Tokyo – Yoshitaka Shindo, Japan’s new economy minister, has expressed concerns regarding the struggles in China’s real estate industry and weak domestic demand in China, as it poses a risk to both the Japanese and global economies.
With China accounting for nearly a fifth of Japan’s exports, Shindo believes that the economic troubles in China may have a significant impact on Japan’s economy. He emphasized that this risk is magnified given China’s central role in the global economy. Shindo pointed out that foreign investment in China has drastically declined and real estate companies in the region are facing difficulties, resulting in a slow recovery of the Chinese economy.
Speaking about Japan’s own economy, Shindo noted that there is a sense of improvement after a prolonged period of stagnation. He highlighted that inflation is running above the Bank of Japan’s 2% target and the government’s analysis indicates that overall demand in the economy exceeds supply. This is a reversal of Japan’s historical issue of insufficient demand.
However, Shindo cautioned that it is premature to proclaim an end to the long-standing problem of deflation. He explained that wages, particularly at smaller companies, are not keeping pace with inflation.
Overall, the struggles faced by China’s real estate industry and the weak domestic demand in China are seen as significant risks to both the Japanese and global economies.