- Joint Delegation to China with the Japan-China Economic Association
- The Russia-Ukraine War
- Trump Tariffs
- Recruitment of New University Graduates
- Spring Labor-Management Wage Negotiations
- Monetary Policy
- The High-Cost Medical Expense Benefit System
Joint Delegation to China with the Japan-China Economic Association
(In response to a question mainly about the accomplishments of the delegation's visit to China) In a world of deepening divisions and intensifying levels of confrontation, it is of major significance that Japan and China have moved forward with their "mutually beneficial relationship based on common strategic interests" and reaffirmed the need to build "constructive and stable Japan-China relations."
I was left with two notable impressions. First, the Chinese side responded to our various requests politely and with a tone of sincerity. In addition to stressing the need to develop a predictable business environment marked by safety, security, transparency, and fairness, the Japanese side requested that controls on exports of graphite, antimony, and other minerals for civilian use be limited only to those products with an actual bearing on national security. Although we were not completely satisfied with every detail in the Chinese side's responses, they accurately understood each of our requests and responded accordingly.
My second impression is that the Chinese side was extremely confident about the future direction of the Chinese economy. In our discussions, Chinese Vice Premier He Lifeng stated that China was striving for high-quality economic development. China values the role that private companies fulfill in the sphere of economic development. In fact, on the same day we met with Vice Premier He Lifeng, we were informed that a symposium headed by Chinese President Xi Jinping had convened with the participation of top executives from leading private-sector Chinese firms. Moreover, as China has cultivated its middle class, our Chinese counterparts emphasized that growing consumption by the nation's middle class of some 500 million citizens has not only expanded China's domestic market but is also having a favorable ripple effect on neighboring countries.
(In response to a question regarding comments by the Chinese side on Trump's tariffs) We did discuss working together to strengthen the rule-based international economic order.
The Russia-Ukraine War
(In response to a question regarding efforts to bring about a ceasefire between Russia and Ukraine) It is imperative that Ukraine be directly involved in talks aimed at ending the war with Russia and that those talks result in a lasting peace. To that end, we look forward to the efforts in diplomacy by all nations concerned. As Prime Minister Ishiba noted at the G7 Summit (held on February 24), caution is needed to ensure that the situation does not lead to the erroneous conclusion that the status quo can be changed by force.
Trump Tariffs
(In response to a question about the impact on Japanese companies in the event US President Trump implements his announced tariffs on steel and automobiles) President Trump is exploring a range of tariffs. Although the 25% tariffs on imports from Canada and Mexico were postponed for one month, if they are put into effect from March 4, they likely will have an impact on Japanese car and car component manufacturers that have set up operations in Mexico.
Also, as steel and aluminum are raw materials, tariffs on them are expected to have a wide-ranging impact. In any case, the impact within the US will likely manifest as inflation. We are concerned about a negative impact on not only Japan's economy, but the world economy as a whole.
I have seen news reports that Japanese Minister of Economy, Trade and Industry Yoji Muto plans to visit the US for talks in March. I am hopeful he will engage in negotiations to minimize the negative impact on Japan.
Recruitment of New University Graduates
(In response to a question regarding sound approaches to the corporate recruitment of new university graduates) To encourage sound recruiting practices, first of all, it is important that students have the time to fulfill their primary duty, namely, learning. To that end, third-year university students should be encouraged to focus on their studies up through February. Under government scheduling rules for the recruitment of new university grads, companies will begin announcing their recruitment targets from March 1, start their recruit selection processes from June 1, and then begin announcing informal appointments from October 1. Although gaps between these rules and actual practice have been cited, for example, with some companies announcing informal appointments prior to the established commencement date, the rules exist for a reason.
Spring Labor-Management Wage Negotiations
(In response to a question regarding the current situation and future outlook for the spring labor-management wage negotiations) One question in focus for the wage negotiations this spring will be whether the momentum for wage increases broadly spreads among small and medium-sized enterprises. Large corporations will present their wage offers together on March 12, and many will conclude their wage negotiations from mid-March through April. SMEs customarily follow this trend and hold their own wage negotiations from May through June. Actually, this is when the negotiations get serious.
Keidanren considers 2025 the year for the recently strong momentum in wage growth to take root. It has called on companies to consider including increases in their base salaries and is engaged in efforts to encourage broader recognition of appropriate price pass-through, including labor costs, as a social norm. We will continue our efforts to ensure that this trend spreads among SMEs as well.
Monetary Policy
(In response to a question regarding assessments of the Bank of Japan's policy decisions and their impact on the economy and corporate sector now that almost a year has passed since it decided to end its negative interest rate regime) In light of the impact from the sustained and unprecedented level of monetary easing during an era of long-term deflation, the BOJ reversed its monetary policy last year in the interest of countering cost-push inflation and stabilizing prices. As a result, given that it is in the process of achieving its target for core price inflation and that growing labor costs now account for the largest share of price inflation, I think the BOJ's decision to reverse policy was appropriate.
However, while real interest rates are still in negative territory, I think it is still too early for the BOJ to implement a bold increase in the policy interest rate. My impression is that the BOJ has been careful in setting policy to effectively hold down price inflation while ensuring it doesn't have a negative impact on the business cycle. The business community has to gradually re-adapt to a world of positive interest rates and continue raising wages enough to stay ahead of inflation.
The High-Cost Medical Expense Benefit System
(In response to a question seeking the Chairman's views on revisions to the high-cost medical expense benefit system) It is crucial to protect lives. No one should ever die because they were unable to receive medical care. While Japan is arguably a nation whose citizens pay relatively low premiums for medium levels of welfare, its social insurance system is facing a fiscal crisis and in need of revision. Integrated reforms based on ability to pay will be essential for the tax and social insurance systems. To that end, consideration must not be limited to income alone, but rather also assess ability to pay through the capture of assets based on utilization of the My Number ID system.