultural policy. But policies are currently under reform here, and general subsidies will be cut back. Furthermore, Japan needs to implement a more industrial and liberal approach towards agriculture because of Asian FTA negotiations anyway. So Japan will likely follow U.S. the stance towards subsidy and tariff cuts for the WTO meeting. It therefore really depends on progress in the EU's position now.
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Finance: Yen Weakness and Yen Recycling |
Posted by
Martin
Monday, November 21 @ 03:40:58 CST (1110 reads)
The Yen remains weak against the U.S. Dollar because the government seems to pressure the BOJ to keep its quantitative easing policy well into next year. Will this keep the stock market booming as it did over the last week? The quantitative easing policy finally has a strong indirect impact on markets in Japan. Japan’s banks are flooding international financial markets with Yen while buying higher-yielding foreign bonds. Foreign investors, in return, are recycling these Yen into Japan’s stock market, which drives optimism in Japan. But because it is not the objective of the BOJ to drive down the exchange rate or to push Japanese money out of the country, it will stop the party on the first sign that deflation has become history. Will this week's CPI data already signal a start of mild inflation? Core CPI inflation for October should be zero. And even November figures for Tokyo show little improvement. But because of Tokyo's extreme regional concentration, the hike in energy prices is less important in Tokyo than in the rest of the country. So we should see positive inflation figures for Japan in November.
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 | | | Monday, November 14 | | · | APEC Meeting and Cahnces for the WTO Doha-Round |
| · | Japan's Growth and Exports, and the Role Quantitative Easning |
| Monday, November 07 | | · | The Yen's Weakeness vs. the Strength of the Japanese Economy |
| Monday, October 31 | | · | Policy Prospects in Japan |
| Monday, October 24 | | · | UK Foreign Secretary Straw meets Alabamans |
| · | Deflation, Demand and Investment in Japan |
| · | Currency Reform and Policy in China, Japan, and the U.S. |
| Monday, October 03 | | · | Tankan shows that Japan's Growth is Spreading to Smaller Companies |
| Monday, September 26 | | · | China's Return to a Classic Dollar-Peg |
| · | The G7 Meeting and Policy Reactions to Inflation Fears |
| Monday, August 15 | | · | Japan's War Apologies, Nationalism, and Chances for Asian Integration |
| · | East Asia Currencies and Inflation Risks |
| Monday, August 08 | | · | Mr. Koizumi's Strategy to Postal Reform and LDP Reform |
| Monday, August 01 | | · | The Battle for Japan's Economic Reforms in a Final Phase |
| · | London Fight's Back |
| Monday, July 25 | | · | China's Revaluation |
| Tuesday, July 12 | | · | Oil Prices start to Destabilize Southeast Asia |
| · | Japan's economy faces further weak data and political quarrel |
| Tuesday, July 05 | | · | Asian Companies are Expanding Abroad |
| · | Tankan shows that Japan's Economy is getting Fundamentally Stronger |
| Monday, June 27 | | · | The Tanakan and the Outlook for Japan's Economy |
| Monday, June 20 | | · | Is China Still Overheating? |
| · | The Impact of Record-High Oil Prices on Japan's Economy and Trade |
| Tuesday, June 14 | | · | China`s Currency Strategy |
| · | Japan`s Economy remains on a Recovery Path |
| Monday, May 23 | | · | Japan` Economy climbs out of Recession |
| · | China's Revaluation Plans Fall Victim to U.S. Currency Regime Demands |
| Wednesday, April 27 | | · | China-Japan Tensions and the Risks to Cooperation and Growth in Asia |
| Thursday, April 21 | | · | Falling Stock Markets, Demonstrations and China Risks |
| Monday, April 04 | | · | Japan`s Economy, Oil Prices, the Dollar, and Chances for a Revaluation in China |
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