Former Japanese Prime Minister Shinzo Abe . Picture/IC
About seven hours after the news of being shot came out, CCTV News reported on July 8 that former Japanese Prime Minister Shinzo Abe (hereinafter referred to as: Abe) died of excessive injuries at the age of 67.
According to the Japan Broadcasting Association, around 11:30 local time (10:30 Beijing time), Abe gave a speech near Yamato Saidaiji Station in Nara City, Nara Prefecture to support the Liberal Democratic Party Senate candidate. The speech began with one or two Minutes later, a man shot Abe from 3 meters behind him. Abe was shot in the chest and neck and fell to the ground.
Abe has been elected Prime Minister of Japan four times and is the longest-serving Prime Minister in Japan. After the news of the attack came out, the Japanese financial market experienced short-term shocks. The Nikkei 225 index fell sharply by more than 300 points in half an hour, and the Japanese yen exchange rate, which had been depreciating for several months, rose in the short term.
" Abenomics " ripples: Economy Recovery, high debt
As Japan's longest-serving prime minister, Abe has changed the situation of frequent changes in Japan's top leadership.
In September 2006, Abe was elected as the 90th Prime Minister of Japan and resigned in September of the following year. He later served as the 96th Prime Minister in 2012 and was re-elected twice until his resignation in August 2020.
After becoming Prime Minister again in 2012, Abe launched "Abenomics", which became a major label for Abe's achievements in the economic field and is also considered to be one of the reasons why Abe was subsequently re-elected as Prime Minister.
In the early days, "Abenomics" had a certain effect in boosting the economy. Since the Asian financial crisis in 1998, Japan's economic growth has fallen into long-term stagnation. After the introduction of "Abenomics", Japan's economic growth has recovered. From the end of 2012 to 2019, Japan's economy continued to grow moderately for nearly seven years until the impact of the new coronavirus in 2020. Interrupted due to the impact of the epidemic.
Loose monetary policy , flexible fiscal policy, and economic structural reform policy are known as the "three arrows" of "Abenomics", of which monetary policy is the most used. In 2013, Japan adopted an inflation targeting system for the first time, and the Bank of Japan (BoJ) set the inflation target at 2%. After taking office, Kuroda Haruhiko, who became the governor of the Bank of Japan with the support of Abe, introduced radical quantitative and qualitative easing policies (QQE). Specific measures include increasing base money supply, lowering interest rates, purchasing assets, etc., as well as increasing the amount of money. The depreciation of the yen brought about by this.
Since 2014, the Bank of Japan has begun purchasing assets indefinitely. Since 2016, Japan has entered negative interest rates , becoming the first country in Asia to implement negative interest rates.
Judging from the results, in the few years after the implementation of "Abenomics", Japan's GDP, stock price, and corporate profits have increased, and the unemployment rate has decreased. However, the stimulus effect on the economy has gradually weakened, and the potential The risks have also begun to gradually emerge.
Loose monetary policy has not had the expected effect of stimulating inflation. Japan's inflation rate has not reached the expected 2% target for a long time. It was not until this year that it began to exceed 2% under the influence of rising international oil prices.
Ping An Securities Chief Economist Zhong Zhengsheng once wrote that the logical transmission of Japan from "low interest rates" to "high borrowing or high consumption" to "high inflation" does not seem to be smooth as expected. Driven by years of quantitative easing, Under the crisis, Japan's loan interest rates have been pushed down a lot, and the unemployment rate has also dropped to historical lows. However, the number of new personal consumption loans in Japan is still hovering at a low level. Possible reasons include residents' consumption habits formed in a long-term deflationary environment that are difficult to change, and Residents' income has not increased significantly. In addition, the depreciation of the yen did not bring about a significant recovery in exports. The slight improvement in Japan's inflation after the end of 2016 also relied on imported inflation, but it was not directly related to currency depreciation or export growth. Exports were increased through currency depreciation. As a result, the path to promoting economic growth and getting rid of deflation has not met expectations.
At the same time, the debt problem has become a major concern for the Japanese economy. Since a considerable part of Japan's fiscal revenue comes from bond issuance, the Japanese government debt ratio continues to rise with the cooperation of fiscal expansion policy and extremely loose monetary policy.According to IMF data, as of the end of 2020, Japan's central government debt balance accounted for 221% of GDP, which means that the Japanese government's debt is already twice the total economic volume. When debt repayment expenditures account for a large proportion of total fiscal expenditures, the stimulus effect of fiscal policy on the economy is also limited.
The Japanese yen "continues to fall." Is the Asian market affected?
After the news of Abe’s attack came out on July 8, the yen rose in the short term. As of 17:00, the US dollar against the yen was at its lowest at 135.34, down about 66 basis points from the previous day, but then rebounded. Why did the
attack cause the yen to rise? Analysts believe that due to the long-term loose monetary policy of the Bank of Japan under the leadership of "Abenomics", the Japanese yen has been in a long-term depreciation channel, and Abe's attack may cause the loose monetary policy to lose support. Under the influence of external factors, the Bank of Japan has already faced a dilemma this year, and the Bank of Japan's monetary policy may change in the future.
After the launch of "Abenomics", the Japanese yen rapidly depreciated against the U.S. dollar in the two and a half years from the end of 2012 to the first half of 2015, from about 80 yen per U.S. dollar to 120 yen per U.S. dollar. In the following years, the yen remained volatile against the US dollar.
Until March this year, the Japanese yen started a new round of rapid depreciation. Affected by the divergence in the monetary policy directions of Japan and the United States, the depreciation of the yen has accelerated. Since March, the yen has depreciated nearly 15% relative to the US dollar. In early March, 1 US dollar was exchanged for about 115 yen. Currently, 1 US dollar is exchanged for about 135 yen. The exchange rate of RMB against the Japanese yen has also risen above the 20 mark, rising from about 18 Japanese yen to 1 yuan in early March to the current 20 yen to 1 yuan.
Tianfeng Securities analyst Sun Binbin pointed out that the current round of yen depreciation is caused by, on the one hand, the divergence of monetary policies between the United States and Japan; on the other hand, the Bank of Japan, which continues the logic of "Abenomics", also accepts the result of depreciation intentionally or unintentionally. The main reason why the Bank of Japan promotes the depreciation of the yen is that Japan's economic fundamentals are weak and it is still not free from the risk of deflation.
analysis said that the rapid depreciation of the yen, on the one hand, has indeed had the effect of stabilizing export growth, but on the other hand, Japan is highly dependent on energy and food imports. Against the background of the rapid rise in global bulk commodity prices, Japan The accelerated depreciation of the yuan has also expanded Japan's trade deficit, adding to imported inflation pressure. In the past two months, Japan's domestic inflation exceeded 2%, but after excluding fresh food and energy, the CPI growth was only 0.8% year-on-year, which shows that Japan's current inflationary pressure mainly comes from imported factors.
Haruhiko Kuroda has always insisted on the need for the Bank of Japan to continue to implement active loose monetary policies. The Bank of Japan’s monetary policy meeting in June still maintained the monetary loose policy of controlling interest rates at extremely low levels. According to Reuters , former Bank of Japan executive director Maeda Eiji said the Bank of Japan may adjust its ultra-loose monetary policy before the end of its dovish governor Haruhiko Kuroda's term in April next year.
Sun Binbin believes that the Bank of Japan will not give up its easing stance, but the continued rapid depreciation of the yen will indeed cause constraints and troubles. From the perspective of the Bank of Japan, what we currently want to see is a gentler depreciation of the yen.
Japan’s foreign trade data has further deteriorated in recent months. Japan's trade deficit expanded to 2.38 trillion yen in May, the second highest level since statistics were collected, and has maintained a deficit for 10 consecutive months. Among them, Japan’s imports in May increased by 48.9% year-on-year to 9.64 trillion yen, reflecting the dual pressures of rising raw material prices and the depreciation of the yen.
Zhong Zhengsheng believes that the rapid depreciation of the yen, as well as the difficulties it reflects in Japan's inflation and foreign trade deficit, continue to make the market doubt the sustainability of the Bank of Japan's easing policy. The Bank of Japan faces a "dilemma": on the one hand, Kuroda Haruhiko insists on pursuing "Abenomics", maintaining low interest rates to support the weak economy, and tolerates a "weak yen" in order to boost exports; on the other hand, Japan's inflationary pressure is gathering , excessive depreciation of the yen has increased import costs and intensified financial market volatility.
The depreciation of the yen was once one of the triggers of the "Asian Financial Crisis" in 1997. What impact will this round of depreciation of the yen have on the Asian market? Zhong Zhengsheng pointed out that the destructive power of this round of yen depreciation on the Asian market is even more extreme.The influence of Japan's economy in Asia is not as good as before, and China's economy and RMB exchange rate may play a "ballast" role. As China's economic strength and status as a major trading nation have been consolidated, the number of RMB assets held by foreign investors has increased, and the degree of marketization of the RMB exchange rate has continued to increase, the RMB has initially exerted a " currency anchor " effect in Asia through de facto links. On the other hand, most of Asia has floating exchange rates, which have played a "balancer" role in cross-border capital flows, and Asian countries have intentionally accumulated more foreign exchange reserves after the financial crisis, thickening the hedging Capital outflow of security pad . In addition, the rise in raw material prices this year has been beneficial to some Asian resource-exporting regions to increase economic output, and has also provided support to the local currency exchange rate .
Beijing News Shell Finance Reporter Gu Zhijuan
Editor Wang Jinyu
Proofreader Liu Baoqing
