Willamette World News

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Economic situation of Japan

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Although Japan’s economy is recovering, there are several elements in the world economy that remain unclear, which make the foundation for the Japanese economy unstable. First, the social security system of Japan should be reformed. Until now, each element of the system – pensions, medical care, and nursing care – has been reformed separately. Recently, however, the squeeze on benefits and the increased burden of payments have required repeated spur-of-the-moment adjustments.

These successive reforms have made the Japanese people anxious about the continued viability of the system and leave them wondering just how much more they will be required to pay. The primary baby boomers will begin entering their late old age of 75 and older in around 2020, at which time every 1.5 working person should support one elderly person in Japan. This is an example of an aged society unmatched anywhere else in the world. Before that time comes, Japan must reform the entire social security system as a single unit that includes pensions, medical care, nursing care and other elements, and integrate the reform of the unit with the reform of the Japanese tax and financial systems. If the Japanese government can reconstruct a social security system which is easy to understand and sustainable, they can ameliorate people’s dissatisfaction and anxiety and give them renewed peace of mind. Second, Japan should promote technological innovation and strengthen the partnership between industry, academia and governmental agencies. Because Japan is a resource-poor country, technological innovation is essential for sustained economic growth. Currently, various policies are being pursued by both the public and private sectors to establish Japan as an advanced science and technology oriented nation. In this connection, the strengthening of ties between universities, which are the birthplace of new knowledge, and the industrial sector, which applies and commercializes that knowledge, is especially crucial to bolster Japan’s international competitiveness.

Third, Japan should strengthen economic partnership with East Asia and promote free trade. As economic activity rapidly globalizes, it is essential for companies in all countries to have a systemic foundation that permits them to freely and smoothly engage in economic activities, including trade and investment, that transcend national borders. In view of this, Japan is working to strengthen such international trading systems as the World Trade Organization (WTO), while aiming toward concluding high-level, comprehensive free trade agreements (FTA) with countries and regions that are important for Japan. Japan should regard East Asia as priority region and should put up efforts to conclude FTAs with countries in the region, which are geographically close to Japan, have close economic ties to us, and are expected to experience further growth.Almost seven years have passed since China was admitted to the WTO. The Chinese government is continuing its efforts to rigorously uphold WTO commitments. The business community in Japan applauds these efforts and hopes that they will be both continued and accelerated in the future.

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