Home / Business/ Japan firms wary of boosting investment amid intensifying trade war: Reuters poll

Japan firms wary of boosting investment amid intensifying trade war: Reuters poll

Comments / {{hitsCtrl.values.hits}} Views / Wednesday, 23 January 2019 00:00


FILE PHOTO: A worker walks between shipping containers at a port in Tokyo, Japan - Reuters

TOKYO (Reuters): Over a third of Japanese firms aim to raise capital expenditure in the fiscal year starting April, with many others worried about the impact on spending plans of a trade war between major markets China and the United States, a Reuters survey showed.

Tit-for-tat import tariffs and ensuing uncertainty have started to drag on global growth and hurt Japanese firms, particularly those with business in China. This has made many nervous about corporate investment, which before the trade war began last year had been a bright spot in Japan’s economy.

“We are being affected by US-China trade friction, so we are curbing capital investment until the outlook becomes clear,” a manager of a machinery maker wrote in the 7-16 January survey.

Since the start of 2019, precision motor maker Nidec Corp and automation equipment manufacturer Yaskawa Electric Corp both cut their annual operating profit forecasts due to weakening demand from China.

“Uncertainty about the global economy as a whole is causing some Japanese firms to hesitate to make active investments,” wrote a manager at another machinery firm.

Some 52% of respondents said they would not change their capital spending amounts next fiscal year versus this year, whereas 12% said they would cut. Meanwhile, 22% planned to increase investment, and 14% said they would do likewise but only moderately.

The Reuters Corporate Survey, conducted monthly for Reuters by Nikkei Research, polled 480 large and mid-sized firms with managers responding on condition of anonymity. Around 250 answered the questions on capex and trade issues.


Capex reversal

Major corporations said they planned to raise investment by an average 14.3% for the fiscal year that ends in March – the highest since 1990, at the end of Japan’s Bubble Era – according to the Bank of Japan’s December tankan survey.

But trade friction has since disrupted global supply chains, fuelling concern of a significant impact this year on world trade, investment and financial markets.

The Corporate Survey showed about 40% of Japanese firms saw the possibility of trade friction and protectionism denting sales and profit plans in the next fiscal year. The proportion hit around 50% among manufacturers alone.

As the trade war intensifies, global companies are shifting production and supply chains out of China, scrambling to secure new facilities in neighbouring Asian countries and rebuild supply chains outside of China.

A quarter of all firms surveyed – and one-third of manufacturers – said they intended to review their supply chain in the coming fiscal year.

Share This Article

Facebook Twitter


1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.


Today's Columnists

The Presidential Election: Into anarchy or out of anarchy?

Saturday, 24 August 2019

In politics there are no absolute truths, rights or wrongs: all is relative. Politics is about choices and alternatives. It is also the art of the possible. The best policy for the people is to work through the give

We need to challenge climate change doubters before it is too late

Friday, 23 August 2019

Imagine a London where the entire subterranean region is engulfed with dirty water. Crammed train carriages that once barrelled along 249 miles of track transporting busy office workers, builders, teachers, civil servants, cleaners and students now r

The Provincial Council Elections – The charade goes on

Friday, 23 August 2019

Originally the SLPP was keen to hold the Provincial Council Elections (PCE) immediately after the Local Government Election results as they felt the PCE would go in their favour. PCE were held under the Proportional Representation system. The relevan

The presidency and the dilemma of the Presidential Election

Friday, 23 August 2019

J.R. Jayewardene created a presidential system not because the parliamentary system of governance that preceded it had failed. He wanted to take over all the powers of the State and assume the status of ancient kings who ruled the country in the past

Columnists More

Special Report