Japan's third stimulus is aimed at restructuring its economy
In response to the long-term change especially since winter COVID - 19 outbreak epidemic new peak, focus on the outbreak era economic development at the same time, on December 8 in the evening, the Japanese government cabinet meeting on the third large-scale economic stimulus plan, plans to increase spending 40 trillion yen 1 yen (about RMB 0.06), and thus promote corporate investment, is expected to total 73.6 trillion yen.
The third economic stimulus plan will include the extension of the government's measures since the epidemic to support business operations and stabilize employment, as well as the addition of plans to promote the integration of small and medium-sized enterprises, and the promotion of low-carbon emission reduction and digital technology as the breakthrough point to boost economic development in the post-epidemic era. Among them, about 6 trillion yen will be invested in novel Coronavirus detection, patient treatment and vaccine procurement in response to the epidemic; Extension of promotional activities to support tourism and catering services until the end of June next year, and extension of special measures such as maintenance of Employment grant, which were scheduled to expire at the end of the year, until the end of February next year; Another 1.5 trillion yen will be allocated to local governments to improve their health care systems and to subsidize commercial shops that shorten their business hours in line with local governments' efforts to curb the epidemic.
The economic stimulus plan also focuses on the transformation of economic structure in the post-epidemic era. To this end, it will invest 18.4 trillion yen, which is estimated to drive the economic scale to 51.7 trillion yen, accounting for about 70% of the total scale of the plan, making it the top priority of the economic stimulus plan. It is reported that the economic structural transformation mainly focuses on the medium - and long-term growth strategy promoted by Japanese Prime Minister Yoshihiko Suga, and guides and promotes the industrial economy to transform to the zero-emission green economy through a series of supporting means such as setting up funds, and meanwhile promotes the Japanese economy to transform to the digital economy.
The plan will boost investment in infrastructure by Y5.9tn to cope with natural disasters; To stimulate economic development, a new system will be created to provide equipment investment subsidies of up to 100 million yen per company to small and medium-sized enterprises that independently merge or expand new businesses. In order to promote energy conservation and emission reduction and achieve the comprehensive target of carbon emission by 2050, the Japanese government will set up a new fund of 2 trillion yen through fiscal investment and financing to support enterprises' research and development activities, promote the construction of energy-saving housing and activate the real estate market in the next 10 years. A ¥10 trillion university fund will be set up to upgrade research at universities and other institutions. 1 trillion yen to promote digital administration and digital economy; To curb population decline, infertility treatment will be covered by health insurance and the government will increase subsidies.
The economic effect of these measures, Suga said, would lift GDP by 3.6 percentage points.
According to the new guidelines, the Japanese government will prepare the third supplementary budget of this year, with a planned investment of 20 trillion yen, and allocate 10 trillion yen in next year's annual budget. Then, it will make up 10 trillion yen through fiscal investment, financing and local budgets, so that the actual fiscal expenditure will reach 40 trillion yen. The third supplementary budget will be submitted to parliament in January.
The evaluation of the supplementary budget varies from all walks of life in Japan. On the one hand, the government is seen as putting more emphasis on stimulating the economy at a time when investment in health care is relatively low amid a growing epidemic. Medical experts, such as the Japan Doctors Association, have blamed tourism promotions launched by the Japanese government to boost the economy for the third wave. On December 8th Tomohiko Ozaki, president of the Tokyo Medical Association, reiterated his call for the government to halt the flow of people, such as tourist promotions, to avoid a collapse of the medical system. On the other hand, the two supplementary budgets enacted by the Japanese government in April and May this year have increased fiscal expenditure by 120 trillion yen, with a total size of more than 230 trillion yen. Three supplementary budgets in an economic year is not only rare in history, but also a widening deficit will further increase the fiscal burden. With gross central and local government debt already at twice nominal GDP, the government's target of primary fiscal balance by 2025 will have to be pushed back. In addition, the large size of the reserves listed in the supplementary budget and the fact that their specific use is not subject to parliamentary oversight are considered contrary to the principles of fiscal democracy.