Japan economics thread

[gadgetcool5]

Another huge blow to Japan.

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Homegrown jet, which was slated to be released as early as 2021, may be halted.

 

[ansy1968]

Another huge blow to Japan.

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Homegrown jet, which was slated to be released as early as 2021, may be halted.

Hi gadgetcool5,

In contrast ARJ21 is doing great with enough order to be viable.

 

[silentlurker]

Got full article text?

 

[gadgetcool5]

Mitsubishi Heavy halts development of Japan's home-grown jet


TOKYO -- Mitsubishi Heavy Industries has moved closer to a final decision on freezing its regional jet program, Nikkei has learned, casting doubt on hopes for the first Japanese-built passenger plane in half a century.

The program, known as SpaceJet, has been beset by delays since its 2008 launch and now faces a global slump in air travel owing to the coronavirus pandemic.

Mitsubishi Heavy sees little near-term prospect of generating profit from the jet business, which has consumed more than 1 trillion yen ($9.5 billion) in development costs and weighed on the earnings of one of Japan's biggest industrial groups.


An announcement will be made Oct. 30 when the company presents its next medium-term business plan.

Mitsubishi Heavy had aimed to deliver the first SpaceJet as early as fiscal 2021. All Nippon Airways, Japan Airlines and other carriers have ordered about 300 of the 90-seat-class jets.

The aircraft continues to undergo trials for certification. But even if the plane is certified, Mitsubishi Heavy has no plans to begin mass production.

Coronavirus-induced restrictions on travel are sapping airlines' ability to make fleet investments. By one estimate, air travel demand will take five years to return to pre-pandemic levels.

The SpaceJet program's struggles contributed to Mitsubishi Heavy's first annual pretax loss in two decades in the year ended in March. The company expects only to break even in the current fiscal year, compared with the year-earlier 32.6 billion yen pretax loss.

The looming decision to freeze the regional program follows repeated cutbacks to the business.

In May, Mitsubishi Heavy wrote down the value of its SpaceJet business assets to zero. It booked a 263.3 billion yen loss for the program in the year ended in March.

Development spending was halved for the current fiscal year, and development of a 70-seat-class version geared for the North American market has already been halted. The staff of roughly 2,000 at subsidiary Mitsubishi Aircraft, headquartered in Toyoyama near Nagoya, has been cut by more than half, while development centers in the U.S. and Europe have closed.

Mitsubishi Heavy plans to shift more resources into power generation equipment as an alternative growth industry to aircraft.

 

[Mr T]

Another huge blow to Japan.

What, that a company's attempt to enter the busy commercial airliner market may not succeed? In what way was this important for Japan's medium/long-term economic growth?

It's also slightly odd that you would create a new forum topic just to post something that you see as negative news. Someone might accuse you of acting in bad faith. Presumably you'll be posting more positive stories as well?

 

[Mr T]

I tell you what, I'll get the ball rolling with a recent article from the Financial Times.

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The election of Yoshihide Suga as the new prime minister of Japan on September 16 has triggered many obituaries for “Abenomics”, which was launched dramatically by his predecessor, Shinzo Abe, in December 2012. Japan is back on the radar screen of global macro investors, after a long period in the doldrums.

Key questions are whether Mr Suga will offer foreign investors new opportunities, and what lessons can be learnt from Abenomics by other countries that are well on the way to so-called “Japanification” — a combination of zero interest rates, low inflation, subdued output growth and very high public debt. After decades in which western economists have lectured Japan about the “correct” approach to macroeconomic stimulus, it is ironic that the US and European economies have started to adopt the same characteristics. Convergence has occurred, but in an unexpected way.

Abenomics aimed to end deflationary pressures by its “three arrows”: ultra-easy monetary policy, flexible fiscal policy and reformist industrial policy.

Haruhiko Kuroda, Bank of Japan governor, certainly delivered on the first arrow. Aggressive quantitative easing reduced interest rates across the yield curve to almost zero by 2016. Short-term interest rates then went negative and yield-curve control was used to keep 10-year bond yields below 0.1 per cent.

As a result, the BoJ’s holdings of government debt rose to 84 per cent of gross domestic product at the end of 2019, about 41 per cent of the level of public debt outstanding. This was a much larger dose of QE than in other major economies. At first, the monetary arrow seemed to succeed. Inflation expectations rose towards the 2 per cent target, but this was mainly because the yen’s real effective exchange rate fell 30 per cent in the first two years, reversing decades of overvaluation. This devaluation, which increased import prices and boosted export competitiveness, was arguably Abenomics’ winning feature.

Foreign capital inflows into equities boosted the Nikkei 225 index by 120 per cent in the first 30 months of Mr Abe’s term, the best performance of the major stock markets. But since then, attempts at monetary stimulus have lost their force. Inflation has remained stubbornly below target, as wages resisted a tightening labour market. The Japanese equity market has traded broadly sideways, while US and European markets have strongly outperformed. On the fiscal side, there was confusion about the exact meaning of “flexibility” in Mr Abe’s second arrow. Initially, budgetary policy was expansionary, supporting the thrust of monetary policy.

But the Ministry of Finance had always been eager to control public debt by raising consumption taxes. In 2014 and 2019, higher sales taxes slowed economic growth, though they also shifted the primary budget balance into surplus, while stabilising the public debt ratio. Contrary to some expectations, extraordinary levels of debt never led to a government financing crisis, but nor did fiscal policy fully support monetary policy in stimulating inflation. Finally, structural reforms in industrial policy proved politically difficult.

According to the BoJ, potential GDP growth has been falling steadily since 2015, and has reached the worrying rate of 0.1 per cent year on year in the 2020 data. Adverse demographic trends account for much of this but productivity growth has also slowed sharply. A major achievement in the real economy has been the strong labour market.

Unemployment halved in Mr Abe’s time, reaching 2.2 per cent before the coronavirus shock in January. Mr Suga inherits an economy that has made genuine progress under his predecessor. He now has 12 months in which to cement his position at the helm of the Liberal Democratic party, and win re-election. His strategy will accept the macroeconomic aspects of Abenomics, but add sensible emphasis on structural reforms, such as the restructuring of regional banks, and more competitive pricing in transformed digital markets.

Given the outstanding performance of Japan relative to other advanced economies in handling Covid-19, the outlook for 2021 looks encouraging. The yen and the Nikkei 225 have not gained much from this achievement but may now close the gap with Chinese and Korean assets.

In the longer term, a re-elected Mr Suga might face the same macroeconomic problems as other advanced economies, assuming secular stagnation deepens after the pandemic. However, in contrast to recent decades, Japan might be better prepared for the slow bicycle race of the 2020s than some other advanced economies.

 

[PiSigma]

Mitsubishi Heavy halts development of Japan's home-grown jet


TOKYO -- Mitsubishi Heavy Industries has moved closer to a final decision on freezing its regional jet program, Nikkei has learned, casting doubt on hopes for the first Japanese-built passenger plane in half a century.

The program, known as SpaceJet, has been beset by delays since its 2008 launch and now faces a global slump in air travel owing to the coronavirus pandemic.

Mitsubishi Heavy sees little near-term prospect of generating profit from the jet business, which has consumed more than 1 trillion yen ($9.5 billion) in development costs and weighed on the earnings of one of Japan's biggest industrial groups.


An announcement will be made Oct. 30 when the company presents its next medium-term business plan.

Mitsubishi Heavy had aimed to deliver the first SpaceJet as early as fiscal 2021. All Nippon Airways, Japan Airlines and other carriers have ordered about 300 of the 90-seat-class jets.

The aircraft continues to undergo trials for certification. But even if the plane is certified, Mitsubishi Heavy has no plans to begin mass production.

Coronavirus-induced restrictions on travel are sapping airlines' ability to make fleet investments. By one estimate, air travel demand will take five years to return to pre-pandemic levels.

The SpaceJet program's struggles contributed to Mitsubishi Heavy's first annual pretax loss in two decades in the year ended in March. The company expects only to break even in the current fiscal year, compared with the year-earlier 32.6 billion yen pretax loss.

The looming decision to freeze the regional program follows repeated cutbacks to the business.

In May, Mitsubishi Heavy wrote down the value of its SpaceJet business assets to zero. It booked a 263.3 billion yen loss for the program in the year ended in March.

Development spending was halved for the current fiscal year, and development of a 70-seat-class version geared for the North American market has already been halted. The staff of roughly 2,000 at subsidiary Mitsubishi Aircraft, headquartered in Toyoyama near Nagoya, has been cut by more than half, while development centers in the U.S. and Europe have closed.

Mitsubishi Heavy plans to shift more resources into power generation equipment as an alternative growth industry to aircraft.

Mitsubishi never had a chance. They can't compete with Boeing or airbus on experience or size and don't have a home market large enough. Especially since Shinkansens are everywhere in Japan and superior in everyway.

 

[Phead128]

Don't combine Japan and North Korea / South Korea news. They aren't even related to each other.

 

[Deino]

I can only agree ... Please don't combine two separate completely different countries. Topic changed to "Japan economics thread"

 

[gadgetcool5]

Japan Plays Catch-Up in Venture Capital as Rivals Boom​

Nation’s startup scene is beginning to show some Silicon Valley swagger, but entrepreneurs and investors say it has a long way to go​

Still, Japan’s venture-deal volume last year was less than a tenth of China’s and 3% of the U.S.’s, according to figures from data providers PitchBook and Initial. In the first six months of 2020, Japanese startup funding sank slightly compared with the previous year to $1.9 billion, while U.S. venture-deal volume rose a bit.

Japan not only lags behind the U.S. and China but also has fewer $1 billion-valued “unicorns” than developing nations such as India. Even Tokyo-based

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Corp. , the world’s biggest tech investor, has shown little interest in funding homegrown startups.

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