'Chinanomics' could hold key to Japan's economy recovery

TOKYO - Intensifying economic cooperation with China is the best way for Japan to recover its stalled economy, said Kiyoyuki Seguchi, a senior researcher of a leading Japanese think tank, calling this "Chinanomics."

Seguchi, researcher director of the Canon Institute for Global Studies, said the Japanese economy still has a long way to go to achieve its revitalization as some positive factors brought by the "Abenomics" seemed exhausted now and, except some large firms, most companies remain weak in terms of vitality and competitiveness.

"For those general companies, they need new demands, particularly under the circumstances of the Japanese government not being able to spend more due to its monstrous finance deficit. Therefore, they need the Chinese market," Seguchi said.

He stressed during a recent interview with Xinhua that improvements in bilateral political ties since last November have already brought changes in economic exchanges as Japanese companies that understand China well enough have started to reinvest in China. "More Japanese firms will change their viewpoints on China and facilitate their investment in China. This will result in the Japanese economy's revival."

"Japan will benefit from economic growth in both China and the United States, but Japan's exports to China are much larger than the United States', so, China's smooth economic development has more significance for Japan," Seguchi said.

China on Wednesday released its first quarter gross domestic product growth rate, which stood at 7.0 percent, the lowest reading since 2009, triggering concerns over China's slowdown.

However, Seguchi, prior to the data's release, hailed the slowing economic growth rate in China, which is known as the "new normal," as being more rational and the policy will lead to a healthier growth of the Chinese economy.

"The 'new normal' means two normalizations - a normalized economic growth rate and a normalized economic structure," the expert on the Chinese economy said.

"During the 10-year period, China maintained a fast economic growth rate and at the same time, the inflation rate hit 5 percent three times, it is abnormal," he said, "but since the second quarter of 2012, the Chinese government successfully kept the inflation rate below 3 percent. It is a fantastic success."

The economist said under the abnormality, investments in fixed assets and real estate presented as overheating for a long time, but the current Chinese government, using market mechanisms, effectively managed the unhealthy trend.

"It is a 'losing weight policy' that will be very good for the Chinese economy."

Seguchi continued to say that current economic slowdown is not a major problem for China and it is controllable. "Employment and prices remain stable right now and the Chinese government pays great attention to the two key indexes in order to maintain them in a stable manner. That is a reasonable policy goal."

But he suggested that China has to enhance its industries' competitiveness in an effort to boost exports, adding a possible enlarged trade deficit will pose a remarkable challenge to China.

On the Chinese visitors' astonishing amount of purchasing in Japan during the Chinese Spring Festival vacation and cherry blossom season here, Seguchi said the strong purchasing capability of the Chinese visitors brought great profits to Japanese businesses.

"Besides economic interests, the most important thing is that the smiles on Chinese visitors' faces will definitely make Japanese think they like Japan and it will close relations between the two peoples, which will also serve to help bridge the bilateral political gap," Seguchi concluded.