Japan economy has seen slump in the third quarter due to soft global demand and the US-China trade war. This has put extreme pressure on Japan’s fragile recovery of economy. The ruling party members have been pressuring the government to a big spending package.
PM Shinzo Abe is considering a large-scale economic stimulus package of $92 billion. Japan will also provide financing to companies for overseas investment to help them diversify production
The government will issue bonds to fund public works spending of up to $36.82
billion and make up for tax revenue shortfalls as firms feel the pinch from the
trade-wars between the US-China.
In 2016, Britain’s vote to exit the European Union jolted Japan’s export-reliant economy. And it is almost three years since the US-China trade dispute which jolted the world’s economy. The US has put tariffs on Chinese goods and created problem in Hong Kong. Last week, President Trump has signed a bill for ‘Hong Kong Human Rights and Democracy Act’. China said it would “fight back forcefully” if anyone will try to change the China authority over Hong Kong. The bill has created a new hurdle in US-China relation.
China has $12 trillion Bond market, bigger than Japan. In 2020 China will open up Chinese financial sector market for international markets. This will de-couple China from the US and strengthen China’s economy but things will turn worse in 2020 for world’s economy due to trade-war between them.