Japan drafts $227bn spending package

Updated 11 January 2013
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Japan drafts $227bn spending package

TOKYO: Japan's ruling Liberal Democratic Party was in the final stages of drafting fresh stimulus spending yesterday reportedly totaling more than 20 trillion yen ($227 billion), rushing to fulfill campaign pledges to break the world's third-biggest economy out of its deflationary slump.
Economy Minister Akira Amari and Prime Minister Shinzo Abe discussed details of the stimulus package ahead of an announcement expected today, officials said.
Abe took office last month vowing to make reviving the economy his top priority and promising support both to small businesses and big industries such as the auto sector. He and his ministers have sought support for his program from big business in a whirlwind round of appearances at new year parties this week.
"We will work with you and appreciate your cooperation," Industry Minister Toshimitsu Motegi told a gathering of Japanese auto executives, describing the car industry as the "main hitter" of the Japanese economy.
"Without a revival of the auto industry there will be no rebirth of Japan," he declared.
The bulk of the spending package will go to supporting industrial revitalization and reconstruction from Japan's March 2011 earthquake and tsunami disasters. It also includes plans a request to raise military spending by 100 billion yen ($1.1 billion) from the 4.6 trillion yen ($52.3 billion) budget last year, the first such increase in a decade.
The increase is partly aimed at beefing up monitoring and defenses around islands in the East China Sea, known as the Senkakus in Japan and the Diaoyu islands in China, that are the focus of a simmering territorial dispute.
The interim budget request made in September under the previous government of Democratic Party of Japan called for keeping the 2013 defense budget flat.
Earlier this week, Defense Minister Itsunori Onodera acknowledged the size of the budget request increase and added that the rise would be aimed at stepping up defense against threats from Japan's "neighboring countries."
"Many people are concerned about tensions recently with neighboring countries, or North Korea's missile development. I believe people want us to firmly tackle those issues and protect our territorial land, seas and air, and we are preparing a budget that can quickly address those concerns," Onodera said.
Abe has urged Japan's central bank to do whatever it takes to meet an inflation target of 2 percent to counter a persisting cycle of sinking prices and weak demand.
The spending package expected Friday is due to form the basis of a supplementary budget for the remainder of the fiscal year, which ends March 31. Abe has said he plans to draft a budget for the next fiscal year by the month's end.
Local media reports said the proposed spending package includes 10.3 trillion yen ($117 billion) in extra outlays by the central government. Abe's administration is pledging to spend 19 trillion yen ($216 billion) through 2015 in support for reconstruction of the coastal areas devastated by the March 2011 disasters.
The change of administration has raised hopes that Abe's more aggressive approach might help Japan escape recession.
"We hope the promised growth strategy will be implemented as soon as possible," Yasuchika Hasegawa, chairman of the Japan Association of Corporate Executives, told reporters this week at the group's annual new year party.


Asian stocks hit as Trump drops Kim summit but losses tempered

A man walks past a bank electronic board showing the Hong Kong share index at Hong Kong Stock Exchange Friday. (AP Photo/Vincent Yu)
Updated 25 May 2018
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Asian stocks hit as Trump drops Kim summit but losses tempered

  • Traders had already been nervous in recent days after the US president warned he could pull out of the June 12 meeting with the North Korean leader, while also voicing his displeasure at a deal to avert a trade war with China.
  • In a letter released by the White House, Trump told Kim he was canceling the summit because of North Korea’s “anger” and “hostility.”

HONG KONG: Asian markets mostly fell on Friday as Donald Trump shocked the world by pulling out of next month’s historic summit with Kim Jong Un, though analysts said the losses were tempered by hopes the talks can be rekindled.
Traders had already been nervous in recent days after the US president warned he could pull out of the June 12 meeting with the North Korean leader, while also voicing his displeasure at a deal to avert a trade war with China and threaten tariffs on car imports.
The news Thursday took many by surprise — including North and South Korean officials — and fueled concerns about the future of a rapprochement that has had many hoping for peace on the divided peninsula.
In a letter released by the White House, Trump told Kim he was canceling the summit because of North Korea’s “anger” and “hostility.” The message came after a key aide to Kim hit out at comments from Vice President Mike Pence, saying they were “ignorant and stupid” and warning the talks could be canceled.
However, Trump’s letter added that the talks could still go ahead “at a later date.”
For its part, Pyongyang said the decision “unexpected” and “regrettable” but added: “We again state to the US our willingness to sit face-to-face at any time in any form to resolve the problem.”
“It looks like we are back to fire and fury as the modus operandi for the White House again after President Trump (threatened) a new 25 percent car import tariff and canceled the summit with North Korea,” said Greg McKenna, chief market strategist at AxiTrader.
“Not only was the summit canceled but it was back to threatening the DPRK with a military response.”Wall Street ended lower, while Asian trading was muted. Tokyo ended the morning slightly higher, while Hong Kong slipped 0.3 percent and Shanghai was barely moved. Sydney and Singapore each fell 0.1 percent while Seoul was 0.2 percent lower.
Manila and Kuala Lumpur also fell but Wellington, Taipei and Jakarta were in positive territory.
While warning the issue remained fragile, analysts said there was still hope the meeting will go ahead.
“As we’ve seen countless times before, the president tends to walk back some of his more boisterous rhetoric time and time again,” said Stephen Innes, head of Asia-Pacific trading at OANDA.
“While the US and their allies have offered a way to prosperity for North Korea, it was never going to come without some significant concession on the nuclear non-proliferation front.”
And Eli Lee, Bank of Singapore’s head of investment strategy, added: “Given the US’ surprising acceptance of the meeting only in March, the cancelation... may simply be due to the fact that both sides need simply more time for preparation and to find a middle ground in terms of their demands.”
On oil markets, both main contracts extended Thursday’s more than one percent losses after Russia said an agreement with OPEC to cap production — which has provided support to prices in recent years — could be up for revision at a meeting next month .
The comments from Energy Minister Alexander Novak dented a rally in the commodity, which has hit three-and-a-half-year highs on the back of improving demand and supply worries from Venezuela and Iran.

Tokyo — Nikkei 225: UP 0.1 percent at 22,457.20 (break)
Hong Kong — Hang Seng: DOWN 0.3 percent at 30,666.38
Shanghai — Composite: FLAT at 3,154.04
Euro/dollar: DOWN at $1.1705 from $1.1725 at 2100 GMT
Pound/dollar: DOWN at $1.3364 from $1.3385
Dollar/yen: UP at 109.53 from 109.30 yen
Oil — West Texas Intermediate: DOWN nine cents at $70.62
Oil — Brent North Sea: DOWN 12 cents at $78.67
New York — Dow: DOWN 0.3 percent at 24,811.76 (close)
London — FTSE 100: DOWN 0.9 percent at 7,716.74 (close)