Japan Hopes to Cut Exports to U.S., Reduce Over-Reliance, Official Says
Finance Minister Kiichi Miyazawa said Friday that Japan wants to reduce its over-reliance on the American market by reducing its exports to the United States to between 25% and 30% of its total exports.
In an interview dealing with changes taking place in Japan’s economy, Miyazawa said Japan sent almost 40% of its global exports to the United States in 1986, a level he described as “fantastic.” He added that the figure has “got to be somewhere between 25% and 30%.”
Miyazawa said he would not be surprised if the 25% to 30% range is achieved “in a relatively short period of time.” Once begun, “the trend will be rather quick,” he said, and added: “This is a country where things move by consensus. When (something) starts in one direction, it goes all the way--sometimes excessively. Sometimes consensus is a snowball.”
Last year, when Japan sent 36.5% of its exports to the United States, it recorded a $59.8-billion bilateral surplus. Cutting exports to the United States to 30% would have reduced its U.S. exports by $14.8 billion.
Miyazawa said he does not think that Japanese overseas investment, which rose 49.5% to $33.4 billion in fiscal 1987, will go as far as that of the United States. American businessmen, he said, invested in “too much offshore production.”
“That won’t be the case with Japan, I hope, and as a realistic forecast, probably it won’t be as excessive,” he said.
He said a political backlash against Japanese investment is unlikely because “the extent of our investment is not anything of alarm to the United States.” He acknowledged, however, that investment in real estate in “a restricted area like Hawaii, where our presence is getting to be a bit scandalous,” could cause problems.
“I think we should use . . . restraint,” he said.
Miyazawa, who is also deputy prime minister, expressed confidence that Japan’s overall trade surplus will continue to shrink, helping to ease the trade conflict between Tokyo and Washington. Although Japan’s exports have increased slightly in volume this year, by 3% or 4%, imports are coming in at a far higher rate, with gains of between 20% and 30%.
“That is a good trend, and I think the trend is clearly set,” he said.
Citing gains in Japan’s two-way trade with other Asian countries, he said he hoped that Japan can increase this trade in order to hasten its shift from “over-dependence on the United States.”
Imports from the newly industrializing countries of Asia--South Korea, Taiwan, Hong Kong and Singapore--are acquiring a reputation for quality among Japanese consumers, Miyazawa said. Although Japanese industrialists are “half worried” about imports, he expects the flow to continue, providing a fresh competitive spur for Japanese business.
Purchases from the industrializing countries, he said, will be “good for Japanese consumers and for this part of the world as a whole.”
As part of the effort to shift the economy away from its dependence on exports, the Japanese government will continue its public works program, Miyazawa said. The goal, he said, is to restructure the Japanese system so that it relies on domestic expansion instead of exports to power economic growth.
“Now, at long last, the government is ready to finance that,” Miyazawa said. He said the government will enjoy huge extra revenues over the next several years by continuing to sell the government’s shares in recently privatized Nippon Telegraph & Telephone.
The sale of these shares will allow the government to finance an increase of more than 20% in spending on domestic public works for five to seven years, or more. That would provide up to $13 billion more than the $48 billion Japan has been spending on such projects.
“That is set,” Miyazawa said. “The system is in the books. The shares are in my pocket.”
As part of the effort to open Japan’s economy, Miyazawa said, he expects Japan to complete deregulation of its financial markets this year. That would come close to completing a process that the United States has been pressing on Japan for the past several years.
The final stumbling block to complete financial deregulation, Miyazawa said, has been opposition from postal officials to the elimination of controls on interest rates that give an advantage to the huge postal savings accounts controlled by the government.
He said he thinks something will have to be done this year about lifting controls on small-size postal and banking deposits.
By decontrolling its financial markets, Japan would be in a better position to expand the use of the yen in world money markets. But Miyazawa said Japanese officials are still not ready to accept the widespread use of the yen as a reserve currency in international transactions.
“Our state of mind has not been set to make the yen a part of world currency yet,” Miyazawa said.
