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Japan-US trade war (2): retreat and non-return

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Japan is a feminine nation, but it is soft and tactical, strategically just. The United States is a masculine nation. If there are many new ones, there will be more than just outside. Looking back on the 40-year trade war between Japan and the United States, the strategic tactics of both sides also show different characteristics.


American two-axe


Cheng gnawed the gold, only three strokes and three axes. Although the United States has different focuses and different ways in different periods, it is basically the same as tactics: (forcing Japan) to sell less, (forcing Japan) to buy more. The strategic goal is to reduce the deficit.


Before the square agreement, from textiles, steel, color TVs to car friction, the US demand for Japan is less. At this time, the United States has moral purity and self-discipline. The trade protectionism in the bones does not dare to justify it because it is "Politified incorrectly". Unlike today's Trump, you can say it if you don't. How can I do both XX (protectionism) and archway (free trade)? The best way is for Japan to restrict exports. And Japan is indeed under the pressure of the United States. This self-restricted export and active "less sales" not only preserved the "table" of the United States, but also benefited the "li" of the United States. In Japan, it is a temporary respite.


The square agreement forced the yen to appreciate, and it is hoped that "less selling, more buying" will bring the best of both worlds. The sharp appreciation of the yen has weakened Japan’s export competitiveness, reduced Japan’s exports to the United States, and achieved “less sales”. The relative depreciation of the US dollar has strengthened US export competitiveness, increased exports to Japan, and achieved “more purchases”.


The second front parallel to the Plaza Agreement – ​​forcing Japan to open its market, it is “buy more”. The characteristics of the Japanese market are that there are too many open and secret scorpions on the open side. Open on the bright side, because tariffs and non-tariff barriers are not obvious. It is because of the special relationship between Japanese companies and the habits of Japanese consumers that it is not conducive to the entry of foreign goods. But no matter what, the purpose of this second front is to ask Japan to "buy more."


The US demand for Japan is basically two types, either selling less or buying more, and the strategic goal is to reduce the deficit. Americans have a simple mind. The arithmetic formula in his eyes is like this. If Japan sells less, it can reduce the deficit, and if you buy more, you can reduce the deficit. If the yen appreciates, you can sell less and buy more, and reduce the deficit by two-pronged approach. It is no wonder that in the 85 years, there were so many voices in the United States that required the appreciation of the yen.


Japanese Judo: tactically flexible, strategically just


When Japan invaded China, China was tactically retreating step by step, but the strategy was only one word: support. With Jiang Baili’s words, if you win or lose, just don’t talk to it. The tactics seem to be retreating, but the strategy is a firm word: not falling.


This is the Jiu Jitsu of China's war of resistance. The tactics and strategies seem so different. The tactics are retreating at the same time, saving the vitality of the country as much as possible; never surrendering strategically, and never retreating on this issue. This retreat and retreat is the embarrassment of China’s war of resistance. When the Japanese suffer from a loss, they remember it. After a few decades, the United States started a trade war against Japan, and Japan’s anti-American strategy and tactics are exactly the same as those of China’s anti-Japanese law. This is because the Japanese are originally masters of judo, or they are eating from the Chinese battlefield, they can argue in another language, and they will not start here.


Japan’s anti-American tactics are to retire step by step, to preserve the relationship with the United States as much as possible, and the US market is not lost, thus creating time for other coping techniques (for example, product upgrades, setting up factories in the United States). This is a tactical retreat, lost face, and kept the quilt.


Japan’s strategy against the United States is that exports cannot be lost. The export referred to here does not refer to the export of Japanese manufacturers to avoid the appreciation of the yen and voluntary quotas, and to set up factories in the United States. It refers to exports that are produced in Japan and can bring GDP, taxes and employment to Japan. Even if such exports are to be re-exported through a third country, as long as they bring GDP, taxation, and employment to Japan, it is an export that Japan must protect and cannot lose. In this sense, the protection of exports is to protect Japan’s manufacturing industry and protect Japan’s employment.


On the surface, in the face of the pressure of the United States step by step, Japan is fully retreating. But behind the retreat, Japan succeeded in minimizing export losses. The preservation of the export preserves the strength of Japanese manufacturing. Japan and the United States have been in friction for 40 years, and the Japanese economy has lost 30 years. Japan is still a big country and a strong country in manufacturing, and it is a big exporting country and a strong country. People only saw the step backwards of Japanese tactics, but did not see Japan’s strategic success. We have preserved the foundation of the manufacturing industry and will never give up export and manufacturing. Just like when China’s war of resistance retreated to the rear, it saved the lifeline of the country and never surrendered.


Many people are puzzled. The yen has tripled its appreciation. According to the usual theory, how should the trade deficit fall? After the short-term J-curve effect, Japan’s imports did show a substantial increase. According to the truth, the deficit should be down, how can the deficit be stubbornly high?


An important reason is that while Japan is stepping back to the US negotiations, it has tried its best to export in a very aggressive manner, rather than sitting still. For example, tapping potential and improving labor productivity. Another example is product transformation, exporting products with high added value and low price elasticity. These two methods, the enterprises of the general state do not understand, but can not do, prefer to choose some easier methods, such as squeezing profits, layoffs and pay cuts. Of course, Japanese companies will also use these easy-to-use methods, but they will do a better job in tapping potentials and upgrading their products, and will be able to turn export pressure into a product of product upgrade and competitiveness improvement. This is why Japanese companies are so good. Excellent, it is good to be hard on the bones.


Judging the outcome of a war has never been to see the outcome of the battle, but to see if the strategic goal is achieved. To achieve the strategic goal, even if every step is retreating, it is also a victory. Japan has won this way in the trade war with the United States. The sign of victory is that at the end of the war, the strength of the export has not been seriously injured, and it can rebound strongly. At the end of the eight-year war of resistance, China has saved the country's lifeline and achieved a strategy of not falling. This is victory.


If so, what did Japan do right in this trade war? That is to retreat in a tactical step, achieving strategic savings in export. In this sense, Japan has won in terms of trade wars.


However, in terms of the economy, Japan has lost. Let me talk about the reasons below.


Japan won the trade war and lost the economy


Japan won the trade war and saved the strength of exports and manufacturing. But after all, it is a war. No one can retire from the whole body, and it will inevitably leave some harm. For Japan, there are two injuries that have led to a structural imbalance in the Japanese economy, which has made Japan embark on the evil path of the bubble and ultimately lost the economy.


An injury is inevitable, that is, the manufacturing industry moves overseas. Whether it is self-restricted export (VER, Voluntary Export Restriction) or the appreciation of the yen, an inevitable result is that the Japanese manufacturing industry has moved out and invested in the United States. For Japanese companies, it is a natural and reasonable choice based on market principles. It is beyond reproach and can avoid trade restrictions and exchange rate losses. But for the Japanese economy, it is a fairly "hollowing" of manufacturing. Although Japan has done its utmost to maintain the strength of domestic manufacturing, hollowing out is a market trend that cannot be stopped. The manufacturing environment that stays in the country and is easy to keep is also becoming more and more difficult.


The manufacturing industry, which has been double-impacted by hollowing out and difficult management, is the basis for the structural imbalance of the Japanese economy in the future, and is the basis for the Japanese economy to “get rid of the reality”.


This is also a natural thing. If the real economy makes money, the money will of course stay in the real economy. But if the real economy is not good at earning money, then it’s no wonder that the money is red. Especially if there is a lot of money.


Japan is adopting a loose monetary policy at this time and maintaining a low level of interest rates for a long time. In the aftermath of the latecomers, this is like the crux of the US subprime mortgage crisis, the interest rate Too low for too long. Too much money, too cheap, domestic manufacturing is not good, money can only go to the field of making money, such as the stock market and the property market. As a result, the stock market is in full swing and the property market can triple.


There is always a broken day in the bubble. The result of the rapid puncture is the Minsky moment. Its destructiveness and consequences are the 10 years and 20 years that Japan lost. The trade war did not destroy Japan; the excessive reaction to the trade war and the long-term artificial low interest rate were the real reasons for the destruction of Japan.


This ruining Japan’s long-term low interest rates is another damage that the trade war has brought to the Japanese economy. The wisdom of the aftermath is something that should be avoided. But in Japan at the time, the authorities were fascinated and could not over-blame. As a latecomer, it is okay to learn from the lessons of Japan and respond appropriately to the trade war.


In short, Japan and the United States have won the trade war because the roots of exports and manufacturing have been preserved. But the economy was lost because the export was difficult and the manufacturing industry was not doing well. It was as if the woman was old and the man was old and yellow, which provided the basis for the man to deviate. At this time, if there is another young woman who is swaying, it will provide conditions for the man to deviate. If a man has no moral self-discipline and integrity, the family will burst.


The situation in Japan is similar. The real economy is like a woman, and the old stock market is booming, like a young woman. At that time, the Japanese Ministry of Tibet, the interest rate was so low, so long, that is, the man who has no self-discipline and integrity. All three are in harmony, and the Japanese economy is not broken, it is strange.