Vegetable prices continue surging in Japan
Prices of fresh vegetables in January climbed 36% year on year, with prices of cabbage and Chinese cabbage shooting up by about three and two times respectively, according to consumer price data released by the internal affairs ministry Friday.
Rice prices rose 70.9%, with the pace of increase marking a record high for the fourth straight month.
For prepared food, there have been moves to pass higher production costs on to retail prices, putting pressure on households.
The recent lack of rain is a factor behind the surge in vegetable prices, according to the ministry and other sources.
The pace of rise for Chinese cabbage accelerated from December's 55.7%, partly reflecting a surge in demand as a substitute for cabbage, whose prices remain elevated.
Rice prices have been on an uptrend since last summer, when they soared amid supply shortages.
The higher rice prices have led to markups of related products, with prices in January rising 9.2% for
onigiri
rice balls and 4.5% for sushi served at restaurants.
Earlier this month, the government decided to release some rice that had been stockpiled by the state to ease the distribution bottlenecks, a factor contributing to the spike in the prices of the staple food.
Koya Miyamae of SMBC Nikko Securities predicted that the rate of rice price growth will remain high as moves to pass on higher production costs continue.
Prices of food excluding fresh food in the first half of this year are expected to rise over 5% from a year before, pushed up by spikes in the prices of rice-based products, according to Miyamae.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Nikkei Asia
27 minutes ago
- Nikkei Asia
Spain's Huawei contract exposes EU to security risks, critics say
Huawei has been contracted by Spain to store judicial wiretaps. KRIS CHENG LONDON -- Spain's decision to use Huawei Technologies hardware to store judicial wiretaps opens the European Union to security risks and undermines the bloc's new digital strategy, experts warn. The Spanish Interior Ministry awarded a 12.3 million euro ($14.2 million) contract to Huawei this month to manage and store information obtained through the wiretaps on the Chinese technology giant's OceanStor 6800 V5 servers.
Asahi Shimbun
27 minutes ago
- Asahi Shimbun
Chinese company accused of bogus refund claim on consumption tax
Tax authorities have penalized a Hong Kong-based freight company for submitting a fraudulent refund claim on the consumption tax, the first such case to come to light. As the number of foreign companies required to pay the consumption tax is rapidly increasing, tax authorities have been struggling to keep track of dubious filings. According to sources, the international freight company hired a Japanese logistics firm to deliver goods, paid the charge, including the consumption tax, and claimed a refund on the grounds that the taxable amount was negative. The procedure was handled by a tax accountant firm in Osaka, which acted as the company's 'tax agent,' the sources said. However, an investigation by the Tokyo Regional Taxation Bureau found suspicions that the Chinese company had falsified a bill required for the refund and inflated the payment amount. The company was hit with about 30 million yen ($200,000) in back taxes and penalties in 2023. In principle, foreign companies are not obligated to pay corporate taxes unless they have a base in Japan. However, if they sell goods or provide services in Japan, the consumption tax is levied based on transaction amounts. Even if companies are based overseas, they must pay the consumption tax by subtracting the tax amount paid on purchases from the amount received on sales. If the resulting amount is negative, they are eligible for a refund. According to Tokyo Regional Taxation Bureau documents, 8,148 foreign companies were required to pay only the consumption tax in 2024, including those eligible for refunds, a sharp increase from 4,086 companies in 2023 and 1,538 in 2022. A factor behind the increase is the invoice system introduced in 2023. The 'qualified invoice' contains the company's registration number, transaction details, tax amounts and other data. Japanese firms doing business with foreign companies in Japan need an invoice issued by the latter when paying the consumption tax. As a result, a growing number of foreign companies are registering with the National Tax Agency for issuing invoices. Tax authorities have increased surveillance of foreign companies suspected of failing to pay the consumption tax, such as game and app distributors, since around 2021. The monitoring system is far from robust, however. Of about 56,000 officials in charge of national taxes across Japan, only 50 or so at the Tokyo Regional Taxation Bureau are responsible for investigating foreign companies. 'We simply do not have the resources to investigate every foreign company,' a tax official said. Shigeru Ino, a professor of tax law at Asia University, said enhancing the collection of the consumption tax, which accounts for the largest share of tax revenue, is essential. 'We need to improve the monitoring system for foreign companies and strengthen the accountability of tax agents who handle procedures on their behalf,' said Ino, a former regional commissioner of the Sapporo Regional Taxation Bureau.
The Diplomat
2 hours ago
- The Diplomat
The Challenge to China's ‘Unified Big Market' Drive
The country's vast consumer base is the key to riding out Trump's tariffs. But China's internal market is riven by its own trade barriers. In April, U.S. President Trump announced his so-called 'Liberation Day,' slapping tariffs on nearly every country in the world. However, after Beijing retaliated, Trump made China his primary target. China has been widely viewed as 'well-prepared' for Trump's full-scale tariff war. It did not come as a surprise; Chinese economic officials and scholars had been discussing the possibility of renewed China-U.S. trade tensions since Trump's election victory in November 2024. Since Xi Jinping came to power in 2012, one of his top economic priorities has been to enhance the Chinese Communist Party's capacity to control and lead the economy while strengthening China's resilience to external shocks. The trade war during Trump's first term, along with the COVID-19 pandemic, further accelerated China's pivot away from reliance on international trade. Xi's strategy of economic self-strengthening – through technological nationalization and the promotion of 'dual circulation' – has made China less vulnerable to foreign economic coercion. The dual circulation strategy, introduced by Xi in 2020, prioritizes domestic economic activity over international trade. The goal is to increase the resilience of China's supply chains by reducing dependence on foreign technology. Xi's confidence rests on his belief in the strength of China's domestic market. He identifies China's vast consumer base – comprising over 400 million middle-class citizens – as the foundation of the national economy. As a result, strengthening the domestic market has become a top priority on Xi's agenda. During the most recent National People's Congress in March, Chinese leaders emphasized boosting domestic demand as the key to future growth, introducing new policies aimed at stimulating consumer spending and improving the domestic business environment. One example was the launch of a national subsidy program for major household purchases. Under this program, individuals buying cars, home appliances, and electronics can apply for price reductions. The goal is to encourage consumer spending and, in turn, stimulate economic growth through increased domestic consumption. The Chinese government is also advancing a major structural reform: dismantling internal market barriers. In the Government Work Report released in March, building a 'unified national market' was identified as a key policy objective. By breaking down regional trade barriers, policymakers aim to reduce logistics and other operational costs, thereby improving corporate profit margins and lowering consumer prices to boost domestic sales. Additionally, a unified market is expected to foster fair competition among businesses, enhancing the efficiency of resource allocation. More broadly, Xi envisions a system in which all factors of production – land, labor, capital, skills, and information – can circulate freely across the country. This nationwide integration, he argues, will maximize the use of resources and generate greater economic value. The root of China's 'dukedom economics' – a term coined by Chinese economists in the 1980s to describe the fragmented domestic market – can be traced to the growing power of local governments following the economic reforms. As part of the fiscal decentralization efforts in the 1980s, local governments gained control over their own budgets. In addition, they acquired authority over regional state-owned enterprises, effectively making them both regulators and entrepreneurs. The reforms also altered the incentives of local leaders: fostering local economic development became their top priority, as economic growth emerged as the most important criterion for cadre promotion. This shift gave rise to a tournament-style competition among localities, with each striving for rapid economic gains. As a result, local governments pursued aggressive investment strategies aimed at generating visible outcomes within short timeframes, often emphasizing self-sufficiency and local protectionism to achieve their growth targets. They are also incentivized to maximize the profits of local enterprises, which serve as their primary tax base. To protect these interests, many local governments established trade barriers to prevent local resources from flowing out and to block external goods from entering their jurisdictions. In recent years, the Chinese government has launched several major initiatives to dismantle internal trade barriers, including strengthened enforcement of anti-monopoly measures and regulations on unfair competition. These efforts specifically target local protectionist policies that discriminate against non-local firms. In June 2024, the State Administration for Market Regulation (SAMR) issued a policy document on fair market competition regulation, outlining the agency's responsibilities and enforcement powers. The document authorizes the SAMR and its local branches to investigate local laws and regulations that obstruct the development of a unified national market – particularly those involving discriminatory practices in subsidies, market access, and market entry and exit. Notably, the policy grants local Market Regulation Bureaus sweeping authority to scrutinize the policymaking processes of other local agencies and to strike down any regulations deemed inconsistent with the goal of building a unified national market. While China's recent reforms have significantly elevated the status of the Market Regulation Bureau – giving it more power within local governments – important exemptions remain in its authority. Specifically, policies that aim to 'protect national interests,' 'promote technological and innovation capabilities,' and 'provide public goods such as energy conservation, environmental protection, and disaster relief' are exempt from investigation. These broad exemptions leave the door open for local governments to continue offering subsidies to China's strategic industries, particularly the high-tech sector, including electric vehicles. In effect, local authorities can shield their own tech companies from both domestic and international competition, making market consolidation in China's tech sector more difficult. Regarding the national interest clause, an immediate question arises: Who holds the authority to define 'national interest'? Local governments – especially those at the municipal level – play a crucial role in the distribution of subsidies. While national and provincial governments formally own industrial policy subsidies, they typically do not engage in the detailed review and allocation process. For national subsidies, the central government allocates funds to provinces based on economic performance and other indicators. Provinces then distribute these subsidies to cities using similar criteria. It is the municipal governments that actually review companies' applications and decide on the final allocation of subsidies to individual firms. In addition to subsidies from higher levels, many cities also operate their own local industrial policy programs. There have been some attempts to centralize the distribution of subsidies. For example, last year Hunan province revised its industrial policy so that companies would submit subsidy applications directly to the provincial government, rather than through municipal governments. The goal was for the provincial government to review applications and allocate subsidies in a way that better reflected provincial economic priorities. However, the provincial government quickly found itself overwhelmed by the volume of applications, exceeding its processing capacity. Moreover, unlike municipal governments, which could conduct on-site visits to verify company information, the provincial government lacked the human and financial resources to carry out such reviews. As a result, the effort failed, and the Hunan government was forced to delegate the review and distribution authority back to the municipal level. By controlling the distribution of subsidies, municipal governments effectively gain the power to define 'national interests,' which often results in equating national interests with local interests. Consequently, city governments continue to use subsidies to protect local companies from outside competition. For example, Article 46 of the 'National Unified Big Market Construction Guideline' (全国统一大市场建设指引) states that local government cannot use local registration, subsidiary, and investment requirements to exclude companies from receiving local subsidies. But the local commerce bureaus, who are responsible for subsidies distribution, view this article as complete nonsense. 'Our job is to protect our [local] companies and promote our economic growth,' a Commerce Bureau cadre said, commenting on this requirement. 'If you don't contribute to our local economy, why do we give you our money?' 'We will try our best to carry out the rest of the document, but there is no way for us to implement this article,' he concluded. The SAMR is responsible for enforcing the unified national market, so the local Market Regulation Bureau is expected to monitor compliance. According to the cadre, the Commerce Bureau would likely receive a warning from the local Market Regulation Bureau. However, the Commerce Bureau would respond by invoking 'national interest' to justify its policy. In the end, the local Market Regulation Bureau is still part of the local government – its budget comes from the city – so it understands that it cannot act in direct opposition to local interests. The warning is therefore more symbolic than substantive; it serves primarily to demonstrate to the higher-level Market Regulation Agency that it is fulfilling its duties, rather than to enforce any meaningful policy change. The challenge to Xi's 'unified big market' vision will certainly hamper China's ability to weather the China-U.S. trade war. Without a massive boost to the domestic market as a buffer, China cannot implement a shifting export policy without experiencing short-term pain. However, the implications go far beyond the current trade war: Despite over a decade of power centralization under Xi, Beijing still faces pushback from its localities in implementing its vision.
