Japan Wants to Have Renminbi 'Demonized': Analysis

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Last updated at: (Beijing Time) Wednesday, March 12, 2003

Japan Wants to Have Renminbi 'Demonized': Analysis

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Not long after the unsuccessful hawking of the "Theory of China Exporting Disinflation" by the Japanese Financial Minister at the meeting of the G7 on Feb.22, 2003, a major Japanese paper "Nihon Keizai Shimbun" again released an article on Mar.2, saying that China was exporting ceaselessly into Asian countries the "disinflation". The article asserted that the products exported from China were of low price and of low labor cost, thus incurring the fall of wage-income and the tumble of realty price and further causing the diffusion of disinflation in the Asian region.

Before that, an article released by the Japanese "Yomiuri Shimbun" on Jan.28 under the title of "Chinese export increase accelerated the currency constraint in Japan" reprimanded that China had to a certain extent intensified the currency constraint in Japan. Around this Mar.6 a Japanese councilor aired an opinion, censuring that China should inflate the rate of the people's currency so as to alleviate the impact on the economy in Japan and the world due to China's export of disinflation. The very person described China as a "Seven-headed Monster". Even if it has something wrong with the three heads it can still go forward. And so Japan cannot do anything about it. In the meantime, according to the report of China Taiwan media, "the government and the public in Japan all begin to worry about the influence exerted by China's cheap labor and the low price for land-use."

Dec.4, 2002, a Japanese vice minister of finance published an article on the British "Financial Times", saying that the disinflation in China was exported by way of diffusion to Taiwan, Hong Kong and to the whole world and so China should take up the responsibility of inflating the people's currency. Before the meeting of the financial ministers of the G7 to be held in Paris this year the Japanese financial minister announced by availing himself of all occasions that he would work out a so-called program combating the global disinflation. And he would also ask the other countries to jointly adopt an agreement together with Japan in order to force China to inflate the exchange rate of the people's currency just as did the western countries in 1985 to force Japan to inflate the Yen by adopting the "Plaza Agreement". When the meeting of the financial ministers of the "Seven Countries Group" was going on, Musajuro Shiokawa the Japanese Finance Minister once again condemned and protested China's people's currency policy. Arguing that China was incessantly increase its exportation of cheap goods, which was a great cause incurring the currency constraint in Japan he again put forward the demand for the inflation of the people's currency. "Too much importation of China's cheap goods has not only caused the currency constraint in Japan," said he, "but also the root-cause of the global economic depression."

An informed person of the People's Bank of China recently revealed to the reporter of China Youth Daily, the ways and doings taken by the Japanese government have never been discussed or brought face to face with the Chinese government whether they were direct or indirect, non at all. Japan wanted to impose, of his own accord, pressures on China by way of international community. However, Japan, as a good-neighborly country of China is doing neither flesh, fish, nor fowl in so far as the morality and justice is concerned. The Chinese side holds what Japan is doing is ignominious and will take no other effect than doing harm to the relations between the two countries.

Root-cause of the above is to "use a neighbor's field as a drain"

In regard with Japan's frequent peddling of the "Theory of China Exporting Disinflation" Yuan Yuedong, a senior specialist on Japanese economy with the International Finance Institute of the Bank of China when recently having a special interview with the reporter, was of opinion that the fundamental cause for Japan's currency constraint had things to do with the "slow movement in the adjustment of Japan's economic structure", the "intensification in the out-moving of traditional

Industries" and the "failing of the newly booming industries as expected". All these problems have so far not been solved.

When no solution could be found internally Japan began to fumble for "external reasons", said Yuan Yuedong, to find out his "foe" and "scapegoat". For some 10 years, the Japanese economy was landed in a depression while the Chinese economy has witnessed a continuous booming for some 20 years on end. This has provided Japan with a life-saving grass to catch with.

Yuan Yuedong was of opinion that the Chinese commodities of reasonable price and good quality exported to Japan have met with great appreciation from the Japanese customers. This has actually restrained in a way the Japanese price. If you say none at all, it's by no means an objective viewpoint, but very minute. The question is: the limited impact of the Chinese exported goods on Japan was limitlessly overstated by some persons in Japan with ulterior motives. Some persons with conservative minds in Japan would in no way like to see China develop at such a fast speed and lopsidedly hold that China exported too many goods to the outside.

To put all these in a nutshell, Yuan Yuedong said Japan should do something to bring its thoughts back onto a right track to face directly with the reality of a fast development in China, and not to do anything as "dumping rubbish in the neighbor's yard". It is requested that Japan should better do something by finding the reason out from itself. China's development is not a threat for Japan but a "substantial opportunity for Japan's development".

By People's Daily Online

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