CAN JAPAN STAY THE COURSE?

Dominion, Volume 31, Issue 2, 28 September 1937, Page 9

CAN JAPAN STAY THE COURSE?

Changing Conditions: Economic Problems

Japan, to-day, is confessedly harassed more than ever by her economic limitations, -as well as by the unfavourable effects which these last years of strain are gradually showing in her none-too-strong economic . and social structure, said Guenther Stein, in “The Speetotar” recently. Economics have become the main preoccupation of her, military and civilian leaders. Social issues, although still neglected as far as action is concerned, are forcing themselves on their attention. Industrial capacity is the most prominent of the many vexatious problems facing the Japanese authorities. For the 50 per cent, growth in the volume of output of Japan’s manufacturing industries, which was brought about from 1931 to 1936, and the accompanying 50 per cent, increase in the industrial machinery installed in the country, are no longer viewed a,^ achievements which can assure Japan of the economic and military prominence to which she aspires. Even now the total output of all the factories in Japan equals but a fraction of that of each leading Western country, including the new industrialised Soviet Union. Per head of her population Japan produces hardly one-twelfth as much in manufactured goods as Britain or the United States. Japan-Manehukuo’s output of steel, in spite of all the vigorous State assistance by which it was fostered in recent years, is but 6.7 per cent, of that of the United States, Britain and the Soviet Union combined; on which countries, moreover, Japan has to rely for almost half of the ferrous materials used in her domestic production of steel.

Japan's engineering industries, too, much though they have advanced recently both in the volume and quality of their production, are still lagging far tiebind the desires of her economic and military leadsr. They can hardly be expected to Increase the comparatively small total of machinery installed in all branches of industry by much more than about 10 per cent, annually, even if no attention be paid to the replacement of obsolete equipment. Moreover,, if only part of to-day’s. largescale projects for industrial expansion were to be carried out, Japan would have to increase very considerably its costly imports of foreign machinery, which never cease to be needed in large quantities side by side with homeproduced equipment; just as the country’s hurried industrial progress in general. and that of its armaments in particular, depends to such a large extent on the acquisition from Western countries of costly patent rights and licences for newly-developed processes of manufacturing. It is not only for these reasons that Japan’s insufficient foreign currency income is the object of the second great anxiety of her leaders. The deficiency of raw materials which entailed imports worth 770,000,000 yen in 1931. rose to 2,040,000,000 yen in 1936, ami it keeps on growing. Before the occupation of Manchuria and the new armament effort, 29.4 per cent, of all the industrial raw material requirements of the country had to be secured from abroad. But after five years of strenuous efforts to become one of the "have's,” 33.5 per cent, of its raw material needs had to be imported. (Japan is still able, however, to feed her quickly growing population without incurring any deficit in her foreign trade in foodstuffs). The increasing quantities of foreign raw materials' needed for the manufacture of larger volumes of export goods which account for part of this deterioration do not constitute any real financial problem, for such exports automatically pay for the raw material imports involved. The quickly-rising raw material imports for armament and equipment purposes are alone responsible for the mounting deficit in the country’s foreign trade, which during the first five months of the present year reached the record total of almost 600,000.000 yen. Tais heavy burden is becoming the more onerous as the rising trend of world prices set in at a moment when Japan had almost exhausted most of her reserves of foreign currency. The comparatively small gold supplies of the country are now being tapped once more.

The last, but by no means the least, anxiety of the leaders of Japan is the wave of demands for higher wages, of strikes in an almost unprecedented number, and of dissatisfaction with an insufficient liveMhood that has been sweeping over the country since the beginning of the current year.