CCTV Script 21/07/2025

CNBC

3 days ago

Many analysts have pointed out that the issue of "inflation" has become a key focus for Japanese voters in the Upper House Election. In June, Japan's core CPI, excluding fresh food, rose by 3.3% year-on-year, significantly exceeding the Bank of Japan's 2% target. Additionally, although the price of rice has declined from its year-on-year surge of 101.7% in May, it remains at a high three-digit level.
"The whole election is about inflation. People are hopping mad about the size of the inflation at the moment, rice is up 100.2% year on year. Japan has just had its biggest wage hike since 1991 and the whole of that has been washed away by the rise in inflation."
In response to the rising prices, the ruling coalition led by Japanese Prime Minister Shigeru Ishiba and the opposition parties have proposed opposing plans. The opposition parties advocate for reducing the consumption tax to alleviate the pressure of rising living costs, while the ruling coalition favors issuing one-time cash subsidies, arguing that this approach is easier to implement quickly. They also emphasize that consumption tax revenue is a crucial source of funding for Japan's social welfare system. It must be acknowledged that this issue is indeed tricky.
There is a generational divide among the Japanese public regarding whether to lower the consumption tax. Recent polls by Nikkei and Tokyo Broadcasting System show that younger Japanese are more inclined to support tax cuts, while older generations prefer maintaining the status quo to safeguard social welfare.
The current unfavorable election prospects for Japan's ruling party could also impact U.S.-Japan trade negotiations. Prime Minister Ishiba is facing widespread skepticism both within and outside his party, raising doubts about whether he can fulfill the commitments on the trade talks with the U.S. Analysts point out that under the current circumstances, Japan is unlikely to secure a favorable position in trade talks with the United States.
For example, U.S. President Trump has been pushing for Japan to further increase its imports of American rice. However, analysis indicates that Japan currently allows a maximum of 770,000 tons of duty-free rice imports annually, nearly half of which already come from the U.S. Therefore, under the existing framework, Japan has limited room to increase the imports further. Any additional concessions would require broad consensus and support within the ruling party.
"LDP is now losing the elections. It's not so popular. So which means, at this moment, he's not in a position to make a bold vision to open the country for agriculture products. That's a concern."
In addition, experts caution that automobiles are the key battleground in U.S.-Japan trade talks. It's important to note that cars and auto parts account for as much as 80% of Japan's trade surplus with the U.S. If the U.S. imposes tariffs on Japan's automotive industry, it could severely impact Japan's car exports, thereby affecting Japan's overall exports and the domestic economy.
Analysts also point out that, regardless of whether Prime Minister Ishiba remains in office, Japan may face dual challenges in both politics and the economy in the future.
'…if Ishiba survives, you have a crisis Because you have a leader who really has lost the confidence of the public and lost the confidence of much of much of his own party, and isn't able to get anything through the diet. But even if you get a new leader, and you get maybe an expanded coalition, you're still not looking at, you know, it's going to be a weak coalition...and they're going to be dealing with a real, you know, potentially serious economic blow."