Source: Global Information Broadcasting
A few days ago, sources said that the Japanese government plans to issue construction bonds worth 511.7 billion yen (about 3.29 billion U.S. dollars) in fiscal year 2024, an increase of 77.4 billion yen, or 20%, from the initial budget of the previous fiscal year.
The purpose of Japan's substantial increase in its construction bonds is to finance the country's huge defense construction and to pay for the increased defense spending.
Screenshot of the Asahi Shimbun report
Kishida government's approach 'crosses the line'
Until World War II, Japanese militarists had been financing Japan's military operations and wars of aggression through the issuance of war bonds.
It is precisely on the basis of reflection on the lessons of history that successive Japanese governments after the war have consistently avoided using the money borrowed from the issuance of bonds for defensive purposes.
However, Prime Minister Fumio Kishida broke this taboo.
The Kishida government decided in December 2022 to increase the defense budget for the next five years ending in fiscal 2027 to 43 trillion yen, a significant increase of 50% from the previous five years.
Screenshot of Japan's Kyodo News report
In order to achieve this "historic shift", the Kishida government approved a construction bond for "public works projects", and listed the construction of Japan's Self-Defense Force facilities and ship construction costs as investment targets.
The initial budget for fiscal 2023 set out 434.3 billion yen for the issuance of construction bonds, and in the preliminary budget for fiscal 2024, the amount of funds that need to be raised through the issuance of construction bonds will increase to 511.7 billion yen.
In the words of an official from the Ministry of Finance, "As Japan gradually strengthens its defense capabilities, the cost of building SDF facilities and ships that need to be paid for with government bonds has increased."
Screenshot of the Asahi Shimbun report
Some within the ruling Liberal Democratic Party (LDP) and in Japan's defense industry have long called for further increases in defense spending, citing a weaker yen and rising costs of equipment and materials.
According to some analysts, the Kishida government had planned to compensate for the increase in defense spending by raising taxes, but has not yet made a decision on the specific tax increase policy. In addition, the Kishida government has considered selling national assets and special account surpluses to pay for defense spending, but these are far from reliable sources of revenue.
Kenji Ishikawa, a professor of constitutional law at the University of Tokyo, said the Kishida government's use of the proceeds from the construction of government bonds for military purposes "crossed the line."
Kenji Ishikawa: "The [post-war] constitution contains a clause that will never maintain the possibility of waging war, in order to ensure that Japan will abandon the war of aggression in terms of fiscal policy. To embody this spirit, Japan's Public Finance Law prohibits the government from indebtedness for investments other than public works projects. A look back at history shows that countries that were able to easily raise funds for the war were involved in the war. ”
Data map: Kenji Ishikawa
The prospects for the Kishida cabinet to govern are not optimistic
In fact, Japan is already heavily indebted.
According to the latest data released by the Ministry of Finance, the total debt of the Japanese government reached a record 1,286.45 trillion yen (about 8.6 trillion US dollars) by the end of last year, an increase of 29.45 trillion yen year-on-year, equivalent to more than twice the size of Japan's GDP and the worst situation among developed countries.
Screenshot of Kyodo News report
And Japan's economy is already in turmoil.
Since the collapse of the bubble economy in the 90s of the 20th century, Japan's economy has struggled to improve.
In addition to Japan's long-term ultra-loose monetary policy, aging population, declining birthrate and other reasons, the U.S. interest rate hike has also accelerated the depreciation of the yen and raised the cost of living for the people.
According to foreign media analysis, Japan's GDP in dollar terms has been hit hard by the depreciation of the yen. Japan is in a technical recession, which, combined with a weak yen, has led to Germany replacing Japan as the world's third-largest economy. In addition, after the Bank of Japan reversed its deflationary policy for more than 20 years and began to raise interest rates, the cost of repaying record government debt will be very high.
Screenshot of the report on the website of Australia's "East Asia Forum".
While economic development is faltering, Japan's pace of strengthening its military and expanding its armed forces is getting faster and faster.
Japan's defense spending has been rising for 12 consecutive years, and it is expected that by fiscal 2027, Japan will reach the NATO standard of 2% of GDP, completely changing the "defense-oriented" situation that has been 1% since World War II.
Such huge military spending is bound to crowd out government spending on social security and other aspects, which has exacerbated the discontent of the Japanese people, and the approval rating of Kishida's cabinet has hovered at a low level for several months.
The Australian Financial Review commented that Japan is stepping up to become a major defense player in the rapidly changing global order, not only trying to play an increasingly important role in the Japan-US alliance, but also considering joining the US-UK-Australia "AUKUS" trilateral alliance. At the same time, Japan, once pacifist, is establishing itself as a major military power through stronger alliances and weapons development.
Japanese diplomats, business leaders, academics and government officials say Japan is at a turning point when it finally emerges from decades of economic stagnation since the bursting of the economic bubble in the early '90s. However, optimism about Japan's future has been diluted by the country's structural challenges, including an aging population, labor shortages, and high government debt.
Commentary by the Australian Financial Review
In addition, the continued fermentation of the Liberal Democratic Party's black gold scandal has further exacerbated the dissatisfaction and disappointment of the Japanese people.
As a result, Fumio Kishida's Liberal Democratic Party (LDP) suffered a crushing defeat in the election of three seats to fill vacancies in the House of Representatives at the end of last month, losing the seats previously held by the LDP.
Public opinion generally believes that the defeat in the by-election has made the prospects for the Kishida cabinet to govern extremely bleak.
Screenshot of the Associated Press report
The British "Guardian" bluntly said that although Kishida's visit to the United States last month was in the limelight, he could hardly win the favor of Japanese voters by himself or the Liberal Democratic Party.
The report pointed out that Kishida's evasive handling of the black gold scandal was also considered "completely unacceptable". And the anger of the Japanese people over the black gold scandal may lead to Kishida's resignation.
Screenshot of the British "Guardian" report
Material source丨Global Information Broadcasting "Global Deep Observation"
Planner丨Wang Jian
Reporter丨Wang Hongling