What is the impact of the sharp depreciation of the yen on China's exporters?
China Business News: When will the yen rebound after hitting a 32 year low?
Last week, the exchange rate of the yen against the dollar fell to 148.86 yen, breaking the low of 147.64 yen against the dollar set in August 1998 and the lowest level since August 1990.
Mr. Wu, an analyst who has been engaged in the operation of small and medium-sized enterprises in Japan for many years, told First Finance and Economics that in the foreign exchange market, the Japanese yen, which is currently in a "weak" situation, has a significant impact on Japan's imports and exports. At the same time, the sharp depreciation of the Japanese yen has also affected Asian countries, putting pressure on the export of relevant competitive products of these Asian countries.
For the current accelerated depreciation of the yen, Japanese Finance Minister Junichi Suzuki reiterated on the 17th that Japan was ready to take "decisive" action against the rapid decline of the yen. He said: "We have been watching the trend of the foreign exchange market with a sense of urgency. If speculators or others cause excessive volatility in the foreign exchange market, our position will never change, and we will take bold action." Last month, when the yen fell to 145.90 against the dollar, the Japanese government intervened in the foreign exchange market for the first time in 24 years to support the yen exchange rate.
Trade double-edged sword
According to the above analysts, the data shows that since the Inada government took office in September last year, the trend of the yen against the dollar has dropped from the current one dollar against 110 yen to the current one dollar against 147 yen, with a depreciation rate of about 33%. As of the press release of China Business News, the dollar still hovered at 148.62 against the yen, approaching 150. Although it rebounded from a 32 year low last Friday, it was still far behind the 145.90 point that triggered the Japanese government's foreign exchange intervention last month.
As for the reason why the yen has depreciated so rapidly recently, Mr. Wu believes that it is still the Federal Reserve as the representative of the multinational central banks that are tightening monetary policy, while the Bank of Japan has been sticking to monetary easing policy. The policy differences between the two have caused the yen to fluctuate violently in the foreign exchange market. The day before the yen exchange rate broke out of a 32 year low, the Federal Reserve released a stronger than expected inflation report.
As for the most intuitive reaction of yen depreciation in the Japanese market, Mr. Wu said, for example, according to his observation, nowadays, among the electronic products that are popular with young people, the price of purchasing a high-end computer with a higher configuration is equivalent to the one month salary of Japanese famous college students who just graduated. "Therefore, some brand mobile phones or high-end electronic products in the Japanese market tend to become luxury goods due to yen depreciation."
At present, China has become Japan's largest trading partner for 14 consecutive years, and Japan is also among China's top five trading partners. Such close bilateral trade ties are bound to make Chinese export enterprises that mainly focus on the Japanese market affected by the fluctuation of the yen.
Mr. Wu told First Finance that despite this, some Chinese export enterprises are also taking positive measures to cope with the current accelerated depreciation of the yen, such as adjusting the specifications of products exported to Japan from large specifications to small specifications; Analyze the factors of the rising cost of export products to hedge the impact of the yen exchange rate; Accelerate the research and development of new products and increase export orders; Adjust the export order plan, filter the products that can lock the production cost element, and arrange production in advance.
"Students studying in Japan and Chinese import enterprises engaged in Sino Japanese trade have become the main beneficiaries of the current devaluation of the yen," Mr. Wu said. "Especially, some Chinese e-commerce platforms have recently increased their import orders from Japan."
Previously, Tian Zheng, an associate researcher of the Japan Institute of the Chinese Academy of Social Sciences, analyzed to the First Finance and Economics reporter that "with the continuous depreciation of the yen, Chinese enterprises can purchase high-end Japanese components, raw materials and other products at lower prices, thus promoting further in-depth cooperation between the supply chains of China and Japan and expanding the space for Sino Japanese economic and trade cooperation." According to Xinhua News Agency, Jin Jianmin, chief digital economist of Fujitsu's global marketing headquarters in Japan, said that Chinese enterprises' investment in Japan is still at a relatively late stage compared with other countries, not as much as that in Europe and the United States. "Now the devaluation of the yen is an opportunity, and I think Chinese enterprises will certainly seize it."
This time is different from the past
For a long time, the depreciation of the yen has been considered as a favorable factor to promote Japan's economic exports. However, this round of yen depreciation has also been accompanied by the rise of commodity prices. The combination of the two has made some Japanese enterprises and consumers suffer a lot more than before. The view that "yen depreciation is conducive to Japan's exports" is also being questioned more and more.
"The negative impact or risk we are seeing from the devaluation of the yen is unprecedented." Eiji Hashimoto, chairman of the Japan Iron and Steel Industry Association, said that although steel manufacturers and other manufacturers had benefited from the depreciation of the yen in the past, the current sharp rise in energy and material costs meant that "this situation is completely different from the past".
According to the latest survey conducted by Tokyo Mercantile Industry Survey Company, the number of Japanese enterprise bankruptcies increased 6.9% year-on-year from April to September, reaching 3141, the first increase in three years. The company said that since August, the exchange rate of the Japanese yen against the U.S. dollar and other major currencies has continued to weaken, leading to high raw material prices. The number of bankruptcy cases of Japanese domestic enterprises triggered by this factor has continued to increase.
So, what will the yen fall to in the foreign exchange market? Mr. Wu said that the Japanese banking industry speculated that it might depreciate to 150 yen per dollar, a drop of more than 35% compared with last September.
"Compared with the epidemic, the Japanese people are more worried about the decline of the yen. Because Japan is heavily dependent on foreign imports, the most direct impact of the yen depreciation is the rise in the cost of living, such as food, consumer goods, car oil prices are rising. This situation is bound to further curb domestic consumption's pull on the Japanese economy." Mr. Wu said.
Although the growth of Japan's gross domestic product (GDP) in the second quarter was 0.9% month on month, all sectors of Japan saw signs of economic recovery, the data of Japan's Ministry of General Affairs showed that the consumption expenditure in tourism, transportation and other aspects of the data in the second quarter showed significant growth, but the overall effect was not expected. In the second quarter, the real income of Japanese households decreased by 2% year on year, and the real consumption expenditure decreased by 0.7% year on year. Personal consumption, which accounts for 50% of Japan's GDP, is still far from fully recovering.
Shigeto Nagai, the chief Japanese economist at Oxford Economics, previously told the First Financial Reporter that unless the financial market is convinced that the Federal Reserve's interest rate hike cycle has reached its peak and Japan's inflation outlook is also moderate, the pressure on the weak yen and the yield of Japanese government bonds will continue.
At present, all parties are waiting to see whether the Japanese government, which is deeply worried about market volatility, will intervene in the foreign exchange market again. Once it chooses to intervene, how long will the impact last.