Japanese Firms’ Capital Spending Tops U.S. Rivals

Japanese companies are outspending their American rivals on new plants and equipment, and that spells trouble for their governments’ efforts to balance world trade, private economists say.

They said the huge jump in corporate investment means that Japanese companies will be well positioned to dominate world markets into the next decade.

“Japanese companies are setting themselves up to throw a knockout punch in the ‘90s,” said Kenneth Courtis, senior economist at broker DB Capital Markets (Asia).

Difference Not Great

The Japanese laid out nearly half a trillion dollars last year on new factories and capital equipment, some $10 billion more than the United States invested, despite a big jump in U.S. spending.

The difference is not great, but the significance is that Japan spent more on the future even though its economy is just over half the size of that in the United States.

Economists said that trend is likely to continue. Many expect another double-digit increase in Japanese capital spending again this year.

“Japanese spending on commercially driven research and development and in new capital investment is set to surpass that of the entire North American economy in 1989,” Courtis said.

The implications for future trade patterns have the governments of both countries worried.

Japanese officials said the issue should be on the agenda when the two nations discuss structural economic problems that have contributed to the yawning trade gap.