The Rise and Fall of Abacus Banking in Japan and China phần 5

62 The Rise and Fall of Abacus Banking in Japan and China Total working hours are recognized internationally as long. In the eyes of many observers, these differences symbolize the failure of workers to share Japan’s success. After all, we associate long working hours with poorly developed econ-omies, and short working hours with advanced industrial nations. Japan seems to be an anomaly in this regard.7 Compounding the problem of small houses, long working hours, and a high cost of living is a poor infrastructure that lags behind those of other industrialized countries. ‘‘In areas ranging from roads to sewer systems to airports, Japan is said to be so far behind her counterparts in the West as not to deserve the label of an advanced developed country.’’8 Japan’s main sewage system, for instance, serves only 40 percent of the population, compared to 73 percent and 95 percent of the population served by the corresponding U.S. and British sewage systems.9 In 1990, the average urban Japanese enjoyed 2.2 square meters of park space, compared to 19.2 for the average American living in New York City, 30.4 for the average urban Englishman, and 37.4 for the average urban German.10 Japan’s rapid rise of asset values, currency appreciation, and economic growth, in conjunction with unfavorable demographics, had another negative impact on the Japanese economy—the erosion of her competi-tive position. Rapid economic growth, for instance, along with an aging labor force, declining working hours, and tight emigration policies, cre-ated severe labor shortages that pushed labor costs higher.11 Rising labor costs and rising commercial leases, and especially the stronger yen, in turn priced many of Japan’s products out of world markets, contributing to ‘‘hollowing out,’’ the transfer of traditional manufacturing operations offshore.12 Hollowization of the economy is closely related to the movement in exchange rates because the appreciation of the exchange rate will lead to the substitution of imports for domestic production, the substitution of overseas production for domestic production, and the shift in resource allocation from production of trad-able goods to production of nontradable goods.13 Indeed, the precipitous rise of the yen has made it difficult for Japanese companies, especially consumer electronics companies, to compete effec-tively in world markets without shifting production in overseas trans-plants to the United States, the European Union, and especially Asia. In fact, according to some estimates, a 1 percent yen appreciation is fol-lowed by a 1.6 percent increase in Japanese investment in Asia.14 Al- The Fall of Abacus Banking in Japan 63 ready, almost 70 percent of the color television sets and about 30 percent of VCRs are made overseas. Japanese companies, like Uniden, the cord-less telephone maker, have already relocated their manufacturing out-side of Japan.15 A conformation of this trend is the reduction in Japan’s surplus with the United States and an increase in China’s and Southeast Asia’s surpluses with the United States on the one side and the rise of trade deficits of these countries with Japan on the other side.16 ‘‘Hollowing out’’ had two major impacts on the Japanese economy. First, it weakened the traditional keiretsu relations, intensifying compe-tition. Second, it fueled a ‘‘softomization’’ of the economy (the growing importance of services over manufacturing), which has contributed to the slowdown of economic growth. In 1995, the service sector provided for 55.8 percent of the GDP and 59 percent of employment; the corre-sponding figures for the United States were 68.8 percent and 72.5 per-cent. The industrial sector provided for 41.9 percent of the GDP and 34.6 percent of employment; the corresponding figures for the United States were 29.2 percent and 24.6 percent (see Exhibit 3.4). As discussed earlier, Japan is further beset by demographic problems arising from the aging of the country’s population, which has contrib-uted to the country’s labor shortage and has further challenged the coun-try’s three major labor institutions (lifetime employment, seniority wages, and enterprise unionism) and has strained Japan’s government finance, turning her fiscal surplus into deficit. In this sense, the country found herself in a situation where it criticized her trade partners, mainly the United States. In 1996, Japan’s combined central and local govern-ment deficit approached 7 percent of the GDP, one of the largest among OECD countries.17 Last but not least, due to the continuing regulation of certain domestic sectors, Japan has been suffering from an accumulation crisis, the lack of opportunities to re-invest profits accumulated in the export sector: Ac-cording to Hirsh and Henry, The message of the multinationals is this: The low productivity and growth of this over-regulated marketplace no longer work for us. Japanese firms across the board have seen a dramatic deterioration in the break-even points and efficiency of their Japan-based operations.18 Reflecting this trend, the former chairman of Toyota Motor Corporation, Shoichiro Toyoda, calls for a ‘‘shift from an economy burdened by reg-ulations to one in which the private sector can operate unfettered.’’19 The Exhibit 3.4 Employment and GDP by Sector in 1995 Source: OECD Observer (June/July 1996). The Fall of Abacus Banking in Japan 65 lack of opportunities reinforces the hollowing out of the economy (dis-cussed earlier), eventually feeding into the speculative frenzy that will be discussed in the next chapter. In short, Japan’s early efforts to open her markets to foreign products and competition, especially the hyperliquidity that followed the Plaza Accord, had a mixed impact on her economy. On the one side, it accel-erated the country’s economic growth, boosting equity and real estate prices. On the other side, it raised the country’s already high cost of living, further opening the gap between the country’s production and consumption potential, leading to a hollowing out. In the meantime, un-favorable demographics raised the country’s government deficit, while deregulation limited investment opportunities in a number of domestic sectors. Life became even more expensive for Japanese consumers, and competition became even tougher for Japanese producers. To address these new challenges, Japan reversed some of her earlier measures and accelerated others. To contain hyperliquidity and rising asset values, the BOJ tightened up the money supply, raising the official discount rate five times, from 2.5 percent in 1989 to 6 percent in 1990; it also imposed restrictions on land transactions and bank loans. Japan’s broad money supply dropped from 10 percent in November 1990 to below 1 percent in 1992 before bouncing back to around 3 percent in 1994 (see Exhibit 3.5). In the meantime, as part of the ongoing GATT negotiations and the establishment of the WTO, Japan continued to slash tariff and non-tariff trade barriers in line with her major trade counterparts. Specifically, with the exception of some agricultural products and alcoholic beverages, Ja-pan slashed tariffs to 2.6 percent, well below the 3 percent level for the United States and the 2.9 percent level for the European Union.20 Tariffs continued to drop even further after the establishment of the WTO (see Exhibit 3.6). Product standards and certification systems were adjusted in line with those of other industrialized countries. The Electrical Appli-ances and Material Control Law, for instance, simplified certification for foreign appliances and electric products. The Measurement Law simpli-fied the procedure for the importation of measurement devices, and a 24-hour import clearance service was established. Japan further continued to make progress in such highly protected sectors as agriculture and finance. In the agricultural sector, for instance, under pressure from the country’s two main beef suppliers, Australia and the United States, Japan reached an agreement that provided a two-stage liberalization of beef imports. In the first stage, from 1988 to 1990, 66 The Rise and Fall of Abacus Banking in Japan and China Exhibit 3.5 Japan’s Broad Money Supply Growth Source: Bank of Japan. import quotas were raised from 274,000 metric tons to 394,000 metric tons, maintaining a 25 percent tariff. In the second stage, from 1991 to 1993, quotas were raised from 472,000 metric tons to 680,832 metric tons, and tariffs were raised to 50 percent. In the financial sector, Japan continued to deregulate deposits, secu-rities commissions, and currency transactions. • June 1992: Revision of laws regulating financial system is approved. • June 1993: Interest rates on time deposits are fully liberalized. • October 1994: Interest rates on demand deposits are liberalized. • November 1996: Deregulation of fixed commissions on securities begins. • June 1997: The Financial Supervisory Agency (Kinyu Kantokucho) is established to oversee the fairness and transparency of the financial system, a function previously performed by the MOF. ... - tailieumienphi.vn