Research Areas & Themes ( 2019 ): Politics / Economics

Trade Policy

Project Leader
Research Objective In 2018, the Trump Administration entered its second year and confused the world by adopting a series of protectionist measures (increases of steel and aluminum tariffs, tariffs on Chinese products and possibly car tariffs). These actions are claimed to be “unpredictable” but they were definitely “predictable” in the sense that the President has been faithfully doing what he had promised to do in the election campaign. Changing the viewpoint, President Trump would never change his protectionist policy unless he can change the minds of the people who supported him. For that purpose, the President will need to present the degree of burden concrete protectionist policies will impose on specific industries and workers, as well as the entire economy in the US, rather than merely advocating abstract interests of free trade.
For example, the trade war with China is meant to exclusively increase tariffs between the US and China, which simply implies the situation that all countries except the US and China have concluded a free trade agreement. Since the essence of a free trade agreement is “discrimination,” industries of the US and China will be discriminated against the world. In fact, Brazil, Australia and Japan have gained advantages as a result of China’s increases of tariffs on soybeans, beef and cars, respectively. The problem lies solely on the US and China trade route, while other trade routes to the US and to China remain unchanged. Therefore, there has been no disruption like the one that had occurred after the Great Depression. However, there are little assertions like that similar to the TPP issue without the US. It is because no one sees the essence of this issue.
Additionally, Trump’s trade policies include the increases of tariffs on iron and cars for national security, and the increase of tariffs on Chinese imports by operation of Section 301 of the US Trade Act, bypassing the WTO rules. On the other hand, the WTO’s legislative roles basically don’t work. In order to overcome this situation, it is necessary to include the terms of the TPP Agreement, whose importance would be greatly enhanced by the expansion of the members joining the TPP-11 in the WTO agreement. From these standpoints, we will provide analysis and policy proposals that will correspond to changes in circumstances.
Project Overview The project leader will exchange views with negotiators, thinktank researchers and scholars of international economics and international economic law in Japan and elsewhere, and study and analyze the future of trade negotiations based on the insights gained.

Agricultural policy

Project Leader
Research Objective (1) Policy Areas
As a matter of fact, the agricultural policies under the Abe administration trigger changes of the existing systems for the worse or growth of agricultural protection, rather than making a better transition, although some advances are observed in limited issues such as initiation of the agricultural cooperatives reform. The cabinet frequently ratifies the policies arranged by the Diet members of the Liberal Democratic Party acting in the interest of the agricultural industries and the Ministry of Agriculture, Forestry and Fisheries by substantially strengthening reduction of acreage for rice production, bragging the abolition of the policy the first time in 40 years, or taking unnecessary deregulation measures which would have no real effects. In addition, many people in Japan have been caught in the wrong preoccupied ideas through the agricultural industry’s manipulation of information on, among other issues, the food self-sufficiency rate. We will continue to propose the necessity of agricultural reform and policies on its directionality.

(2) Technologies
There is a kind of fever surrounding the utilization of IT or AI for agriculture. However, if the growth of crops can be checked using drones, it should only be left to ordinary economic activities of individual entrepreneurs and farmers. By contrast, if the goal cannot be achieved merely by leaving it to the market, political involvement will become necessary just as ordinary policy measures.
(i) Formation of an agricultural IT cooperative (with the intent of creating a successful big data strategy, to provide farmers with assistance on data processing; collect, analyze and anonymize data from farmers; and give farmers advice based on big data and management/production conditions of individual farmers)
(ii) Utilization of traceability for blockchain (food and agricultural/marine products) are in circulation while being separated into different parts, or being subdivided or processed. The circulation process consists of multiple phases, and requires the involvement of many people. There are a wide variety of hazards that will increase the danger of food, including mixture of hazardous chemical substances due to human error in the phase of processing, and the possibility of being contaminated by microbes where no one involved knows about it (for example, the Snow Brand’s food poisoning incident was caused by the employees who mistook the contamination by microbes caused by a power outage). If any contamination is found in any particular phase and products contaminated similarly can be identified, it is possible to stop circulation in the subsequent phases, minimizing the harm resulting from proliferation of contamination. This process is a traceability for safety of food. However, only companies with an integrated process for agricultural products from production to processing can cope with it, because it takes huge costs to enter all items throughout the process in records manually in multiple phases. If blockchain technology can be successfully introduced in the process, it will be able to further improve food safety.
Project Overview We will exchange opinions with farmers and farm produce processing/distribution businesses to understand the current situation of agriculture. While being based on economics, we will make recommendations centering on the three pillars of agricultural policy: price support policy, farmland policy, and agricultural cooperative policy.
The project will study the possibility of developing Japan's agriculture by introducing and utilizing information technology, biotechnology, and other advanced technologies, as well as policy frameworks needed for this, while examining the trends in Japan's agriculture and agricultural ventures, and similar initiatives in developed countries such as the Netherlands, the US, Australia and New Zealand.

Forestry policy

Project Leader
Research Objective (1) Raison d’être of forestry policy
The forestry policy has placed an emphasis on either advancement of industry or multifunctionality. More recently, however, heavy rain damage has frequently occurred due to drift timbers, resulting in a consequence opposite to multifunctionality (i.e., forest caused the damage). Under the theory of multifaceted functions, which is more effective, forestation or returning to nature? From the viewpoint of prevention of natural disasters, isn’t it more effective to expand barriers to prevent landslides or develop a disaster-resistant river (which will prevent drift timbers from flowing into the river), rather than to advance the forestry industry? Agriculture has a reason for its need of protection: food security. However, unlike food consumed every day, there is nothing unique about forest products being protected as goods, because the existing houses made of wood can continue to be used even if imports of timbers are suspended for a certain period of time. The forestry industry should not be protected simply because the industry exists. We will examine whether it is necessary to protect and advance the forestry industry from the standpoint of the national economy.

(2) Validity of forestry policy
New forestry policy is to improve the efficiency by having forest land accumulated under the control of industry players or, if impossible, to elect municipalities to manage them. The forestry industry greatly differs from the rice industry in the field of agriculture where its efficiency has substantially deteriorated by the governmental policies. It is impossible to decide on the correct policy without clarifying why the industry could not be made more efficient just by relying on economic behaviors. Is it primarily difficult to accumulate forest land because it does not help industry players increase their revenue levels? Or, will the deforestation and forestation management make revenues extremely uncertain just because harvest comes after the lapse of a long time? Given these issues, we will research approaches for sustainable forestry business, as well as appropriate forestry policy.
In this context, we also will examine, among other things, whether forestry is a sustainable industry in foreign countries, how it is different from Japan, and what measures have been taken for it.
Project Overview We will exchange opinions with those engaged in forestry, as well as forestry policy makers and researchers, and make policy recommendations based on statistics, and forestry trends of foreign countries and their policies.

Analysis on Chinese economy

Project Leader
Research Objective Since the early 2010s, the Chinese economy has been in the final stages of its high-growth period, showing a gradual decline in the growth rate over the medium to long term. For about a year and a half from early 2017 to mid-2018, the slow-down tendency of the Chinese economy stopped and remained almost flat, and then it entered into a moderate decline in the growth rate once again. In 2019, an unpredictable situation will continue, in part, because there is a risk that the unstable element of the trade frictions between the US and China may grow fiercer. However, it is fully possible for China to keep its macro economy stable unless the US-China frictions become extremely serious, as the Chinese economy has already transformed into a domestic demand-led economy.
Meanwhile, the political base of the second Xi Jinping administration became stable after the 19th National Congress of the Communist Party of China in October 2017, and his administration is leveraging that political power to tackle challenging structural reforms on financial and fiscal policies to avoid financial risks over a medium to long period of time. China’s most important task in the immediate future is how it will carry out structural reforms while securing the stability of its macro economy under the influence of the US-China trade frictions, while carefully identifying the resulting negative impacts of structural reforms on the economy.
In May 2018, Li Keqiang, Premier of the State Council, visited Japan, which accelerated improvement of the China-Japan relationship, backing up Japanese companies to expand investment in China. Against a backdrop of ongoing strong China business, Japanese companies are becoming highly likely to make active investments in China on a full-scale basis after not doing so since the earlier 2000s.
Based on the above-mentioned recognition of the present situations, we will aim to provide an easy-to-understand overview of the Chinese economy as a whole, paying attention to the interactions of the real factors, such as short-term macroeconomic trends, various influences of the structural reforms, and the revitalized economic exchange between Japan and China.
Project Overview Through periodical visits to China for direct interviews, we will collect accurate and timely information from reliable sources, such as Chinese government officials, scholars, economists, and Japanese business leaders in China.
Based on the collected information, we will gain a comprehensive understanding of China's economy, including its macroeconomy, regional economies, industry-specific trends, financial trends, and the progress in various structural reforms. While factoring in domestic political developments and Japan-China relations, we will provide an easy-to-understand description of Japan-China economic relations and the realities of the Chinese economy.

Élan Vital for Japan

Project Leader
Project Member(s)  ・   ・ 
Collaborator(s) Kiyoshi KUROKAWA (The National Graduate Institute for Policy Studies (GRIPS)), Yukio HONDA (Osaka Institute Technology)
Research Objective Critical study and proposals of major fields relating to the revitalization of the Japanese economy and society, and corporate activities.
Project Overview Various proposals have been made to help deal with the declining birthrate and aging population problems as a long-term issue in the Japanese economy and society, as well as the social security costs that are increasing year by year. Unfortunately, there are no processes available to solve these issues at the moment.
Given these situations, in this project, we will work with researchers in Japan and abroad to study and offer information in multifaceted ways.
Firstly, we will study the "new social contract theory" that has now started to be redefined globally. We will study, from the field of social thought, how the government, business organizations, communities, and individuals will get involved in the future Japanese economy and society.
Secondly, as mentioned earlier, the Japanese society, which is facing the highest level of aging in the world, has significant economic issues with the expansion of social security costs, as well as social issues with the search for an optical system for care of elderly people and their self-reliance support. This project will discuss care and self-reliance support of elderly people from a viewpoint of the robotics industry in Japan.
Thirdly, we will study and offer information on globalization problems in the Japanese economy and society by introducing knowledge of overseas researchers into globalization and human resources development strategies of companies.
As in the past research activities, we will put an emphasis on presenting our research results in Japan and abroad.

Assessment and analyses of the long-term strategic trend in East Asia

Project Leader
Project Member(s)
Research Objective The project conducts a comprehensive analysis and assessment of long-term changes in the trend of the relationship between major powers in East Asia through 2050. Focus will be placed on strategic geo-political trends, including major power competition between the US and China. The project aims to identify the major strategic trends in East Asia which are to be expected over the long-term, and explore how the international relations in East Asia can be stabilized.
Project Overview (1) Study group for long-term analysis of East Asia
We will hold study group meetings regularly, approximately once a month, to discuss long-term strategic trends in East Asia, particularly expected economic, political and social changes, as well as the impact that these changes will have on international relations in East Asia over the medium to long term. Based on the results, the CIGS will organize a symposium on the long-term strategic trend in East Asia.
(2) Invitation of foreign researchers on China
We will invite a few foreign researchers on China to monthly study group meetings to discuss long-term strategic trends in East Asia.
We plan to invite researchers from neighboring countries.

China's banking system reform and capital market development

Project Leader
Research Objective Through the intensive structural reforms after its accession to the WTO, China’s banking and financial institutions have recovered their financing abilities, contributing largely to the economic development of the state. On the other hand, more recently, excessive debt problems stemming from bank loans and bond issues supported by banks have sometimes impeded the sustainable and stable growth of China. Thus, it is a key issue for banks, companies, individuals and governments to reinforce their respective risk management capabilities.
In this project, we will analyze the current situation of China’s banking sector and study China’s challenges for further development of the financial market, including international comparisons. In particular, we will verify the progress of the efforts of state-owned companies and local governments to resolve debt issues, and will attempt to provide recommendations on improvement of the regulatory and other systems to control financial risks, based on the experiences of Japan.
It is important to foster the capital market in order to improve the efficiency of fund allocation and mitigate the concentration of risks to the banking sector. We will verify the progress of the capital market reforms, and deepen our consideration into challenges toward developments of capital markets in China, as well as comprehensive development of capital market in Asia.
Project Overview We will evaluate and analyze the outcomes of past reforms, especially banking system reforms, and challenges for future development of financial systems that will perform the fund allocation function, which is key to the sustainable and stable growth of the Chinese economy. We will analyze these issues from multifaceted perspectives, based on policies announced by the Chinese government and statistics made available to the public, along with anecdotal information, mainly to:
(1) Collect and organize materials and financial statistics published by the Chinese government, market operating bodies and financial institutions, and evaluate and analyze the financial standing and risk management operations of financial institutions, as well as the challenges facing them.
(2) Verify the present status of bond issues by local governments, and grasp changes in their relationships with regional banks.
(3) Verify the effects of the efforts of the central government to control excessive shadow banking on innovations in the banking sector, and look into processes to solve issues.
By publishing interim reports and working papers in the course of our research, we will ask for comments from experts. The project leader will visit China and Southeast Asian and European countries at an appropriate time to proactively exchange opinions with market participants and researchers, and aims to improve the quality of research outcomes.

The role of fiscal policy in China in its pursuit of a smooth shift to steady economic growth

Project Leader
Research Objective We will further progress with the research we have conducted since 2016 on the soundness and sustainability of China’s fiscal policy, and conduct studies including international comparisons. In particular, we will verify the results of recent reforms for the reduction of local government debts, and the ideal approach for allocation of fiscal roles between the central government and local governments.
We will verify the progress of development of social security systems, and deepen our understanding of issues with future designs.
We endeavor to grasp the current situation of the national fiscal policy in China and study risk identifications.
Project Overview We will deepen our studies into the current status and issues of China's fiscal policy by gathering and organizing reviews presented in preceding research in China and elsewhere, materials published by the Chinese government and information provided by the Chinese and international media.
(1) We will organize moves to reduce local government debts about which there has been more concrete data and information available since 2017, and research future issues.
(2) We will deepen our research on the future prospects of China's social security-related expenditures we have conducted since 2016.
(3) We will attempt to create a medium and long-term survey into the soundness of the fiscal policy in China.

Changes in international capital flows in China

Project Leader
Research Objective We will verify the current situation of international capital flows in China, and continuously study the pace of deregulation of capital transactions. We also will analyze the present situation of outward financing and currency swaps in China, and deepen our consideration into the ideal approach for international financial cooperation.
Project Overview The project leader will attend academic workshops in Japan and abroad and exchange views from diversified perspectives. Presentations given by the project leader, when joining the joint study groups as a panelist, will be published, e.g., on the website of the CIGS to allow for comments.
Taking advantage of opportunities to answer questions about Japan's financial deregulation from Chinese researchers, etc., we will deepen discussions on the process of financial deregulation in China.

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