By Tetsushi Kajimoto and Leika Kihara TOKYO (Reuters) - Policymakers in Tokyo believe China's deepening economic woes could hit Japan's fragile ...
STORY CONTINUES BELOW THESE SALTWIRE VIDEOSTOKYO - Policymakers in Tokyo 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. China is Japan's largest trading partner, accounting for 20% of its exports, having replaced the United States in 2020. Exports to China fell 8.6% in the first half of this year as demand for cars, steel and electronics wilted.
Ogawa said going forward Komatsu will"cut down on production capacity in a way to match actual demand in China."Suntory Holdings chief executive Takeshi Niinami warned China's economy is in an"extremely difficult" situation, which may be contributing to a rising backlash against Japan over the release of treated Fukushima water into the ocean.
Japan's core inflation hit 3.1% in July, exceeding the BOJ's 2% target for the 16th straight month. Firms also promised wage hikes unseen in three decades this year, heightening the case for a retreat from decades of ultra-loose monetary policy.
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