TOKYO: Policymakers here believe China’s deepening economic woes could hit Japan’s fragile recovery, especially if Beijing fails to shore up demand wi...
A worker producing solar photovoltaic modules used for solar panels at a workshop in Huaian city, in China's Jiangsu province. Economic risks from China will be among key topics of debate at the Bank of Japan’s September policy meeting, say sources. – AFPpicPolicymakers here believe China’s deepening economic woes could hit Japan’s fragile recovery, especially if Beijing fails to shore up demand with meaningful stimulus, potentially delaying an exit from ultra-loose monetary policy.
“A downturn in China may diminish the chance of Japan achieving sustained wage growth,” which is a crucial condition for phasing out monetary stimulus, another source said. While many Japanese policymakers expect China to avert a hard landing, thanks in some part to Beijing’s recent support measures, the stakes for Japan are high.
Komatsu Ltd, was among them. The world's No. 2 construction machinery maker has shifted some operations away from China, its chief executive Hiroyuki Ogawa told Reuters this week. “Exports to China had already been weak and headwinds to inbound tourism are clearly bad for Japan’s economy,” said Toru Suehiro, chief economist at Daiwa Securities. “All in all, it’s hard to justify tightening monetary policy any time soon.”
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