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 AOYAMA VIEW

END SUMMER, CEREMONIES AND HOLIDAYS OVER, BACK TO WORK FOR ALL
With Obon holidays, war anniversaries and hottest three weeks of summer now behind, Japan is returning back to work routines and foreign expats back to Japan from their home leaves. Politics are resuming, too, once Prime Minister returns from his holidays at his Finnish log house near Mt.Fuji. With all anniversary speeches given and new defense legislation in the bag, the focus can be turned back to economics that have been neglected too long. The 2Q.GDP data show more needs to be done to reassure that the recovery continues.
instead.

Abe's anniversary speech was better than expected - and longer, in fact twice as long as any one before. The key words like "aggression", "colonial rule" and "deep remorse" were all sprinkled in despite despite rightists' demands to exclude them all and what Japan did 1931-45 was put into wide historical context from preceding Western colonialization to ensuing pacifism and generous development aid to neighboring nations followed by repeated vows that Japan is committed to stay this course. As expected, Abe also implored that the future generations should be saved from keeping apologizing what their grand-fathers and grand-grandfathers had done.

It was all faultless, yet seemed to lack personal feeling. In fact, the text was based on government's unanimous decision the same day, not on Prime Minister's personal views, and it was staged as a press conference with Q&A to further dress down any ceremonial spirit. This all reflected how astute politician Mr. Abe is, yet lacks wished for emotions.

Verdicts from neighbors and friends were as expected. China Foreign Ministry spokesperson criticized it from old routine - so quickly that she could not have read any translation yet - but the actual leaders refrained from comments, a positive sign. Korean president - later after proper reading - found "something lacking", yet again held back from lambasting Abe's effort. Meanwhile, USA and Australia found the speech very positive in apologizing what was needed and emphasizing Japan's positive contributions were due. So, in overall, allies were kept happy and neighbors seemed getting closer to take Japan's extended hand.

In Japan, despite recent anti-Abe mood, a poll showed opinions were more for than against, while another fresh poll showed PM's popularity shot up from recent low. Yet, slightly more voters remain against Abe, so more tricks are needed to gain back his earlier high level. Publishing new plans and schedules for the new National Stadium might help soon. Rather than cheap tricks, of course, serious observers hope the PM will now revert his focus on genuine economic reforms. The only election where popularity is important is Abe's re-election to head LDP next month and once this is cleared he should have no need to listen to protests from any corner of his own party, the only effective opposition against his chosen policies today.

War time apologies and nuclear bombing memories don't seem that important to many, especially the young generation here. In fact, polls taken on memorial days for Hiroshima and Nagasaki showed that only 20% knew the correct day and year these atrocities took place. Even in the two cities concerned, the level of such "experts" was not higher than 60%. If you don't really know the horrors that took place in your country and city, it is far-fetched to expect any attention to what happened same time elsewhere.

For many Japanese, the important event last week was not 70th war anniversary, but the start of 100th anniversary tournament of high school baseball. Most of us foreigners don't understand the huge national interest to watch school boys play ball, but it is the No.2 popular television sport right after the professional baseball and I guess the viewer ratings during this week's finals will confirm this again. That it has been played since 1915 confirms baseball's long history here and explains part of its popularity and so does longing for your home town or prefecture when "forced" to live in Tokyo or another big city. Yet, my foremost feeling is concern to see the boys struggle in the mid-day sun during the worst heat of the summer, when their professional counterparts are allowed to play in the cool of the evening, often in air conditioned domes. Admittedly, these young athletes are admirably full of vigor and ambition and I cannot recall any fatal sunstroke among them, even if the news are every day full of cases among "normal" people, young or old. In last few weeks alone, over 10,000 people were taken to hospital and some 50 people died of heat exhaustion. Happily, it looks a bit cooler from now on.

Digging a bit deeper behind the 2Q.GDP figures indicates they were not as bad as some commentators painted them. True, that 0,4% decline from previous quarter as well as last year's 0,1% decline in growth puts Japan in same bottom category with Finland, that has been now declared the worst economy in Europe. Yet, it was basically a correction from unexpectedly fast recovery in Jan-March at 4,5% annual speed and the biggest impact came from poor conditions outside of Japan, especially rapidly sliding demand in China, which caused 4% decline in exports, deepest since 2011. Decline in domestic demand was smaller and against recovery over past three quarters. It was blamed partly on poor weather that cut back the usual demand for summer items as well as rising food prices due to FX rate. As you might have noticed in your super market, while producers are shy for outright changes in price tag, the package that you get for same money has often been reduced in size. You can chose whether to call this "skillful selling" or "outright sneaky", but just wonder if it is one of the reasons CPI index continue to show next to no inflation while housewives all complain the food prices, including the local produce not impacted by FX rate, are 20-30% up.

Be as it may for the past quarter, the economist expectations for the ongoing quarter, already half way, are positive. The median estimate calls for return to growth at 2% speed as the elements for consumer demand recovery are now in place with superhot weather and super big summer bonuses paid out last month. Yet, demand in exports markets, especially China and other Asian countries, seem to continue poor and big companies heavily involved there like steel, construction machinery and cars, are now adjusting their sales estimates. Inventories are also record high following last quarter's export slump, so production needs to be adjusted this quarter. The arbitrated CNY write down last week will also cut exporters' profits and the continuing fall in Shanghai share prices raise worries that the government there will manipulate markets further. Many say that Beijing leaders are now in panic when unable to stop the decline and the huge explosion of illegally stored poison materials at a major port, one of the world's largest, showed again in concrete that things are not under control in China whatever they claim.

Japan suffered another blow in China two weeks ago when the men's team ended up last in the annual East Asia Football tournament played against the hosts and two Koreas, with no win, first time ever. As the tournament is not in official FIFA schedules, the best players based in Europe did not participate and this weakened Japan's hand against China and North Korea, but South Korea, too, had best players missing, yet managed to win, so this comes as no excuse. As often in soccer, the media criticism was focused on the national team's new foreign manager, who has been here only a few months now. Some hot heads were already demanding his resignation. With attitudes like this, Japan is never going to grow and develop into a true football nation.

Looking at the matches at television was painful, not because of the tactics, but because of Japanese domestic league players' gutless play. The techniqued were superior to other teams, but any effort for spirited attack was invisible. You can always blame the bad weather, but that is same for both teams, something Finnish long distance skiers were told when they tried to give same excuse long time ago.

The Blue Samurais had better sharpen up their play a lot if they hope to qualify for the next World Cup.

Timo Varhama  
Tokyo, 19 August, 2015   


Previous Columns

6 August 2015
Hot Weather, Hot Air in Politics - From War Anniversary to Whisky in Space".

23 July 2015
Greece, China, EU, Japan: looking for the lost reality

23 June 2015
World No.1 City? The Difficulty of Passing New Laws, the Easiness of Spending a Lot

16 June 2015
"Only in Japan?" - Somethings, Yes, But Others Are Same All Over

4 June 2015
Security and Finances: Pensions, Companies, Banks, Olympics, FIFA

21 May 2015
Economy Back on Track, Record Profits at Big Companies

11 May 2015
Spring Events: Odaiba Rock, Shibuya Sex, Capitol Hill, White Hall and Red Square

22 April 2015
Elections, Elections - Finland, Japan, Around the World

30 March 2015
Sakura: beautiful, but just for a short, fleeting moment

16 March 2015
Better late than never - Japan moves slowly

2 March 2015
Three struck out, three more in doubt - Abe's ministers under attack again

19 February 2015
Spring, Sibelius, Chocolate, Budget and Big, Bad Putin

5 February 2015
Reform Work Starts - Energy, Farming and Food on Wish List

26 January 2015
Terror strikes, plenty work, sad memories wait

15 January 2015
Watching AKB, Eating Mochi, Spending JPY 96 Trillion - Japan Off to Better 2015 After So-So 2014



About the Columnist

The columnist is a Japan veteran among Finnish business, our Chamber ex-president and today Member of the Board of Trustees.
After running a major Finnish industry company's Japan business for over 20 years, he is now Senior Associate in a strategic consulting company.

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