According to statistics published by Japan’s Ministry of Finance on Jan. 26, Japan's trade deficit hit a 35-year record of 12.78 trillion yen, 12.4% worse than 2013. It seems that the preferred policy – devalue the yen to boost exports – has failed to generate the expected results. Japan is still not out of the woods even though Abenomics has been in effect for two years.

To begin with, Abenomics did indeed generate positive results, said Lv Yaodong, director of diplomatic research center of the Japan research institute of the Chinese Academy of Social Sciences. He also pointed out that Abe’s economic policy didn’t work so well later on when a rise in consumption tax caused Japan's economy to enter a downturn last April. On Jan. 12, 2015 the Japanese government cut its forecasts for economic growth in the fiscal year of 2014 from 1.2% to 0.5%.

There is a worry whether Japan can get rid itself of this deflation. Japan's CPI inflation rate is unlikely to reach 2% in the fiscal year of 2014, said HarihikoKoruda, head of the Bank of Japan. The public seems to be losing faith in Abenomics as the economy's long and convoluted journey out of the downturn still seems no nearer to its end.

Economic and social structural problems are the country's main problems. Deflation is just a symptom and the diminishing purchasing power is the real crux. Japan's hollow manufacturing industry has made it difficult to boost the economy through devaluing the yen, and the high debt burden has been spooking Japanese finance, according to Chen Fengying, director of the world economic research institute, Chinese Academy of Modern International Relations. Around 70% of Japanese enterprises have built factories overseas which pay taxes to the governments of those countries. The weak yen has fueled the prices of imported raw materials, and thus has made a dent in the profits of Japan's small and medium sized domestic enterprises. Export rose 12.9% in December 2014, but such an economic upswing is temporary. Abenomics has done little to narrow the gap between rich and poor, according to Tokyo web.

This article was edited and translated from 《安倍经济学，还能走多远？》, source: People's Daily Overseas Edition, Author: Zhang Qiao