Aging Japan

According to an article in yesterday's Washington Post, Japan is undergoing a demographic crisis:

Japan’s population of 128 million will shrink by one-third and seniors will account for 40 percent of people by 2060, placing a greater burden on a smaller working-age population to support the social security and tax systems.

The article goes on to say that, by 2060, the retired (that is, not working) proportion of the population will reach 40%. The Japanese government is proposing tax increases to fund these looming pension liabilities, but faces parlimentary opposition in doing so. And, the standard retirement age is 60.

It isn't just an issue of money, though. The number of nursing homes and the avialability of caretakers are an issue as well. It's to the point where the Japanese are developing robots that can move patients, help the elderly dress, and, most frighteningly of all, provide companionship:

Scientists have invented therapeutic robotic babies that are intended to make life easier for nursing home residents. These Babyloids are being tested in facilities across Japan. During the tests, residents interact with the robots in eight-minute intervals for a total of 90 minutes each day. Designed to resemble infants, these robots simulate human emotions such as crying. This in turn tends to trigger a response among actual people. So far, the Babyloids are showing early promise at reducing depression and despair among residents.

And, this is in a retiree population that, having lost the personal ties from work, is already lonely.

There is, though an argument that the falling birthrate in Japan is an unintended consequence of a deliberate and rational decision on the part of the Japanese. To quote at length from the New York Times:

Take, for instance, how Western observers have viewed Japan’s demographics. The population is getting older because of a low birthrate, a characteristic Japan shares with many of the world’s richest nations. Yet this is presented not only as a critical problem but as a policy failure. It never seems to occur to Western commentators that the Japanese both individually and collectively have chosen their demographic fate — and have good reasons for doing so.

The story begins in the terrible winter of 1945-6, when, newly bereft of their empire, the Japanese nearly starved to death. With overseas expansion no longer an option, Japanese leaders determined as a top priority to cut the birthrate. Thereafter a culture of small families set in that has continued to the present day.

Japan’s motivation is clear: food security. With only about one-third as much arable land per capita as China, Japan has long been the world’s largest net food importer. While the birth control policy is the primary cause of Japan’s aging demographics, the phenomenon also reflects improved health care and an increase of more than 20 years in life expectancy since 1950.

The demographic trends in the EU and the US are not dissimilar. However, the participation of women in the paid labor force in the EU has room to increase, and in both the US and the EU, immigration (documented or otherwise) is another safety valve.

Despite the problems of issues in Japan, I'd rather be old in Japan than in China, where for all but the very rich, "nursing home" translates as "snake pit" or "hellhole."

Renault sells $4.2B stake in truck maker Volvo - Yahoo! News

Renault sells $4.2B stake in truck maker Volvo - Yahoo! News

Ok. This is where we need a handy laminated chart to figure out what's going on.

First, what Renault owned was not the automotive part of Volvo. The Chinese own that now; Ford did own it and recently sold it to the Chinese automaker Geely.

What Renault sold what their ownership in the still-Swedish-owned Volvo Truck.

Straighforward enough, you might say. Not really, because that's just the beginning of Renault's complex ownership structure.

Renault also owns 44% of Nissan. At the same time, Nissan owns 15% of Renault.

Let's bring in the Germans. I quote here directly from Renault:

"On April 17, 2010 the Renault-Nissan Alliance and Daimler AG announced a broad strategic cooperation that will enable both groups to already realize benefits quickly from a range of concrete projects as well as sharing of best practices. The two groups also announced an equity exchange that will give the Renault-Nissan Alliance a 3.1% stake in Daimler and Daimler a 3.1% in Renault and a 3.1% stake in Nissan."

Next. I'd never heard of AvtoVAZ before, but seems that they are the top Russian auto manufacturer. Renault owns 20% of AvtoVAZ.

Last but not least -- Fiat owns 35% of Chrysler.

I did find this, a chart of auto company/brand ownership, but it's from 2008, so the interest is primarily historical. It does give a nice feel for the complexity of it, though; the only problem is that it doesn't seem to pick up the 378 different auto companies in developing countries that are owned in part by one or the other of the EU-US-China-Japan-Korea cartel.

Checking with our in-house auto industry expert, Dr. Jeff Schultz -- his take is that the player to watch is Renault/Nissan, followed by Ford. He sees these two compnaies as having the best management of any of the major auto firms.

Iran and China: New Developments

For the past several years, China has worked to build trade relationships with African and Latin American countries -- Argentina, for example, as well as Sudan, Nigeria and Peru.

It's motivated (as we've discussed in the IB class) by China's growing need for raw materials -- such as recycled paper (for the cardboard boxes that Made-in-China TV is shipped in), soybeans, iron ore and gold. China has an advantage over Europe and the US here -- China isn't a former colonial power (not that the US really was a colonial power or anything, but who cares?). It's been a successful relationship. Even though Japan, South Korea and Taiwan are the biggest source of Chinese imports, China is now Brazil's largest export partner (ahead of the US); Angola, Chile, Democratic Republic of the Congo and Kazakhstan are among the countries sharing that honor.

One of the Chinese trade relationships that is currently troubling to the US is the Chinese relationship with Iran, based, of course, on oil. It goes beyond imports and exports; China has invested heavily in refineries and pipelines in Iran. Moreover, the Iranian government has proposed a system of rail links between China, Iran, Afghanistan, Tajikistan, Kyrgyzstan.

Trade sanctions (banning trade in strategic materials) against Iran have slowed, but not stopped trade between China and Iran.

What exactly can the US do here? Not much. The UN can make agreements, but China is going to act in their own interests. Neither the US nor the EU wants to see Iran with nuclear weapons, but it doesn't appear that the Chinese care.

Don't forget that the Chinese own a lot of US government debt [1]. And, the US exports a lot to China as well -- luxury products [2] such as wine and ginseng roots, but also basic raw materials, such as recycled paper and soybeans.

The batteries in my crystal ball need to be recharged, but I don't see much changing here. It's a tenuous balancing act between the EU [3] and the US, first, China second, and Iran, third. One solution might be for the US to take out Iranian nuclear facilities, making sure to give China plausible deniability. That could get very very messy, though. There's some indication that the Iranian government isn't all that stable, and changes there could very well make a peaceful solution possible. The US would probably have to concede in principle on Iran's right to peaceful nuclear use, though, which would be politically suicidal for the current administration.

Taking a broader and more long-term perspective, though, look at China's trade strategy overall.

China's motivations here are complex. At first glance, the whole point is access to resources. For example, the Democratic Republic of the Congo has copper, Iran has oil, Brazil has wood pulp, etc. China is also investing heavily in infrastructure development in its African and Latin American trading partners. They're thinking long-term. Remember, the Chinese are the folks who have kept track of the (more than 3 million) descendants of Confucius over a 2,500 year span.

Not everyone sees China's growing ties with Africa/Latin America to be a Big Problem; some believe that US influence in Africa is broader based and more likely to be lasting.

But, as we remeber from The Godfather, "it's only business." Trade appears to be the real motivation, with politics being only a means to an end.

It's clear that China isn't in this for their health; China cut off imports of Argentine soybean oil after Argentina imposed retaliatory tariffs in response to accusations that China is dumping textiles and kitchen appliances in the Argentine market.

Another indication that the Chinese government isn't seeing these relationships as one-sided are developments earlier with loans to Zimbabwe:

Deputy Prime Minister Arthur Mutambara says the Chinese want all loans to
be repaid before loosening its purse. According to the Mutambara the Chinese
President Hu Jintao revealed to him during a brief meeting at the World Economic
Forum in Switzerland that he considers Beijing relationship with Harare as
’business partners’ and not ’friends’.

If nothing else, the complexities of trade and politics between China and the rest of the world will give us something to think about for a very long time to come.

Notes

[1] There is some indication that Chinese purchases of US debt declined after the late 2008 economic meltdown. They still hold a lot, though by now China holds enough Treasury securities that it's probably unlikely that they could afford to unload them.

[2] Western luxury products are big in China, though most of these are imported from Europe.

[3] Europe trades a lot with China, too.

A different take on gender issues in Japan

If you'll recall, we touched on gender roles in Japan.

For example, it's only just now that the Japanese are considering changing the rules to allow a female heir to inherit the throne. Japanese women are less likely than women in the US to be part of the paid labor force.

It does seem as though these traditional gender roles are undergioing some change. More and more Japanese women are delaying or foregoing marriage. Japanese women control the household finances. On the other hand, these developments may well mean that women have different expectations, but that men still hold to traditional values. Why marry, if all that means is being a second class citizen. And, if you do marry, have some securtiy that you control.

I'd really like some comments on this one; press the little envelope button below to comment.

Fujimori trying for a comeback?

Former Preuvian president Alberto Fujimori (1990 - 2000) is trying for a comeback !! He plans to run for president in Peru's 2006 election (although he's been formally banned from political participation until 2010). Current president Alejandro Toledo is not eligible for re-election (though with approval ratings hovering around the single digits, that's a moot point; see Peru: Administration in Crisis and Peru's Toledo Announces Plans to Shuffle Cabinet (Update2)).

Doesn't appear that there's any clear successor, although the former Finance Minister and current Prime Minister Pedro Pablo Kuczynski is rumored to be interested in the job.

Up until now, Fujimori's been conducting his campaign from the safety of Japan (Fujimori is of Japanese descent, holds Japapnese citizenship, and Japan has refused to extradite him to Peru). However, he was arrested today in Chile. It's unclear whether or not the Chileans will send him back to Peru.

BBC NEWS Americas Fujimori arrested on Chile visit