Japan's GDP experienced negative growth in the third quarter of this year - due to internal and external mistakes, the Japanese economy is deeply mired in a quagmire (global hotspot)
Recently, preliminary statistics released by the Japanese Cabinet Office showed that Japan's real gross domestic product (GDP) declined at an annual rate of 1.8% in the third quarter of this year, marking another negative growth since the first quarter of 2024.
Experts point out that the current Japanese economy is facing multiple challenges such as weak growth, high inflation, weak domestic demand, and shrinking exports, with prominent structural contradictions. In this context, the large-scale economic stimulus plan recently launched by the Gaoshi Zaomiao government may not be effective. In addition, Japanese public opinion is also concerned that Takashi Hayao's recent erroneous remarks regarding Taiwan will seriously damage Japan China relations, disrupt the good atmosphere of regional cooperation, and add insult to injury to the already stressed Japanese economy. The growth prospects for the fourth quarter will face significant uncertainty.
Continued external threats and unresolved internal concerns
The current Japanese economy is facing internal and external difficulties. From an external perspective, the "big stick" of US tariffs continues to put pressure on the economy; Internally, there are still many structural problems in the Japanese economy
Industry analysis suggests that the Japanese economy sounded a "negative growth" alarm in the third quarter, directly due to a sharp contraction in external demand. According to data from the Japanese Cabinet Office, the US government's imposition of tariffs has led to a significant decline in Japan's exports. In the third quarter, exports of goods and services decreased by 1.2% compared to the previous quarter, and the contribution of external demand to economic growth was negative 0.2 percentage points.
The trade statistics recently released by the Japanese Ministry of Finance show that Japan's exports to the United States have been declining year-on-year for seven consecutive months since April this year due to the impact of US tariff policies. As a result, Japan has experienced a trade deficit for four consecutive months.
At the beginning of the fourth quarter, the data is not optimistic either. In October, Japan's exports to the United States decreased by 3.1% year-on-year. Among them, the decline in the three major categories of automobiles, semiconductor manufacturing equipment, and pharmaceuticals was 7.5%, 49.6%, and 30.8%, respectively. The decline in automobile exports has narrowed, but it remains the biggest factor leading to the sustained decline in Japan's exports to the United States.
The mid-term economic report of the Japanese Cabinet Office pointed out that, given the continued negative impact of the US tariff measures on the Japanese economy, the Japanese government has lowered its economic growth forecast for fiscal year 2025 from 1.2% to 0.7%.
External demand has stalled, and domestic demand has also fallen into weakness. According to official data from Japan, real wages in September decreased by 1.4% year-on-year, marking the ninth consecutive month of decline; In October, Japan's core inflation rate (CPI) rose by 3% to 112.1, marking the 50th consecutive month of year-on-year increase. According to data from the Japanese Ministry of Agriculture, Forestry and Fisheries, as of the week of November 9th, the average price of a 5-kilogram bag of rice was 4316 yen (approximately 198 yuan), breaking the record set in May this year.
The combination of declining income and rising prices weakens people's confidence in consumption. In the third quarter of this year, personal consumption, which accounts for more than half of the Japanese economy, increased slightly by 0.1% month on month, a significant slowdown from the 0.4% growth rate in the second quarter. The contribution of domestic demand to Japan's economic growth in that quarter was negative 0.2 percentage points.
Professor Zhou Yongsheng from the Institute of International Relations at the Foreign Affairs College pointed out in an interview with this newspaper that the current Japanese economy is facing internal and external difficulties——
From an external perspective, the "big stick" of US tariffs continues to put pressure on the economy. Although Japan and the United States reached a trade agreement in July, which unified the tariffs imposed on Japanese imports to 15%, it is still higher than the previous level of 2-3%, dealing a heavy blow to Japan's export industry represented by automobiles. The profit of the Japanese automotive industry is about 7% -8%, and whether tariffs are borne solely by Japanese companies or shared by Japanese and American importers and exporters, companies are on the brink of losing profits. The sluggish export of the automobile industry not only dragged down GDP growth, but also impacted the upstream and downstream industrial chains such as electronics and steel, making the Japanese economy even worse.
From an internal perspective, there are still many structural problems in the Japanese economy: firstly, the wrong choice of industrial route weakens competitiveness, such as betting on hydrogen fuel in new energy vehicles and missing out on the international mainstream opportunity of lithium-ion batteries; Secondly, the problem of low birth rates and aging is prominent, with nearly 30% of the population aged 65 and above. This not only leads to labor shortages and the closure of some enterprises due to labor shortages, but also restricts the expansion of the consumer market; Thirdly, domestic inflation is severe, coupled with the depreciation of the Japanese yen leading to an increase in imported commodity prices, and imported inflation continues to intensify; Fourthly, the increase in social security expenditures has led to a shortage of fiscal funds; The fifth is the huge scale of government debt, which currently accounts for about 263% of GDP, weakening fiscal capacity and posing extremely high fiscal risks.
The 'rescue of the market' is weak, and the expansion of the military is not limited
The current contradiction in Japan's fiscal allocation is prominent: the people urgently hope to improve their livelihoods and reduce tax burdens, while the Takashi Hayao government is going further and further on the path of constitutional amendment and military expansion, which will seriously squeeze social resources and inhibit economic growth potential
In response to the economic crisis, the Japanese Cabinet recently launched an economic stimulus plan worth 21.3 trillion yen (approximately 135.4 billion US dollars), accounting for nearly 3% of GDP. This is the first major economic policy implemented by the Gaoshi Zaomiao government since taking office, aimed at addressing rising prices and expanding investment in areas such as semiconductors, artificial intelligence, and shipbuilding. It is reported that the general account expenditure of the plan reached 17.7 trillion yen, a significant increase of 27% compared to the same period last year's 13.9 trillion yen. Gaoshi Zaomiao stated that if tax revenue growth is not sufficient to cover all expenses, new bonds will be issued to raise funds for the stimulus plan.
The early emergence of the "market rescue" policy by Gaoshi has sparked widespread concerns in the market. Kyodo News pointed out that although Prime Minister Hayao Takashi has stated that he will balance economic growth and fiscal discipline, concerns in the market about fiscal deterioration caused by spending inflation are intensifying, and the yen and bonds are being sold off.
Zhou Yongsheng believes that the economic stimulus plan launched by the Gaoshi Zaomiao government seems to have a huge amount of funds, but it involves numerous industries and fields, like "sprinkling pepper", lacking specificity and difficult to play a substantive role. In addition, the plan is essentially a continuation of the "Abenomics" approach, with the main policy tool being expansionary fiscal policy. However, Japan is currently in a stage of severe inflation, which is completely different from the macroeconomic environment of deflation during the Abe era. At this time, investing large-scale funds not only has limited effectiveness, but may also exacerbate inflation and increase the government's debt burden. At the same time, the plan did not explicitly touch on economic structural reform, making it difficult to solve the structural contradictions in the Japanese economy and greatly reducing its effectiveness.
Professor Liu Jiangyong from the Department of International Relations at Tsinghua University analyzed that in terms of monetary policy, the Gaoshi Zaomiao government holds a cautious stance on raising interest rates, which will lead to further depreciation of the yen, exacerbate imported inflation, weaken Japan's overseas investment capacity, and expose the economy to multiple risks.
It is worth noting that after Takashi Hayao took office, Japan made frequent moves in expanding its military power. The Japanese government recently approved a supplementary budget for the fiscal year 2025 (April 2025 to March 2026), increasing defense spending to 2% of GDP for this fiscal year.
Liu Jiangyong pointed out that the current fiscal allocation contradiction in Japan is prominent: the people urgently hope to improve their livelihoods and reduce tax burdens, while the Takashi Hayao government is going further and further on the road of constitutional amendment and military expansion, which will seriously squeeze social resources and inhibit economic growth potential. If the Gaoshi Zaomiao government relies on the issuance of additional treasury bond to fill the funding gap for military expansion, the essence is to transfer the problem to the future, which is a very irresponsible fiscal policy. This move will also increase the burden on the government, making it more difficult to fulfill its economic and livelihood commitments. What is even more dangerous is that Japan's recent actions of exporting frigates to Australia and Patriot missiles to the United States indicate that Japan is accelerating its deviation from the path of "building a country through trade" and attempting to "prolong" its economy by developing military industries. This practice of drinking poison to quench thirst will lead Japan astray in its economic transformation.
Enemies on all sides eat bitter fruit for themselves
The Takashi Hayao government has placed its focus on security and diplomatic issues, provoking and provoking disputes with neighboring Asian countries, and making enemies on all sides of diplomacy. This move is of no benefit to the Japanese economy
Recently, Hayao Takashi publicly made erroneous remarks related to Taiwan, implying the possibility of military intervention in the Taiwan Strait, which undermines the political foundation of Sino Japanese relations and has a serious negative impact on bilateral economic and trade exchanges and cooperation. Currently, China is Japan's largest trading partner, second largest export destination, and largest source of imports. The bilateral trade volume between China and Japan has exceeded 300 billion US dollars for several consecutive years. Many Japanese government, business, and academic figures are concerned that fluctuations in Japan China relations will add more uncertainty to Japan's economic growth prospects.
Recently, former Japanese Prime Minister Shigeru Ishiba called for attention to smooth Japan China diplomacy in a speech. He pointed out that the Japanese economy currently relies heavily on imported goods such as food, rare earths, and pharmaceuticals from China.
Chinese tourists have always been an important pillar of Japan's tourism industry. According to statistics from the Japan Tourism Agency, the total consumption of Chinese tourists in Japan in 2024 ranks first among tourists from all countries. According to a recent article by Kenei Kinouchi, a researcher at Nomura Research Institute in Japan, if there is a significant decrease in Chinese tourists visiting Japan, Japan's GDP may decrease by 0.36%, and preliminary economic losses are estimated to reach 2.2 trillion yen, approximately 101.16 billion yuan.
Japanese economist Hidetoshi Tashiro warned that "Japan is facing the dilemma of high prices, continuous depreciation of the yen, and weak economic growth. In this situation, if Japan cannot maintain stable economic ties with China, it may fall into a serious economic recession
In addition, since taking office one month ago, Gao Shi Zaomiao has repeatedly made provocative remarks on territorial sovereignty and historical issues, triggering collective criticism from China, South Korea, North Korea, and Russia.
Liu Jiangyong pointed out that after World War II, Japan was able to develop rapidly, and it was very important to follow the development path of "light military, heavy economy", while also maintaining good neighborly relations with neighboring countries. Gaoshi Zaomiao broke through the bottom line on Taiwan related issues and provoked confrontation with China. This wrong behavior will undermine the healthy development of Sino Japanese relations, make Japan miss the opportunity for China's economic development, and exacerbate the difficulty of Japan's economic recovery. Meanwhile, in recent years, Japan's economy has grown at an annual rate of less than 1%, while defense spending has increased by over 20% annually. The abnormal development of "shrinking military and expanding military" and the dangerous tendency to intensify military preparations against neighboring countries are causing Japan to deviate from the post-war peaceful development track. This not only plants a time bomb for peace and stability in East Asia and even the world, but will ultimately bring great disaster to itself.
Zhou Yongsheng analyzed that the Gao Shi Zaomiao government has placed its focus on security diplomacy issues, provoked and provoked disputes with neighboring Asian countries, and made enemies on all sides in diplomacy, which is of no benefit to the Japanese economy. The investment in military equipment essentially belongs to resource consumption. Although it can drive the development of the military industry in the short term, it cannot generate sustained economic chain reactions and is difficult to transform into stable development momentum. At the same time, Japan's military expansion route will trigger high vigilance from neighboring Asian countries and the international community, undermine normal bilateral and multilateral cooperation between Japan and Asian countries, and further pressure the highly dependent Japanese economy on external markets. If the Japanese economy wants to truly reverse its predicament, it needs to face its own structural problems directly, rather than adhering to short-sighted thinking and transferring contradictions outward.