Strengthening Democracy through Power of Words
2016 / 10 / 04
Influential Japanese and Chinese researchers agreed on the need for the two countries to work closely together in the economic field amid unfavorable signs in the global economy. The agreement came at a subgroup meeting on economic issues as part of the 12th Tokyo-Beijing Forum, jointly organized by the Japanese not-for-profit independent think tank Genron NPO and the China International Publishing Group in Tokyo in late September.
The meeting on economic issues, which took place on the first day of the two-day annual dialogue, was devoted to discussing new challenges for structural reform efforts, and private-sector economic cooperation between Japan and China.
The discussion began with a keynote speech by Hiroshi Nakaso, deputy governor of the Bank of Japan, who emphasized the need for Japan to increase its growth potential by encouraging efforts to promote technological innovation and enhance productivity, on top of active credit easing to overcome deflationary pressure. Nakaso also called on China to ensure a soft-landing for its economy by scrapping surplus production facilities and at the same time, implementing measure to stimulate the economy.
Delivering a keynote speech on the Chinese side, Fu Chengyu, former chairman of China Petroleum and Chemical Corp., warned that higher interest rates in the United States have prompted flows of funds back to the U.S. market amid continued weak economic growth. To overcome the difficulties, companies should further share relevant information with each other, he stressed.
Takashi Morimura, an adviser to Bank of Tokyo-Mitsubishi UFJ, noted that excess liabilities are growing amid the emergence of heavily indebted "zombie companies" in China, particularly among state-run enterprises.
Zhang Yansheng, secretary general of the Academic Committee of China's National Development and Reform Commission, said that there are new business opportunities, not just risks, for companies in Japan and China. He called attention to China's ambitious "One Belt, One Road" initiative encompassing the Eurasian region and signs of a shift from investment to consumption in the Chinese economy.
Referring to issues related to a graying of society, Tatsuo Yamasaki, a former vice finance minister for international affairs of Japan, noted that the two countries should cooperate in such fields as improving the social security system and developing innovative medical technologies.
Jiang Ruiping, executive vice president of China Foreign Affairs University, expressed fears that the two countries' economies are becoming less dependent on each other following declines in bilateral trade and investment. In rebuilding economic relations between Japan and China, a company-led cooperative system should be created while paying attention not only to areas of mutual interest but also to the situation in Asia as a whole, he said.
In discussions between panelists, Susumu Okano, senior executive managing director of Daiwa Institute of Research, warned that excess liabilities accumulated in China represent potentially bad assets for banks.
Fan Gang, vice president of the China Research Society of Enterprise Reform and Development, noted that non-performing loans linked to Chinese enterprises were a big issue in the 1990s, too.
Recalling that China was able to gradually repair the situation at that time, he said that China will resolve the current problems without haste so that any adverse influence on its financial system will be averted.
The Trans-Pacific Partnership free-trade initiative is open to all countries interested, Yamasaki said, adding that China also can take part in the broad-based trade scheme.
Zhang warned that the TPP will rather cause a "fracture" in the world economic system, without China's participation, in view of U.S.-led demands for high levels of trade requirements.
Li Xiao, vice dean of the Economic School of Jilin University, said that U.S.-led attempts to introduce global economic standards, as instanced by the TPP initiative, amount to the promotion of capital liberalization drives. The TPP is not a good fit for Asian countries because many of them are highly dependent on other countries for trade and at different stages of development.
In a keynote speech on private-sector economic cooperation between Japan and China, Fang stressed the importance of carefully balancing efforts by each country to promote globalization and to protect their own interests.
Shoei Utsuda, a former board chairman of Mitsui and Co., Japan's major general trading house, noted that political issues between the two countries have become obstacles to promoting cooperation between private-sector entities and bilateral economic cooperation. He particularly mentioned that the number of plans for bilateral cooperation has declined since political friction emerged between the two countries in 2012 over the ownership of a group of Japanese-held islands in the East China Sea.
Noting the lingering misunderstanding among some Japanese companies that proposals for external cooperation in China are tightly linked to its national interests, Utsuda stressed the importance of exchanging related information more actively between Japanese and Chinese companies.
The two countries' companies will be able to cooperate with each other in new business opportunities such as those related to the so-called Industry 4.0, he said. Discussions between opinion leaders will help broaden a vision for cooperation in the years ahead, he said.
Shi Dongwei, vice president of the Alibaba Group, an e-commerce service provider, noted that middle-income people in China, amounting to some 300 million, form a huge market. If Japan's manufactured goods and services further spread in the Chinese market, "win-win" relations can be established between parties in the two countries, he said. Participants from both sides discussed specific ways and areas of private-sector cooperation, and challenges between the two countries from now on.
Masayuki Oku, chairman of the board of directors of Sumitomo Mitsui Financial Group, mentioned environmental protection and financial technologies as specific areas of cooperation between the two countries in the years ahead. Li of Jilin University proposed cooperation in nursing care services as the aging of society is common to both countries. Morimura of Bank of Tokyo-Mitsubishi UFJ said that the two countries will be able to cooperate in the health care market, both in terms of software areas like staff education and in terms of hardware areas such as product development.
Wrapping up the four hours of discussion on economic cooperation in the private sector, Wei Lianguo, vice chairman of the China Center for International Economic Exchanges and a former vice minister of commerce, who served as moderator on the Chinese side, stressed that the dialogue contributed to locating specific problems in enhancing economic cooperation and proposing solutions.
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