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Introduction:
The U.S. currency manipulation of Japan is nothing short of blood-cuttering. The yen depreciated to 160 against the dollar, hitting a 30-year low, and hit Japan's economy directly. By June 26, the yen had once again fallen below the 160 mark, and $60 billion in foreign exchange reserves had been almost depleted. What is all this? Is the motive behind it purely economic interests, or is there another political and strategic consideration?
1. Why did the United States "harvest" Japan?
Behind the financial means, there is a huge temptation of American economic interests. The yen has weakened, the dollar has strengthened, and American companies have become more competitive in the international market. The intervention of the Bank of Japan has been repeatedly broken, and it is clear that the United States is "unscrupulous" to absorb the "nutrients" of the Japanese economy. Behind this seemingly financial operation, the United States is actually "replenishing blood" for its own economy and maintaining its position as the global economic hegemon.
Historically, the U.S.-Japan economic relationship has been fraught with twists and turns. The Plaza Accord in the 80s of the last century caused the yen to appreciate sharply, which hit Japan's export economy hard. Today, history seems to be repeating itself, only in a different role. In this "financial war", Japan has become the target of harvesting, and the United States is the reaper. Japan's economy has been slowly recovering since then, and now it has been hit hard, as if it is in a "cycle of fate".
The U.S. domestic economy is under pressure, with high inflation and slowing economic growth. Strategically, the United States needs to contain China's rise through economic means, while also ensuring "economic order" in the camp of its allies. Japan's economic power should not be underestimated, and it is not surprising that it has become a target of "harvesting" by the United States. By suppressing the yen, the United States can not only relieve its own economic pressure, but also occupy a more favorable position in the international financial market.
In the face of such financial encirclement, will Japan be able to survive this crisis? Are the Japanese government's response effective? These questions need to be answered urgently.
2. Will Japan survive this crisis?
The reasons for the collapse of the yen are jaw-dropping. The Federal Reserve continued to raise interest rates and the strong return of the dollar, which directly led to the sharp depreciation of the yen. The collapse of the yen not only caused the price of imported goods in Japan to soar and inflationary pressures sharply, but also dealt a severe blow to Japan's financial markets, causing investor confidence to plummet and the stock market to fall.
The depreciation of the yen has also had a knock-on effect on global financial markets. As the world's third-largest economy, the turmoil in Japan's economy has sparked widespread concern among international investors. The currencies of other Asian countries are also under depreciation pressure, and capital market volatility has increased. The International Monetary Fund (IMF) has even warned that the instability of the Japanese economy could trigger a new global financial crisis.
In the face of such a grim situation, the Japanese government has urgently introduced a series of countermeasures. First, the Bank of Japan decided to use its foreign exchange reserves to intervene in the market in an attempt to stabilize the yen exchange rate. Despite the initial investment of $60 billion, the effect was minimal and the market response was lukewarm. Then, the Japanese government announced a massive economic stimulus package totaling more than $200 billion, aimed at boosting the economy through infrastructure investment, corporate tax cuts, and consumer subsidies. However, these measures are unlikely to be effective in the short term, and market confidence remains low.
The Japanese government did not stop there, and tried to seek international support through diplomatic means. The Prime Minister has met with Chinese leaders on several occasions to discuss economic cooperation. The two sides reached a consensus and decided to strengthen cooperation in the financial market and jointly safeguard regional economic stability. China pledged financial support, while Japan provided an exchange of technology and experience. Such cooperation will help Japan tide over the difficulties and bring new opportunities for the economic development of China and Japan.
The plight of the domestic economy has aroused widespread concern from all walks of life. The Japanese public has mixed opinions about the government's response, with some expressing support for the stimulus package as a necessary means to boost the economy. However, there are also many people who have expressed concern about the government's massive use of foreign exchange reserves and increasing fiscal deficits, which may lead to more serious economic problems. The media and experts have expressed their opinions, ranging from those who believe that Japan is capable of surviving the crisis, while others are pessimistic about the prospects.
In this situation, Japanese companies are also actively looking for a way out. Many companies have accelerated the pace of internationalization, expanded overseas markets, and reduced dependence on the domestic market. In particular, some high-tech enterprises have gained new development opportunities through cooperation with China and other countries. In addition, tourism has also become a bright spot for the Japanese economy, attracting a large number of foreign tourists and boosting domestic consumption, despite the impact of the depreciation of the yen on outbound travel.
Despite the various measures taken by the Japanese government and companies, the future economic outlook remains uncertain. The pressure on the yen to depreciate continues, and how to maintain economic stability in a complex and volatile global economic environment is a major challenge for Japan.
3. Can China-Japan cooperation be a lifesaver?
China and Japan have chosen to cooperate at this time, and there are profound economic and strategic considerations behind them. The leaders of the two sides have met several times and reached a series of agreements covering various fields such as finance, science and technology, and infrastructure. These collaborations contribute to Japan's economic recovery and provide technology and market opportunities for China.
The foundation of China-Japan cooperation lies in mutual benefit and win-win results. Japan has advanced technology and management experience, while China has a huge market and financial support. The cooperation between the two countries in the fields of new energy, intelligent manufacturing, and digital economy has broad prospects. For example, in May 2024, China and Japan signed a $50 billion new energy cooperation agreement to jointly develop renewable energy technologies. Such cooperation would not only reduce Japan's energy costs, but also help China achieve its green development goals.
The exchange of technology and capital is the core of Sino-Japanese cooperation. Japan has world-leading technological advantages in the fields of automobile manufacturing, electronics, and materials science. China, on the other hand, has an incomparable advantage in terms of capital and market size. For example, in June 2024, China invested $20 billion to build a smart manufacturing industrial park in Japan. This industrial park will introduce advanced technology from Japan, improve the overall level of China's manufacturing industry, and also provide a new development platform for Japanese companies.
However, Sino-Japanese cooperation is not without its challenges. There are great differences between the two countries in terms of culture and politics, and these differences may affect the smooth progress of cooperation. Political issues such as historical legacies and territorial disputes can also become obstacles to cooperation. In order to overcome these challenges, China and Japan need to establish closer communication mechanisms to strengthen mutual trust and understanding. For example, at the China-Japan Cooperation Summit in June 2024, the two sides reached a consensus to establish a China-Japan Economic Cooperation Committee to coordinate and resolve issues that arise in the course of cooperation.
Sino-Japanese cooperation is also facing interference from external forces. The United States is wary of Sino-Japanese cooperation, believing that it could weaken its influence in the Asia-Pacific region. The United States may interfere with the process of Sino-Japanese cooperation through economic sanctions, diplomatic pressure, and other means. In order to respond to these external pressures, China and Japan need to strengthen cooperation in the international arena and jointly resist external interference. For example, in international organizations such as the United Nations and the World Trade Organization, the two countries coordinate their positions and support each other to ensure the smooth progress of cooperation.
Fourth, the dawn of regional economic integration?
Sino-Japanese cooperation is of great significance to the two countries themselves, and also has a far-reaching impact on the economic development of the entire Asian region. The cooperation between the two countries in the fields of new energy and intelligent manufacturing has provided new development opportunities and cooperation models for other Asian countries. Asian countries generally have a positive attitude toward Sino-Japanese cooperation, believing that this is a good beginning of regional economic integration.
Thailand, Vietnam and other countries have expressed their hope to join this cooperation framework and share technology and market dividends.
The success of Sino-Japanese cooperation may also promote Asian countries to strengthen regional economic cooperation. At the ASEAN summit in June 2024, ASEAN leaders discussed strengthening economic cooperation with China and Japan, and put forward the idea of establishing an "Asian energy community". The concept aims to reduce energy costs, improve energy efficiency and promote regional economic integration through intra-regional energy cooperation.
China-Japan cooperation has a positive impact on the Asian economy and has a knock-on effect on the global economic landscape. As Asia is an important engine of global economic growth, the deepening of China-Japan cooperation will further enhance Asia's position in the global economy. European and American economies remain highly concerned about Sino-Japanese cooperation, fearing that it will weaken their dominance in the global economy.
The United States and the European Union are likely to take steps to address the challenges posed by Sino-Japanese cooperation. In July 2024, the U.S. government announced an Asia-specific economic aid package that aims to strengthen economic ties with Asian countries through financial and technical support. The European Union, for its part, said it would strengthen economic cooperation with Japan and signed a series of new trade and investment agreements to counter the competitive pressures brought about by Sino-Japanese cooperation.
The deepening of Sino-Japanese cooperation may also promote the restructuring of the global economic governance structure. The influence of the two countries in international organizations will be further strengthened, which may promote the reform of international rules. For example, at the G20 summit in August 2024, China and Japan jointly put forward proposals to reform the international monetary system, advocating for increasing the voice of Asian countries in the International Monetary Fund. This proposal has been supported by countries including India and South Korea, demonstrating the importance of Sino-Japanese cooperation in the international arena.
Epilogue:
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