Japanese industries take direct hit from China slowdown

The Yomiuri Shimbun

Workers assemble a Lexus luxury brand car at Toyota Motor Kyushu, Inc.’s Miyata Plant in Miyawaka, Fukuoka Prefecture. Lexus brand vehicles are very popular in the Chinese market.

By Mayumi Terashima and Takuya Ono / Yomiuri Shimbun Staff Writers Doubts are arising over whether the Japanese economy can continue on its path of moderate recovery, as the Cabinet Office lowered its assessment of the coincident index for March to “worsening” for the first time in six years and two months.

While factors such as individual consumption remain firm, the increasingly severe U.S.-China trade row is casting a shadow on the nation’s economy and fanning concern among Japanese industries.

Toshiba Corp. on Monday announced that its semiconductor unit will ask as many as 350 workers to voluntarily retire in response to a larger-than-anticipated drop in demand for semiconductor products in China.

“We have taken such measures as relocating personnel and cutting fixed costs, but demand in China has declined,” said Toshiba Corporate Senior Vice President Hiroshi Fukuchi.

In addition, leading semiconductor maker Renesas Electronics Corp. has been suspending production at major factories for up to two months since April.

Meanwhile, Sharp Corp.’s liquid crystal television business fell into the red in the January-March period this year, despite posting operating profits in the April-December period in 2018.

“The market situation was more severe than expected toward the end of the business year [in March] because of such factors as the U.S.-China trade row,” said Sharp Executive Vice President Katsuaki Nomura when announcing the company’s business results on Thursday.

A drop in production due to slowing exports to China was mainly responsible for the lowering of the assessment.

The preliminary index for industrial production in March fell 0.9 percent from the previous month, its first decline in two months. Manufacturing of mainly China-bound production equipment fell sharply, and the auto industry also saw production declines.

Fallout from U.S.-China row

The future of the Japanese economy will likely be impacted by trade friction between the United States and China. Threats to future economy are increasing, with the United States preparing a fourth round of tariffs against China that will extend tariffs on almost all Chinese imports.

The Japanese economy is closely linked to the Chinese market. Many Japanese devices are used in China-made smartphones and personal computers. When China’s exports slow, Japanese companies take a direct hit. The Chinese market itself is also hugely important as a source of sales because it is expanding.

Corporate leaders and market players are increasingly concerned.

“We have lowered [our business outlook] to the lowest possible level and are compiling it very conservatively,” said Yoshiaki Takeda, senior executive officer of paper manufacturer Oji Holdings Corp. “We have no further measures to take.”

Meanwhile, Honda Motor Co. Executive Vice President Seiji Kuraishi has openly expressed his fears.

“I’m afraid that falling stock prices will indirectly cause consumers to lose their appetite for buying,” he said.Speech

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