Japan industrialists face tough choices. Feel pressured by high yen, growing protectionist threat
Tokyo — ``Does anyone here have any suggestions how to bring our trade surplus down?'' The speaker, Eishiro Saito, sounded plaintive as he addressed a Japan Press Club lunch on Monday. Over at the Diet (parliament), Prime Minister Yasuhiro Nakasone was delivering his state-of-the-nation address, exhorting his fellow legislators to remember that ``unless there is world growth, there is no growth for Japan,'' and that ``while we are Japanese, we are also inhabitants of the world village.''
Mr. Saito, too, was concerned about turning Japan into a ``truly international-minded nation.''
But as chairman of the Federation of Economic Organizations (Keidanren) and the principal leader of Japan's business community, his attention was fixed much more concretely than the prime minister's on two items: the soaring yen and Tokyo's enormous trade surplus, which reached $82.7 billion last year. The surplus with the United States alone exceeded $51 billion.
Pressured by the high yen and by increasingly shrill protectionist voices in the US Congress and elsewhere, Japan's industrial manufacturers face a year of agonizing decisions.
Saito's own company, Nippon Steel, is the world's largest steelmaker, but it is having to curtail operations because the high yen is wreaking havoc with its overseas markets.
Company after company is opening factories in the US to avoid protectionist trade legislation. This means loss of jobs in Japan. Though unemployment is still a modest 2.8 percent, it is expected to climb to 4.2 percent by 1991, at which point 2 million people could be out of work.
And if the dollar declines to a rate of 120 or even 100 yen in the next three years, ``secondary industry [manufacturing] in Japan will be wiped out,'' Saito said.
So what is the answer?
Saito said he was tired of having to explain, on every visit abroad, that Japan was working on reducing its trade surplus, that results were beginning to show, and that over a period of several years, the whole structure of Japan's economy would be changed so that imports would be encouraged and exports reduced.
``The Americans, the Europeans, they all tell me they want action now,'' Saito said.
``[British Prime Minister Margaret] Thatcher is mad about Japanese seat-belt regulations, which, she says, restrict imports from Britain.
``Congressman so-and-so from such-and-such a state wants something done about electric fans. Everyone has a specific case in mind. They are not going to be satisfied until the actual trade figures change.''
Saito's dilemma is that no one in Japan wants to make the first move.
The rice farmers will not give up their hefty subsidies.
The carmakers will not reduce their exports to the US under the existing quota system. Declining industries like shipbuilding or textiles seek desperately for ways to remain viable.
Businessmen want the government to come up with a budget that will stimulate domestic growth.
But Prime Minister Nakasone seems determined to squeeze every ounce of fat out of the budget so that deficit financing will be reduced year by year, with a target of no deficit-financing bonds by 1990.
Yet in one way or another, by trade bills or by a declining dollar, Washington seems determined to shrink its trade gap with Japan. For Japan and its manufacturers, 1987 is likely to be the year of decision.