分类： business

Japan’s currency crisis is deepening as the yen plunges to historic lows, creating severe economic pressures that are eroding living standards and threatening stagflation. The Bank for International Settlements revealed in February that the yen’s real effective exchange rate plummeted to 67.73 in January—the lowest level since Japan adopted floating exchange rates in 1973, representing approximately one-third of its 1995 peak value.

This dramatic depreciation stems from fundamental structural weaknesses including prolonged economic stagnation, widening interest rate differentials with the United States, heavy dependence on energy imports, demographic decline, and mounting fiscal burdens. According to Professor Yangchoon Kwak of Rikkyo University’s College of Economics, these factors collectively exert sustained medium to long-term pressure on the currency.

The weak yen has triggered a dangerous inflationary spiral in the import-dependent nation. Japan’s core consumer price index rose 3.1% year-on-year in 2025, marking the fourth consecutive annual increase. Among 522 surveyed items, 440 recorded price hikes with rice prices skyrocketing 67.2% and egg prices increasing 10.3%.

Compounding the crisis, real wages adjusted for inflation fell 1.3% in 2025—the fourth straight annual decline—creating a painful squeeze on household budgets. The situation has prompted major corporations including McDonald’s Japan and East Japan Railway to announce significant price increases, while Tokyo apartment rents have surged by ¥63,000 ($400) over five years.

Economists warn that if prices continue outpacing wage growth, Japan could face stagflation—a combination of economic stagnation and inflation that further undermines consumer confidence. The government has implemented temporary relief measures including gasoline tax cuts and utility subsidies, but experts question whether these will offset broader inflationary pressures.

Meanwhile, Prime Minister Sanae Takaichi faces criticism after admitting to distributing ¥30,000 congratulatory gifts to ruling party lawmakers following recent elections—a move opposition leaders characterize as reflecting outdated political culture amid ongoing public distrust over money and politics.

Hong Kong’s financial landscape has undergone a remarkable transformation, with the government now projecting a HK$2.9 billion (US$372 million) surplus for the 2025/26 fiscal year—a dramatic reversal from the previously anticipated HK$67 billion deficit. Financial Secretary Paul Chan announced this unexpected fiscal improvement during Wednesday’s budget presentation, attributing the positive shift to stronger-than-anticipated revenue streams and strategic financial management.

The surplus emerges against a complex backdrop of economic challenges and opportunities. Fiscal reserves are expected to grow to HK$657.2 billion by March 2026, up from HK$647.3 billion the previous year, signaling stabilization in public finances despite persistent weakness in the property sector.

Multiple factors contributed to this fiscal turnaround. Stamp duty revenue reached HK$99.5 billion—HK$31.9 billion above initial projections—driven by renewed vigor in equity markets and accelerated economic growth. Additionally, the government expanded bond issuance to HK$155 billion while strategically reallocating HK$62 billion from various special endowment funds established outside government accounts.

The property market crisis that began in late 2021 fundamentally altered Hong Kong’s fiscal model. Land premium revenue plummeted to an average of HK$16.8 billion annually over the past three years, representing a HK$110 billion annual shortfall compared to pre-2021 levels. This revenue decline coincided with increased capital expenditure, which grew 27% to HK$155 billion in 2024/25 and another 21% to HK$187 billion in 2025/26.

Credit rating agencies have expressed cautious optimism. Fitch Ratings noted that while Hong Kong’s government debt-to-GDP ratio remains manageable at 15% in 2024/25, continued bond issuance averaging HK$177 billion annually through 2029/30 could gradually erode fiscal strength. Fiscal reserves are projected to decline to approximately 14% of GDP by 2029/30, compared to 41% at the pre-pandemic peak.

Financial Secretary Chan defended the borrowing strategy, emphasizing that the projected debt-to-GDP ratio of 19.9% remains “highly prudent” by international standards. He reiterated that bond proceeds would exclusively fund infrastructure investments rather than recurrent government expenditure.

Looking ahead, the government plans to draw HK$15.8 billion from special funds, HK$37 billion from Bond Fund surplus, and HK$75 billion from Exchange Fund investment income to maintain fiscal stability in 2026/27. However, Hong Kong Monetary Authority Chief Executive Eddie Yue cautioned that the favorable market conditions of 2025 may not persist, citing global economic uncertainties, central bank policies, AI developments, and geopolitical tensions as potential headwinds.

As the sixth round of US-China trade negotiations approaches, both nations are maintaining open communication channels to stabilize bilateral economic relations, China’s Ministry of Commerce confirmed during a Thursday press briefing. The ministry emphasized Beijing’s commitment to equal-footed consultations aimed at managing differences and expanding practical cooperation between the world’s two largest economies.

The upcoming discussions have attracted significant attention from analysts who anticipate focus areas will include extending previous short-term agreements and establishing frameworks for future collaboration. Bai Ming, researcher at the Chinese Academy of International Trade and Economic Cooperation, identified key negotiation priorities as China’s demand for the US to abandon restrictive practices against Chinese high-tech industries and Washington’s desire for increased access to strategic materials.

Recent economic analyses have challenged the fundamental rationale behind tariff strategies, with multiple studies revealing American consumers bear the overwhelming burden of import taxes. A China Securities Co report published Wednesday demonstrated a 92% tariff pass-through rate in 2025, meaning US importers absorbed $92 of every $100 in additional tariff costs. For Chinese goods specifically, which faced cumulative tariff increases of approximately 26 percentage points, the pass-through rate reached 94%, with Chinese exporters reducing dollar-denominated prices by merely 2.5%.

These findings align with a Federal Reserve Bank of New York study indicating approximately 90% of economic impacts from 2025 tariffs were shouldered by US consumers and businesses rather than foreign exporters. The Washington-based Tax Foundation further estimated these tariffs effectively created an average $1,000 annual tax increase per American household.

The trade landscape shifted significantly on February 20 when the US Supreme Court ruled the previous administration lacked constitutional authority to impose broad-based tariffs under emergency powers legislation, invalidating specific tariffs on Chinese goods. However, the Biden administration promptly implemented temporary import surcharges for up to 150 days under Section 122 of the Trade Act of 1974, which took effect Tuesday.

A Ministry of Commerce spokesperson stated Wednesday that China would ‘take all necessary measures to resolutely safeguard its legitimate rights and interests’ should the US continue advancing relevant investigations, highlighting the ongoing tensions even as diplomatic exchanges continue.

In a powerful demonstration of policy continuity, East China’s Fujian province has emphatically reaffirmed its commitment to nurturing the private sector as the cornerstone of its high-quality development strategy. The provincial leadership convened its annual symposium with prominent private entrepreneurs on February 26, 2026—marking the sixth consecutive year that this gathering has been designated as the inaugural working session following the Chinese New Year holiday.

The high-level dialogue provided a strategic platform for direct engagement between government officials and business leaders, facilitating substantive discussions on industrial modernization and innovation-driven growth. Entrepreneurs contributed firsthand perspectives on market dynamics and proposed concrete measures to stimulate regional economic vitality during these exchanges.

Economic indicators substantiate Fujian’s private-sector focus: provincial GDP exceeded 6 trillion yuan ($877 billion) in 2025, with private enterprises generating 77.4% of total economic growth while achieving a 5.5% year-on-year increase in added value.

Zhou Zuyi, Secretary of the Communist Party of China Fujian Provincial Committee, characterized the private economy as both the province’s essential vitality and distinctive competitive advantage. He articulated the government’s tripartite role as “partner,” “servant,” and “guardian,” pledging to cultivate an optimal business environment throughout the 15th Five-Year Plan period (2026-2030).

This provincial initiative reflects a broader national trend, with multiple Chinese provinces including Anhui, Guangdong, Shandong, and Hubei simultaneously conducting their own post-holiday meetings focused on technological innovation and private sector development to launch the new five-year planning cycle.