Japan's Economy Minister Warns of Risk From China's Real-Estate Troubles

By Peter Landers

TOKYO--The struggles in China's real-estate industry and weak Chinese domestic demand pose a risk to the Japanese and global economies, Japan's new economy minister said Friday.

Yoshitaka Shindo, who assumed the cabinet post earlier this month, said that because China accounts for nearly a fifth of Japan's exports, the Chinese economic troubles could cause Japan's economy to move a notch downward.

Potentially, "the impact is really big" given China's central role in the global economy, Shindo said in a group interview with Tokyo-based reporters. He observed that foreign investment in China has dropped sharply and real-estate companies there have fallen into trouble, leading to a sluggish recovery of the Chinese economy.

Speaking about the Japanese economy, Shindo said that after a long period of "low temperature" recently, "there is a feeling of heat." He cited inflation running above the Bank of Japan's 2% target and the government's calculation that overall demand in the economy outweighs supply, a reversal of Japan's chronic problem of insufficient demand.

However, he said it was too soon to declare that the longtime problem of deflation is definitively gone. He said wages, especially at smaller companies, aren't keeping up with inflation.

Write to Peter Landers at Peter.Landers@wsj.com

(END) Dow Jones Newswires

September 29, 2023 04:45 ET (08:45 GMT)

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