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Nation to gain from Japan plan

By Wang Xu (China Daily)
Updated: 2009-04-08 08:01

Japan's plan to introduce a 10 trillion-yen ($100 billion) economic stimulus could prove to be a boon for its trading partners like China, according to economists.

Japan will unveil a new economic package on April 10, and double stimulus spending to around 4 percent of its GDP, as part of the country's efforts to combat its worst recession since World War II, Reuters reported.

The stimulus package will focus on the job market, providing credit to companies, energy-efficient technology and welfare.

That, analysts said, could help beef up consumption and imports.

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"The larger stimulus package, although focused mainly on domestic demand, could help stabilize the Japanese economy," said Zhuang Jian, economist, Asian Development Bank.

"That will in turn benefit its trade partners in Asia, including China."

China is now Japan's largest trade partner and Sino-Japan trade rose 12.5 percent from a year earlier in 2008.

However, bilateral trade saw its first monthly decline in 11 years last November, as the economic downturn dampened consumption and foreign trade.

"Although China runs a trade deficit with Japan, a stronger Japanese economy would help stabilize global economy and may even increase China's exports to the nation," Zhuang said.

The World Bank estimated that China's economy would grow 6.5 percent this year, down from 9 percent in 2008. The slowdown came as exports were affected by the economic crisis.

The World Bank said China's economy could bottom out in the middle of the year, but it warned that a truly sustainable recovery for the nation would depend on developments in developed economies such as Japan, due to its heavy reliance on exports.

Japan's economy, the world's second largest, is expected to shrink 6.6 percent in 2009, the worst since 1945, the Organization for Economic Cooperation and Development said last week.

"Whether Japan's stimulus package could prove effective is still a question," said Lian Ping, chief economist, Bank of Communications.

"First, whether it's enough for Japan is still a question. Moreover, being a major exporter itself, the nation's recovery also depends largely on the US market."