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2016年1月17日 (日)

金融市場大荒れ 中国発の不安連鎖を断ち切れ

The Yomiuri Shimbun
Break chain of anxiety triggered by China causing turmoil in global markets
金融市場大荒れ 中国発の不安連鎖を断ち切れ

Turmoil in the global financial markets, caused by uncertainty regarding the Chinese economy, has been continuing.

On the Tokyo Stock Exchange, the benchmark Nikkei average briefly tumbled below 17,000 points. It later firmed up to a certain degree, but the Nikkei average has dropped as much as 1,800 points since the beginning of January.

The plunge in Tokyo stock prices was triggered by the 15 percent drop in the Shanghai stock market since the beginning of this year. Fluctuations of stock prices have also continued in major stock markets in the United States, Europe and other countries in Asia.

The turmoil has been partly caused by investment money having nowhere to go in markets plagued by fear over the stagnation of China’s economic growth and the plummeting value of the yuan.

The decline of stock prices has also been spurred by oil-producing countries selling huge amounts of stock in markets around the world as the fall of crude oil prices shows no sign of bottoming out.

On the New York market, the crude oil price briefly dropped to the $29 range per barrel, the lowest level in 12 years. But still no signs of a rebound are evident.

This chain of anxiety has to be broken to calm down the markets. Cooperation among the monetary authorities of all countries is essential, but China’s responsibility is particularly grave.

Chinese President Xi Jinping’s government is aiming at a “new normal” economy, meaning the transition of the Chinese economy from investment-based growth to stable, consumption-led growth. But it has not yet clarified the path to achieve this.

Map out path

The Chinese government should take measures to prevent a rapid downturn of the current economy, and formulate plans to reform state enterprises and deal with nonperforming loans at regional financial institutions. Beijing should specify a road map for such policy measures.

It also must try to communicate carefully with markets, changing its makeshift actions over systems to suspend trading and restrict stock transactions when a market experiences sudden change.

The United States ended its zero-interest policy in December, and is eyeing the possibility of raising interest rates further. It must consider carefully when interest rates should be raised again, and how much the hike should be, after analyzing what effect the country’s monetary policy will have on the global market.

Meanwhile, it is important for Japan to prevent the current turmoil in its domestic market from having a negative effect on the real economy.

Companies have logged record-level earnings, and the Japanese economy is making a mild recovery. The falling crude oil prices have benefits for corporate activities and household economies. We don’t have to be too pessimistic about the current economic situation.

However, the yen’s rising value is a source of concern. Many Japanese companies assume an exchange rate of $1 to about ¥120. If the yen becomes stronger than its current value of $1 for about ¥117, it will push down the earnings of export-oriented companies such as automakers and electronics manufacturers.

While paying consideration to such concerns, the government must prioritize enhancement of its growth strategy. We expect the government to raise the level of the nation’s economy by proceeding with the creation of new enterprises and the development of employment opportunities.

(From The Yomiuri Shimbun, Jan. 16, 2016)


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