Top Japan executive sounds alarm over ‘endlessly’ investing in US

{"text":[[{"start":10.3,"text":"One of Japan’s most senior executives has sounded the alarm over the country’s companies “endlessly” investing in the US, as concerns grow about a lack of domestic investment needed to raise lagging productivity. "}],[{"start":22,"text":"The warning from Yoshimitsu Kobayashi, chair of the Japan Productivity Centre economic think-tank, comes as Tokyo pushes forward with a $550bn fund for investment in the US that it agreed under duress last year to ward off punitive tariffs imposed by the Trump administration."}],[{"start":40.65,"text":"“Can this really go on forever, money at the scale of $550bn and domestic investment drying up? How we should evaluate these elements is a problem,” said Kobayashi, who is also the outgoing chair of Tokyo Electric Power, Japan’s largest power utility, and a former president of Mitsubishi Chemical."}],[{"start":60.3,"text":"Kobayashi told the FT in an interview that “Japan had no choice” but to pledge the huge sum given US President Donald Trump’s tariff threats. He also argued that the new fund was aligned with Japanese businesses’ desire to expand in the US, an enthusiasm exemplified by Nippon Steel’s $15bn takeover of US Steel last year."}],[{"start":81.75,"text":"But Kobayashi is one of the first Japanese executives to openly question both the fund’s feasibility and its implications for domestic investment, a critical matter for Japan as it tries to change its status as the least productive economy in the G7 club of wealthy nations."}],[{"start":null,"text":"

"}],[{"start":100.05,"text":"Japan announced in April that it would seek to boost labour productivity by 15 per cent over five years as part of Prime Minister Sanae Takaichi’s wider effort to promote growth."}],[{"start":112.64999999999999,"text":"The Japan Productivity Centre has identified weak domestic investment since the 2008 financial crisis as the principal cause of sluggish labour productivity in Japan, as companies sought to expand overseas and multinationals were deterred by its shrinking population."}],[{"start":129.79999999999998,"text":"But the commitment to pour $550bn into the US has intensified concerns within industry that the government’s ambitions for more domestic investment are unrealistic."}],[{"start":140.74999999999997,"text":"Under the terms of the $550bn investment fund finalised last September, the Japan Bank for International Cooperation, a state lender, will provide funding for US infrastructure along with commercial banks backed by government export finance agency Nexi."}],[{"start":157.29999999999998,"text":"The scheme has been criticised for its lopsided nature, with Trump having ultimate authority to choose investments. Profits from them are to be split 50/50 between Japan and the US until Tokyo has recouped its money. After that, the US gets 90 per cent."}],[{"start":173.49999999999997,"text":"Japan has unveiled two rounds of projects worth up to $109bn, including financing nuclear and gas power plants, but officials in Tokyo are under pressure to announce further deals to keep Trump satisfied while not locking lenders into risky, unviable projects."}],[{"start":190.04999999999998,"text":"“JBIC and the three megabanks will [each] still invest up to a point, say at least ¥5tn to ¥10tn ($31bn-$62bn), but I fully understand the view that this cannot carry on endlessly,” Kobayashi said."}],[{"start":206.39999999999998,"text":"He suggests that changes in the US might dissipate the need for the scheme."}],[{"start":211.39999999999998,"text":"“It’s hard to see if the Republican Party keeps going down the Trump path,” he said, adding that it would ultimately be a “political decision”."}],[{"start":219.64999999999998,"text":"Japan’s economic output per hour worked is only worth $53 adjusted for purchasing power, compared with a G7 average of $75, according to the International Labour Organization."}],[{"start":231.74999999999997,"text":"Richard Katz, an economist and longtime Japan-watcher, said the country’s low productivity was a feature of an “extremely severe dual economy” in which many sectors had consistently performed poorly over decades."}],[{"start":244.49999999999997,"text":"“Japan’s productivity problem is one of capital allocation. Normally labour and capital should move over time from the sectors that are failing to the ones that are rising, but that has not happened in Japan,” Katz said."}],[{"start":264.95,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1781680924_7961.mp3"}