Uneasy Situation Continues

Against many expectations, Tokyo Stock Exchange kept on declining on Tuesday, after three days of non-operational holiday weekend. Among the many possible reason of the new year slump, China factor loomed up as fundamental problem in international economy, taking over other elements, geopolitical risk or energy revolution. Economic policy of Shinzo Abe administration looks like getting into serious environment.

Nikkei Average dropped to ¥17,218.96 on Tuesday, steep decline from last Friday by ¥479. It was six-day consecutive down, renewing the record from 1949 when Tokyo market resumed its operation after World War II. Investors turned to selling in all kinds of brand in the morning. After lunch recess, decline of Nikkei was accelerated, marking ¥500 temporary drop.

Main concern of the investors was possible speed-down of Chinese economy. Shanghai Composite Index showed major decline on Monday, while the Japanese were cerebrating Coming of Age Day. Since Shanghai abolished its new system of “circuit breaker,” investors seemed to be free in exchanging stocks, mainly leaning on selling.

What does “investors” mean? That is oil money. New York Oil showed abrupt down to the level of $30 per barrel on Monday. Cheap oil was a result of speculation on less demand in China. Oil price down also caused negative impression on financial situation of oil producing countries and possible sucking up oil money from international market. It was reported that fiscal deficit of Saudi Arabia had swollen from 3% against its gross domestic products in 2014 to 15% in 2015. Economists in Tokyo supposed that shrink of oil money in monetary market would be continued.

To hedge those risks, investors were looking at Japanese yen as safe haven of their money. That tendency raised the price of Japanese yen. Tokyo Foreign Exchange marked ¥117 for one dollar on Tuesday. With ¥1 of hike in foreign exchange, Toyota Motors loses ¥40 billion of its operative profit. It affects Japanese major companies, including car makers, electric appliances or steel, which have been the leaders of Japanese economic growth.

Abe administration keeps on saying “calm down.” “Too much noisy, isn’t it? It should be better to watch closely,” said Minister of Finance, Taro Aso, in his press conference on Tuesday. But, Abe administration is highly dependent on economic situation, because its policies have been build on greater tax income from the business sector. “Tax income has been increasing from the beginning of my administration three years ago. Economy has been supported by growing business tax and income tax,” Abe answered to the question about resource of tax relief next year in the discussion of the Diet on Tuesday. Is it true for the future?

Attracting the Eighteens

Enthusiasm on lowering voting age covers Japan. Led by campaign strategists, every party considers how to attract new young voters. National government expects higher rate in turnouts, making efforts for “eligible voters education” and some reviews in election system. While those attempts are not supposed to be sufficient for enhancing democracy, Japanese politics is focused on voting age, not willing to lower the age of adult.

It was Coming of Age Day on Monday. Every local office held ceremony for new adults, in which girls decorated themselves with rental kimono and boys appeared with smoking cigarette as a symbol of the aged. Some local government prepared ballot box for mock voting to notify the young agers that they came to an age of eligible voters. It is not clear how many decided to go to vote in coming election of House of Councillors this summer.

A person with age of twenty or more is legally recognized as an adult in Japan. However, Voting age will be lowered from twenty to eighteen this year. Basic reason was to hear more young voices for referendum on constitutional amendment. If the referendum covers the eighteens and older, why not ordinary election. That was why lower voters age was introduced.

But, age of adult is still twenty. The conservatives in Liberal Democratic Party were negative to render broad rights to the teens. So, people younger than age of twenty cannot smoke, drink beer or rend money by themselves. To allow them those activities, a great amount of legal amendment will be required. Even though they have voting right, eighteen and nineteen agers are half adult.

Voting system is not perfect, anyway. Asahi Shimbun revealed that some people with age of twenty had been dropped from the list of eligible voters. A voter has to live one place for three months at least to cast ballot at the region. A person who was listed being age of twenty and later moved less than three months before the election was not eligible, because he/she did not have record of three-month residence. With introduction of younger voting age, the lawmakers are going to introduce new law to allow all voters to vote based on previous address.

The lawmakers are also going to submit bills for voters to be able to vote in shopping centers or train stations. Though voters have been casting ballots only in public offices, they will be able to participate in the election during shopping with families or in their way to office. However, fewer turnouts should be attributed to apathetic sentiment of people against complicated struggle in politics. To tackle the issues closely connected to ordinary life is needed to attract voters.

Insisting Two-thirds

Prime Minister Shinzo Abe revealed his strange target for coming election of House of Councillors this summer. In the TV interview broadcast on Sunday, he showed his willingness for achieving two-third majority with some opposite parties for constitutional amendment. Not satisfied with coalition with Komeito, Abe named Osaka Restoration Party as partner of Liberal Democratic Party, knowing Komeito and Osaka were discordant each other. Maneuver for the amendment seemed to have been occupying Abe’s mind.

In the Sunday Discussion of NHK, Japan Broadcasting Corporation, Abe was negative on achieving two-third majority in House of Councillors only in the framework of current leading coalition. “It is difficult for only the leading parties to achieve two-thirds. There are parties positive for constitutional amendment other than LDP and Komeito, like ORP is so. Which provisions to be amended will be discussed. I hope to constitute two-thirds not only with LDP and Komeito, but with people who consider the amendment,” told Abe.

ORP has long positive on constitutional amendment under the leadership of former Mayor of Osaka, Toru Hashimoto. In spite of its focus on changing power structure between national and local government, ORP has been cooperative with Abe who upheld changing Article 9. “We assume amendment for settling autocracy and are preparing a draft before the election,” told Toranosuke Katayama, Chairman of ORP Lawmakers Group and former ranked member of LDP, in the same TV program.

However, LDP is not completely united for the agenda. Abe abandoned changing and chose reinterpretation of Article 9 for new security legislation two years ago. Some LDP lawmakers do not want the amendment, which is highly controversial in the election. Although Abe pretends not to be insisting on Article 9 and stresses the necessity of the amendment for inserting emergency clause for natural disaster, skepticism still remains.

Komeito has been cautious on Abe’s approach to ORP. “Because this is the issue requiring sufficient consensus regardless leading or opposite party, it is important to make effort to establish broad agreement not only with ORP but other opposite parties,” said Natsuo Yamaguchi, President of Komeito. Komeito is fundamentally afraid of ORP joining the leading coalition.

Actually, other opposite parties are sober on this agenda. President of Democratic Party of Japan, Katsuya Okada, opposes any amendment of the Constitution under Abe administration. Japan Communist Party seeks grand opposite coalition to disturb the amendment. Achieving two-thirds is still not so easy.

Shaken by Circuit Breaker and Geopolitical Risk

For the first time in its post-war history, Tokyo Stock Exchange marked consecutive declines in its average price for five days at the beginning of a year. Cerebrating new year, the market has always been rallying in the opening. This year, confusion in Shanghai market with pessimistic perspective on Chinese economy and sudden appearance of adversary between Saudi Arabia and Iran were major blows on Tokyo. Circuit breaker and geopolitical risk were working as magic spells.

Nikkei Average finished last year at ¥19,033 on December 30^th. At the first day of this year, January 4^th, it marked abrupt fall by ¥582, in spite of new year cerebration with kimono girls to attract the eyes of grown men. Unusual enough, stock price kept on declining. Nikkei Average finished the first week of this year with ¥17,697. Decline for five consecutive new year days was a new record, since the market restarted its exchange in May, 1949.

Major element against Nikkei Average was speed down of Chinese economy. With negative index of Chinese manufacture released on the morning of January 4^th, Shanghai Composite Index showed steep down, causing invocation of “circuit breaker,” a built-in system of halting exchange with excessive move of prices. Circuit breaker encouraged skepticism of investors in Tokyo on Chinese market. Although an announcement of suspension of invocation of circuit breaker in Shanghai eased other Asian markets, Tokyo kept on declining on Friday.

Saudi execution of Shi’ite cleric Nimr al-Nimr and announcement of closing diplomatic tie with Iran shocked the world market. Meanwhile, Eurasia Group released Top Risk 2016, in which Saudi Arabia was included as a geopolitical risk. Not accustomed to the wording, media began to use the word of “geopolitical risk” in explaining psychological uneasiness of the investors.

The risk was not contained in Middle East. With no expectation in any country, North Korea exercised its fourth nuclear test against United Nations Security Council resolutions. Nikkei Average marked further down on Tuesday after Korean Central News Agency announced “complete success of hydrogen bomb test.”

Slump of stock market also affected foreign exchange. Value of Japanese yen rose from ¥120 against one U.S. dollar at the last yearend to ¥118 on Friday. One opposite lawmaker accused Japanese government of its operation of government pension investment fund, which could be calculated as losing ¥4 trillion for the consecutive decline of stock price. It is true that Prime Minister Shinzo Abe’s economic policy is vulnerable to volatility in the market.

Japanese Administration Takes Opportunity

As predicted, short-tempered intimidation of North Korea has been helping Japanese administration. Prime Minister Shinzo Abe proudly denounced Kim Jong-un regime in the discussion of National Diet on Friday as undermining international peace and safety. Lawmakers collectively supported Abe’s criticism against the North with immediate resolution. Abe grabbed a momentum to improve the bilateral relation with South Korea by maintaining diplomatic channel with President Park Geun-hye. He has to thank the despotic regime in the peninsula.

In the plenary meeting of House of Councillors, Abe expressed deep concern on the experiment of nuclear bomb, not determined as hydrogen bomb yet. “This test was making further progress in the development of nuclear bomb of North Korea. Considering enhanced capability of ballistic missiles as vehicles, it is a significant threat against security of our nation,” told Abe. He estimated technological maturity in the fourth nuclear test with possibility of downsizing of nuclear warhead.

Abe called President Park on Thursday. They agreed on cooperating in taking countermeasures against the North and expected actions of United Nations Security Council. Taking the opportunity, Abe reiterated the importance of “final and irreversible” settlement of comfort woman issue and establishing new era of Japan-South Korea. Park basically welcomed Abe’s idea.

Japanese government is considering stricter sanction against North Korea. Japan lifted a part of its own sanction in July, 2014, including banning entrance of North Korean citizens to Japan or mandated reporting of bringing money over a hundred thousand yen out of Japan, when the North started investigation of missing Japanese abductees. Japanese government expects to resume those sanctions and to take additional action for banning money transfer. Those measures will be laid along with international efforts against the North made by U.N., United States or South Korea.

Each House of Representatives or Councillors passed a resolution to criticize the nuclear test by North Korea on Friday. “We rigidly protest and firmly accuse this nuclear experiment, which was exercised ignoring international opinion, and it was not only a serious challenge against international regime for non-proliferation, but also an outrage we could not tolerate as the only nation suffered from nuclear bombs,” said the resolutions. Including opposition parties, the Diet stepped forward to the same direction as Abe was taking. Japanese Prime Minister is surely taking opportunity of united action with internal political opponents and diplomacy for containment of the North.

Sharp Discussion over Policies

In an unusually early-convoked session of the Diet, sharp discussion over major policies of Shinzo Abe administration was taken place in both Houses. The opposite parties accused Abe of his negative attitude against the Constitution of Japan or his economic policy directed to enhance his political basis. Abe defended his agenda with ordinary explanation about the legitimacy of his policies. However, it is unclear whether the opposite will give fatal blow to the administration in this session.

The first seven days of a year is recognized as the period of cerebrating new year for the Japanese, welcoming God to human world with decoration of pine tree at the entrance of each house. It was highly unusual for Japanese parliament to show quarrels for two days in front of God’s watch. That schedule was decided by Abe in calculation of leaving an option of double election this summer.

The opposite parties accused Abe’s security policy. “Opposing the war legislation consists majority of Japanese people. We firmly require abolishment of security laws and repealing of the Cabinet decision to allow exercise of collective self-defense right,” said Keiji Kokuta, Chairman of Diet Affairs Committee in Japan Communist Party, in the House of Representatives on Wednesday. President of Democratic Party of Japan, Katsuya Okada, criticized Abe of his ignorance of a demand to convoke a session last fall, based on Article 53 of the Constitution that mandated Cabinet to do that with one-fourths of requirement in one of two Houses.

Abe disputed to the argument over security policy and constitutional issue. “It is not a war legislation, but the laws for deterring war and contributing world peace and prosperity,” said Abe. He insisted that constitutional amendment had been a firm policy of Liberal Democratic Party, less referring to constitutionality of the reinterpretation by Abe Cabinet.

Another topic in the discussion was tax relief for future consumption tax hike. Councillor Kiyoshige Maekawa, affiliated to Democratic Party of Japan, accused the policy as damaging low-income families. “While gasoline is necessary for all people, tax relief will be rather applied to caviar. Which of the two does support lives?” asked Maekawa with frustration over mismatch between people’s need and tax policy.

What the opposite parties focused on was to depict Prime Minister as a figure against the supreme law and people’s demands. So far as Japanese economy keeps its moderate shape, however, the people look like not noticing serious situation of Japanese politics. Discussion in the Diet is becoming mere façade.

Surprising Quake in Peninsula

It was firstly reported as an earthquake. Later, Democratic People’s Republic of Korea announced that it successfully exercised a test of hydrogen bomb for the first time. International society consequently accused that isolated country as violating the resolutions of United Nations Security Council not to have further nuclear test. While it is actually serious problem in terms of eliminating nuclear weapons, North Korea restarted its fretful behavior to attract attention of the world.

North Korea Central News Agency reported that DPRK “completely and perfectly” exercised first hydrogen bomb test on Wednesday. It explained that the test was a measure to secure independence from adversary powers like United States, insisting on holding nuclear option. It is supposed to be a business as usual to maintain despotic regime led by First Secretary, Kim Jong-un, which is planning national convention of North Korean Labor Party in May.

Major countries were surprised. United States opposed any violation of U.N. resolution, not naming a country. China firmly denounced the test. Russia expressed deep concern. Japanese Prime Minister Shinzo Abe released a statement that accused the challenge against international regime for disarmament and non-proliferation of nuclear weapons. “The nuclear test this time cannot be tolerated as a significant threat for security of Japan and harming peace and safety in Northeast Asia and international society,” said Abe in the statement.

For Abe administration, the attempt of nuclear blackmailing was helpful for promoting its current political agenda. Abe has been eager to show leadership in diplomatic agenda in this election year. Expressing its willingness to stand by U.S., he can appeal legitimacy of the policies for enhancing security posture. Japanese government expects U.N. to have further measures against the North’s unilateral behavior. North Korea is always a card for Japan to maintain communication with such neighbor countries as China, South Korea or Russia.

On the other hand, the test disrupted an Abe’s traditional policy, abductees issue. Families of Japanese abductees were disappointed with deterioration of diplomatic situation around North Korea. Sufferers of atomic bomb in Hiroshima or Nagasaki were furious on the North’s behavior depending on that devilish weapon. Korean-Japanese were afraid of being targeted by hate speakers or anti-Korean activists. As long as the North’s regime ignores pressure from outer world, Japanese administration does not have many things to do in its diplomacy.