In 1972, the United States and Japan signed the "U.S.-Japan Textile Trade Agreement." At this time, Shinzo Abe was still continuing his high school education. In his spare time, Abe, who is keen on geography studies, would never have thought that his early enteritis would make him have to give up the position of prime minister in the future, and twice. What he never thought was that the 1972 trade agreement was only an incentive for him to face the stagnant Japanese economy in the future...
At 17:00 local time on the 28th (Friday), Japanese Prime Minister Shinzo Abe held a press conference and stated that he decided to resign in order to avoid the deterioration of the old disease affecting the national government and expressed his apologies to all Japanese citizens. Earlier Japan’s economic data for the second quarter of 2020 showed that Japan’s GDP in the second quarter fell by 7.8% month-on-month and 27.8% year-on-year due to the impact of the new crown epidemic, setting a new record for the decline.
Abe once said that he had contracted enteritis in junior high school. The resignation statement and apology on the 28th seemed to be Abe's final response to the illness. What remains behind Abe's back is the sluggish economy. This is far from just caused by the new crown epidemic, but also due to Japan's stubborn disease of losing its economic initiative after World War II.
"Surplus Monster": The United States was born and fed by itself
In 1945, due to Japan's defeat in World War II, the United States as a victorious nation published the "U.S. Early Post-War Policy toward Japan" and occupied Japan alone. Since then, the so-called "demilitarization and democratization" of the entire Japanese society has begun. Transformation. Japan has therefore become a "partially sovereign" country. However, in order to contend with the Soviet Union, the trial and accountability of the war criminals of World War II should have been stagnated by the U.S. government. Instead, it controlled Japan by attracting and nurturing the old Japanese chaebols and war criminal families who had launched the war of aggression, in order to make Japan a counter to the Soviet Union. Bridgehead.
Abe's grandfather, Kishisuke, led the Japanese invasion of China in the Kanto region during the war of aggression against China, and was called the "Manchurian Gang of Five" together with the then chief of staff of the Kwantung Army Hideki Tojo and the other three war criminals in China. However, after the end of World War II, he was considered by the United States to be the best candidate for Japan's pro-American faction and was exempt from prosecution. In 1954, he formed the Democratic Party of Japan and served as the secretary general. In the same year, his grandson Shinzo Abe was born. And in 1957, Kishi Nobuyuki became the Prime Minister of Japan, and the history of Kishinobu and the Abe family as a family of bureaucrats in Japan after World War II was opened since then.
In 1949, Joseph Dodge, then the financial adviser to the occupying forces and the president of the Bank of Detroit, proposed an economic route for the postwar reform of Japan during his stay in Japan, which was known as the "Dodge Project." The plan is mainly divided into three aspects. One is to control Japan’s domestic demand, reduce excess purchasing power, and expand exports; the other is US investment in Japan to expand production; and third, the most important, is to adopt a single exchange rate system to exchange the yen against the US dollar. Fixed at 360:1, cancel subsidies and restore market mechanisms. The "Dodge Project" was originally formulated in consideration of the political and economic interests of the United States during the American occupation, but it objectively laid the foundation for Japan to have a strong industrial production capacity and become an export-oriented country in the future. However, the establishment of a single exchange rate and the substantial loss of economic sovereignty have laid hidden dangers for Japan's 30-year economic weakness since 1990.
Soon after World War II, the United States brazenly launched the Korean War, and the production capacity of some Japanese military industrial enterprises served American orders. According to statistics, the Korean War brought Japan 2.4 billion US dollars in "special needs" income. After the Japan-US Mutual Defense Assistance Agreement (MSA) came into effect, from 1954 to 1967, Japan received a total of 576 billion yen in military assistance, which is equivalent to 27% of Japan's total procurement of military supplies during the same period. In addition to direct economic benefits, military aid also indirectly brought advanced industrial technology and production capacity to Japan. Take the optical industry as an example. After obtaining a large number of telescope orders from the United States, Japan Optical and Tokyo Optical Co., Ltd. also obtained independent production and development of military optical sights, aerial cameras and other technologies. This also laid the foundation for the later Japanese military technology to turn to civilian use. The technical foundation. The single exchange rate allows Japan to produce goods at lower costs by simply improving production efficiency, thereby promoting exports.
The above-mentioned reasons made Japan's GDP growth rate as high as 9.2% in the early postwar period. In addition, in the 1950s and 1970s, in order to make the labor force more stable and train skilled workers to improve production efficiency, Japanese companies generally adopted a lifetime employment system and an annual salary system, that is, the older the employees, the higher the salary. These systems objectively accelerated the development of the Japanese economy.
It was also during this period that the young Shinzo Abe obeyed the arrangements of his family’s elders and came to the aristocratic school for the children of Japanese bureaucrats and chaebols. University), spent 16 years here. Because he was born in a political family and an aristocratic school, Abe’s childhood education was higher than most Japanese peers. From elementary school to junior high school to high school and university, Abe studied basketball, kendo and archery. It was also during this period that the young Abe witnessed Japan's economic take-off. Because of his political background, Abe wrote down his dream of becoming a politician on his future dream list when he graduated from elementary school.
In Japan at that time, the educational resources that Abe enjoyed were not universal, but the Japanese government's investment in education and culture was gradually increasing. In 1956, Japan's education and cultural expenditure accounted for 12.4% of fiscal expenditures, and maintained a ratio of over 10% for quite some time.
The enrollment rate of Japanese high schools, universities, and junior colleges rose from 50.9% and 10.1% in 1954 to 90.8% and 34.7% in 1974. This will further provide talent guarantee for all aspects of Japan's industrialization and industrial upgrading.
The "Dodge Project" has a more prominent impact on the expansion of Japan's exports, which has led Japan to develop an export-oriented economic model. Since the 1970s, Japan has been in a trade surplus all year round.
During the period from 1971 to 1985, except for 1973-1975 and 1979-1980, Japan's foreign trade was in a surplus for most of the other time. Especially during the period from 1981 to 1985, Japan's foreign trade surplus expanded sharply, from 2004.8 billion yen in 1981 to 10,870.7 billion yen in 1985, reaching more than five times.
Japan's powerful manufacturing industry has also begun to cannibalize the US market, which has also triggered a continuous 40-year trade suppression by the US against Japan. It was also during this time that Abe began to hear voices from across the Pacific directly or indirectly. When Abe received his undergraduate diploma in political science from Seikei University in 1977, he was catching up with the US restrictions on color TV exports to Japan. In the same year, Abe went to the U.S. and studied at the University of Southern California School of Public Policy. However, after only three semesters, Abe returned to Japan and worked for a steel company in Kobe. At this time, the Japanese steel industry had been signed by the U.S. and Japan. Two trade protection agreements tied hands and feet.
Eyes: Behind 15 "301 Investigations"
The United States has a wide range of suppression. With political intervention from 1957 to the 1990s, the United States imposed export restrictions on Japan in six different industries, including textiles, steel, household appliances, automobile manufacturing, and semiconductors. , Telecommunications, behind this is the reduction in the comparative advantage of the US manufacturing industry brought about by globalization.
In the 1970s, the war's stimulus to American consumption and economic growth completely disappeared. The first round of scientific and technological revolution dividends triggered by atomic energy and electronic information technology disappeared, and the fierce international competition brought about by economic globalization led to the continuous reduction of the US trade surplus. Coupled with the outbreak of two oil crises, American society began to experience economic stagflation for 13 years.
In 1970, the US GDP growth rate was 0.2%. In 1974 and 1975, the US GDP growth rate had dropped to -0.5% and -0.2%, which were significantly lower than in the 1960s. At the same time, inflation in the United States is getting worse. In 1961, the US CPI growth rate was only 1%. By 1974, the US CPI growth rate had reached 11%, and by 1980, the US CPI growth rate had reached 13.5%. In 1971, the US foreign trade deficit began to appear. In 1978, the US foreign trade deficit expanded to 29.763 billion US dollars.
Also during this period, the US dollar broke out many crises. In 1971, then US President Nixon stopped foreign governments and central banks from using U.S. dollars to exchange gold with the U.S. This triggered the collapse of the Bretton Woods system of the gold standard of "dollar pegged to gold and currencies pegged to the U.S. dollar" established in 1944. Western European countries Began to sell dollars frantically. So far, countries have begun to adopt a floating exchange rate system. Japan, which has enjoyed the great convenience of a fixed exchange rate system, also adopted a floating exchange rate system in February 1973. However, as of 1978, the yen against the US dollar had risen to 194.3:1, a cumulative appreciation of 85.28% over the seven years in 1973.
However, pure exchange rate changes still did not stop Japan's trade surplus from continuing to expand. With manufacturing advantages and upgraded industrial structure, after 1983, Japan's trade surplus with the United States still maintained rapid growth. In 1979, Japan's trade surplus with the United States was 1,135.8 billion yen, expanded to 4,323.2 billion yen in 1983, and 9369.3 billion yen in 1985. But on the other hand, while continuing to maintain a trade surplus, Japan's trade exports are also heavily dependent on the United States. In 1979, Japan’s exports to the United States accounted for 26% of Japan’s total exports. By 1985, this proportion had risen to 37%, and Japanese exports were increasingly dependent on the US market.
At this time, Japan naturally became a thorn in the eyes of the United States. In the more than ten years since 1976, the United States initiated 15 "301 investigations" against Japan in accordance with Article 301 of the "United States Trade Act" promulgated in 1974, including automobiles, steel, semiconductors, and pharmaceuticals. Shinzo Abe actually entered the Japanese political arena in 1982, and from 1982 to 1986, it was Abe's father Shintaro Abe and then Japanese Prime Minister Yasuhiro Nakasone who led Japan's diplomacy and trade. In the face of the aggressive trade restrictions imposed by the United States at the time, Shintaro Abe’s compromise seemed to herald the future of Shinzo Abe.
It was not until 1985 that the United States finally launched the Plaza Agreement, but it was the mistakes of Japanese policy makers that ultimately made Japan's long-term high trade surplus with the United States come to an end.
The Plaza Agreement: the end of the carnival and the prelude to the loneliness
In July 1985, the finance ministers and central bank governors of the five developed industrial countries of the United States, Japan, the former Federal Republic of Germany, France, and the United Kingdom held a meeting at the Plaza Hotel in New York. It was agreed that the governments of the five countries would intervene in the foreign exchange market to achieve the depreciation of the U.S. China’s huge trade deficit.
The reason why Japan participated in the Plaza Agreement was because it wanted to get rid of further US trade restrictions on Japan. However, the Japanese side obviously underestimated the impact of this agreement. At the time, Japanese Finance Minister Toshita Takeshita "heroically" said: "It doesn't matter if the yen rises to 190 to 1!" The yen was exchanged at that time. The U.S. dollar exchange rate is still maintained at 240:1, which means that the Japanese government is still extremely optimistic about the room for future yen appreciation. Within three months of the Plaza Agreement’s entry into force, the U.S. dollar quickly depreciated, and the yen-dollar exchange rate rose rapidly from 250:1 in 1985 to 200:1. In 1987, less than three years after the Plaza Agreement entered into force, the yen The appreciation of the dollar doubled to 120:1.
Fearing that the appreciation of the yen would lead to deflation, the Bank of Japan made a more fatal mistake-excessive easing of monetary policy, which triggered a subsequent frantic investment and consumption boom throughout Japan, and at the same time opened Japan to a "bubble era" "prelude. In just one year from 1986 to 1987, after the Japanese government cut interest rates five times in a row, the central bank's discount rate fell to 2.5%, which directly led to a sharp increase in corporate financing. According to statistics, from 1985 to 1989, the amount of Japanese corporate financing increased 5.5 times.
In addition, a large number of Japanese export companies borrowed low-interest loans from banks in order to make up for the decline in exports caused by the appreciation of the yen, which inflated the bubble and further increased the leverage ratio, which also created the boom in the late 1980s. : Mitsubishi Corporation invested US$850 million to buy 51% of the Rockefeller Center in New York, which is regarded by the Americans as the “Symbol of America” and “Symbol of Prosperity”; Sony used US$3.4 billion to acquire the Hollywood Columbia Film Company, Samsung Film Company and Four Seasons Hotel in Hamburg; Panasonic Group invested 6.1 billion US dollars to buy out all the shares of Universal Pictures; Shuwa Co., Ltd. took a huge amount of money to win the famous painting "Sunflower" by Los Angeles Citi Plaza and Van Gogh. After that, the ABC Building, the Mobile Petroleum Company headquarters and the Citibank headquarters all changed hands and became the property of the Japanese.
Historical data from the US Federal Bureau of Statistics show that between 1980 and 1988, Japan’s direct investment in the United States increased by more than 10 times, with US$285 billion in US direct assets and securities assets, and controlling more than US$329 billion in the US banking industry. Assets (accounting for 14% of the total assets of the US banking industry at the time). This phenomenon is particularly serious in California, which is one of the most prosperous regions in the United States, where 27% of banking assets and 30% of outstanding loans are owned by the Japanese.
At the same time, the growth of the Japanese stock market is equally crazy. In 1983, the Nikkei average index was 8,800 points, rose to 16,400 points in 1986, broke 20,000 points in January 1987, and reached a record high of 38957 points at the end of 1989. In March 1987, the total market value of the Japanese stock market had reached US$2,688 billion, surpassing the United States to rank first in the world. At that time, the total market value of global stocks was $7467.0 billion, and Japan accounted for 36%.
After a large amount of funds flowed to the real estate market and stock market, a huge surface prosperity was created. The wealth of the Japanese also increased wildly during this period. However, the high-return stocks and real estate and the export-oriented economic system formed in Japan after World War II formed a huge The contradiction between the first two enthusiasm swallowed up the liquid currency needed for the development of industry.
Facing the huge bubble in the real estate and stock markets in Japan at that time, everyone realized that the bursting of the bubble was only a matter of time and method. With the implementation of the austerity policy from 1989 to 1990, Japan's economic bubble burst and the Japanese economy began to decline rapidly. Earlier debts, aging and declining birthrates have led to the reduction of demographic dividends, bad bank debts, and zombie companies. Beginning in 1991, Japan's GDP fell rapidly. By 1993, Japan's GDP growth rate fell to 0.17%. During this period, Abe has experienced Japan’s economic downturn, his father’s death, and, as a county councillor, inherited his father’s and grandfather’s connections and political resources to enter Japanese politics.
Since the burst of the Japanese economic bubble in the early 1990s, until 2011, the Japanese economy continued to be in a downturn. During the 1997 Asian financial crisis and the 2008 global financial crisis, Japan’s GDP growth rate even dropped to a negative number. This period was also called "Japan's lost 20 years" by later generations. After entering the millennium, the Japanese economy still shows no signs of improvement. Relying on the mantle of his grandfather and father, Shinzo Abe became the Chief Cabinet Secretary of the then Japanese Prime Minister Junichiro Koizumi in 2001. Since then, Shinzo Abe has been cultivated as his successor by Junichiro Koizumi.
In response to the stagnation of economic development, the Japanese government has continued to use proactive fiscal policies and loose monetary policies to boost the economy. During this period, the Japanese government issued more than 20 emergency economic countermeasures, and the cumulative amount of fiscal investment exceeded 200 trillion yen. However, the effect was only to increase the Japanese government's debt.
After the huge bubble burst, Japanese people's consumer confidence continued to slump, and the tradition of high savings also made it difficult for the consumer market to revive. In terms of industry, many Japanese companies are also subject to the lifetime employment system and hierarchical system, making it difficult to enhance competitiveness and innovation capabilities. And companies that cannot afford high labor costs even employ a large number of "temporary workers" to reduce expenditures. In addition, aging and the previous lifetime employment system have caused the government and enterprises to increase more security expenditures, further increasing Japan's economic burden. The Japanese economy has not been boosted for a long time, and the people have been unable to get out of the bubble burst in the 1990s for a long time. This also led to the continuous replacement of the prime minister between 1989 and 2012. Except for Junichiro Koizumi, who took office in 2001, who was able to serve as Japanese prime minister for 6 years with a slightly effective economic policy, in the 13 years from 1989 to 2001, Japan replaced 10 prime ministers, with an average of no more than 16 times per person. month. After Junichiro Koizumi stepped down in 2006, the ensuing global economic crisis brought the Japanese prime minister's position back to the frequent replacement of the 7-phase in 6 years.
"Abenomics": A brief superficial boom
On December 26, 2012, Shinzo Abe served as Prime Minister of Japan for the second time. As early as 2006, after Junichiro Koizumi stepped down, Abe succeeded him as the prime minister. However, due to chronic enteritis, Abe resigned after only one year in office. Abe, who came to power for the second time, is different from the first, bringing new economic policies. Since Abe personally promoted as Prime Minister, this policy is called "Abenomics."
The 2012 "Abenomics" is mainly divided into three parts. Abe called them the "three arrows". They are large-scale quantitative easing, fiscal stimulus, and structural reforms to promote private investment. The devaluation of the yuan promotes exports, and domestic inflation boosts consumption. In essence, the so-called "Abenomics" thinking and traditional economic theories rely on proactive fiscal policies and loose monetary policies to increase market currency circulation and promote investment and consumption. However, the volume of the Abe version is unprecedented. of. In 2013, the governor of the Bank of Japan Haruhiko Kuroda, who took the lead in implementing the quantitative easing program, even named the program "Alternative Quantitative Easing", which means a radical quantitative easing policy that transcends time and space, breaks through history, and is unprecedented. Prior to the Koizumi administration, Japan had adopted excessive easing policies. The amount of base currency rose from 69 trillion yen in 2001 to 112 trillion yen in 2006, an increase of 43 trillion yen in five years. The quantitative easing implemented after Abe came to power has increased the amount of base currency by 132 trillion yen in two years, which is clearly radical.
At the same time, in terms of fiscal policy, Abe has implemented larger-scale asset purchases. The national debt alone has grown at a rate of 50 trillion yen per year. In October 2014, it was expanded to 80 trillion yen. In addition to long-term treasury bonds, 40-year treasury bonds are also regarded as purchase objects. Such a large-scale purchase of national debt and currency issuance enabled Japan's economy to recover and grow to a certain extent from 2012 to 2014.
According to data from the Cabinet Office of Japan, this round of economic expansion in Japan began in December 2012 and lasted until October 2018, with a duration of 71 months. During this period, the number of unemployed people dropped significantly, wages increased, and corporate profit margins also increased. Data from a French financial institution shows that under the stimulus of "Abenomics", the relative depreciation of the yen has led to an increase in the number of tourists to Japan. Statistics show that between 2011 and 2014, the number of tourists to Japan more than doubled, and the total expenditure of tourists to Japan also increased by nearly 150%.
In response to the chronic problems of Japanese society-low fertility and aging, Abe has updated the content of his "Abenomics" and launched the "New Three Arrows", including free day care and nursing subsidies. Although it is still difficult to solve Japan's inherent social problems, Abe's relatively flexible means also allowed him to become Japan's longest-serving prime minister on August 24, 2020.
Abe’s series of policies have given people some hope for Japan’s economic recovery, and the accompanying stock market rise seems to “confirm” the effectiveness of “Abenomics”, but is this really the case?
The final result shows that such a radical fiscal policy and monetary policy have increased Japan's debt burden. According to statistics from the International Monetary Fund, as of 2019, Japan's total debt accounted for 238% of Japan's GDP, and its total debt has exceeded twice the total economic output. Such large-scale borrowing and aggressive monetary policy are almost out of proportion to the amount of economic growth and inflation achieved. In addition, data shows that the two rounds of quantitative easing started in March 2013 have injected nearly 300 trillion yen in base currency into the market. However, as of March 2016, the Bank of Japan’s current account balance totaled 27 billion yuan. The actual effective currency quota is far smaller than the amount of additional currency issued. Abe has paid a huge price for achieving its goal of promoting economic growth and inflation. After entering 2018, due to Japan's severe aging, low expectations of the people for the future, and reduced labor vitality, and many other chronic diseases that are difficult to change for a while, "Abenomics" has shown a weak trend. Under the premise that Japan's domestic demand is difficult to increase, the Japanese economy, which is heavily dependent on external demand, is difficult to be driven by fiscal and monetary policies.
"Waterloo": Abe, Trump and the Tokyo Olympics
Trump, who came to power in 2017, caused Abe, who is heavily dependent on the United States for economy and defense, to encounter Waterloo. On January 23, 2017 local time, U.S. President Trump announced his withdrawal from the TPP, which means that the proponent country with the largest economy in the TPP has withdrawn. Forced by the withdrawal of the United States, Japan, as the country with the largest economy in the TPP at that time, began to dominate its operations and changed its name to CPTPP on November 11, 2017.
In the same year, Trump also initiated trade negotiations with Abe on the content of the "U.S.-Japan Free Trade Agreement", which involved Japan's relaxation of import standards for American cars, removal of import restrictions on American potatoes and other crops, and reduction of Japan's trade surplus with the United States. All trade talks require Japan to unilaterally open its market to the United States. In March 2018, Trump negotiated with Abe on the exemption of tariffs on imported Japanese steel and aluminum products. In September of the same year, Trump conducted bilateral trade negotiations with Japan on agricultural products. By October 2019, Trump directly "asked" Japan to purchase corn worth 7 billion US dollars.
In addition to the strength of the United States in economics and trade, what Abe did not expect is that the 2020 Tokyo Olympics, which he mainly promotes, will also be postponed due to the new crown pneumonia epidemic. Since the beginning of taking office in 2012, Abe has said: “We want the Olympics to be the trigger for sweeping Japan’s 15 years of deflation and economic recession.” Three years later, at the closing ceremony of the Rio Olympics, Shinzo Abe himself as prime minister. Appeared in "Eight Minutes in Tokyo" and starred in the famous Japanese virtual character "Mario". In 2020, the eighth year of Abe’s administration, the benefits of "Abenomics" have been declining, and the United States has begun its de-globalization strategy. As an export-oriented country, Japan’s downward pressure on the economy has become more pronounced. The Tokyo Olympics was a life-saving straw for boosting the economy.
Traveling to Japan in 2020 will contribute 0.15 percentage points to Japan's potential economic growth rate. The Olympic Games held at this time are regarded as an extension of "Abenomics." In order to successfully host the Olympics, Japan spent 7 years building various venues and infrastructure in Tokyo, and continued to invest in the Olympics despite the huge fiscal deficit caused by the implementation of "Abenomics" to expand public expenditure. According to statistics from the Institute of Economic Research of Japan, Japan has invested between 32 billion and 41 billion U.S. dollars only in building competition venues and increasing hotel capacity. However, the global pandemic of the new crown epidemic has turned the life-saving straw that Abe so valued into tomorrow's yellow flowers. In addition to the increasingly serious epidemic, Japan is getting deeper and deeper in the plight of economic stagnation.
Coincidentally, on August 17, after Abe came to Onkei University Hospital for 7 hours of examination and treatment, the Cabinet Office of Japan released the second quarter of 2020 Japan’s GDP. After excluding price changes, Japan’s real GDP in the second quarter of 2020 was further reduced by 7.8% compared with the first quarter, and the annual rate fell by 27.8%, which was the worst post-World War II record. In addition, the data in the second quarter also showed the decline in personal consumption in Japan. Personal consumption fell by 8.2% month-on-month, and exports fell by 18.5%. Abe’s health and Japan’s economy suffer from the same ailments and suffer from "Waterloo" together.
"The Lost Thirty Years": Can Japan Recover it?
On August 28, if the Tokyo Olympic Games were to be held as originally planned, 20 days should have ended by this time, and the reconstruction and demolition of the temporary venues should be almost done. However, the new crown pneumonia epidemic completely failed the Abe administration's Olympic plan.
The rise of trade protectionism led by the United States, the impact of the new crown epidemic, the postponement of the Olympics, high aging, stagnant domestic demand, and the high level of debt that has promoted "Abenomics" for many years have all put Abe in power. It has been difficult for eight years.
Four days after becoming Japan's longest-serving prime minister, Abe chose to resign due to health reasons. It is still unclear whether the successors who have been widely rumored will still pursue "Abenomics", but the clock will not stop, and the "lost thirty years" are moving towards longer time...
Written丨Jin Lucheng