Japan’s Claims Against Other Nations Increase 47% to a Record $1 Trillion

Japan’s claims against other countries--loans and investments overseas--surged by nearly half last year to exceed $1 trillion for the first time.

The increase, announced Tuesday by Finance Minister Kiichi Miyazawa, means that Japan almost certainly will remain the world’s largest creditor nation for the third year in a row, with $240 billion more in claims against other countries than they have against Japan.

These claims take the form of loans and investments in securities, foreign-based corporations and foreign real estate.

Japanese claims against other countries totaled $1.07 trillion, a 47% jump from $727.3 billion at the end of 1986, Miyazawa said. Other countries’ claims against Japan were $830.9 billion, a 52% increase from $546.9 billion a year earlier.

The $240.7-billion surplus represents an increase of $60 billion for the year. In contrast, the United States, at the peak of its overseas wealth in 1981, had net foreign assets of $140.7 billion. By the end of 1986, the United States had plunged into a net foreign debt amounting to $263.6 billion.

Although other nations have not announced their net foreign asset figures for last year, Miyazawa said it appears certain that Japan will be the world’s No. 1 creditor for the third consecutive year. Britain ranked second in 1986, with $169.6 billion.

On May 16, USC Professor Richard Drobnick forecast in a speech here that average annual surpluses of $70 billion in Japan’s current accounts, which roughly equal additions to net foreign assets, will continue for the next five years. If so, this will more than double Japan’s net foreign assets by 1992.

Yutaka Kosai, president of the Japan Economic Research Center, said Tuesday that Japan, as the world’s leading creditor nation, must make greater contributions to the world by more effectively redistributing Japan’s surpluses.

“The time has also come,” he said, “for Japan to distribute its accumulating surpluses in a more balanced fashion between investment at home and abroad. Social capital formation at home is also important.”

Kosai said increased purchases of American securities helped “support the American economy” last year but added that direct investments in manufacturing, which are accompanied by transfers of technology, make the greatest contribution to other countries. More and more of Japan’s direct investment, however, is in the form of takeovers of foreign firms, threatening to cause new friction, he said.

The economic journal Nihon Keizai Shimbun said in an editorial that Japan’s overseas investments continued to focus on purchases of securities and short-term financial transactions. The overseas investments of Britain and the United States are concentrated in direct investments.

Japanese investment in foreign securities rose last year by 31.7% to $339.7 billion. Direct investment, including takeovers and real estate purchases, increased by 32.6%, to $77 billion, or about 7% of all overseas assets. No breakdown was given for types of direct investment.