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Beset by risks, Japan seeks boost from stimulus

Published on NewsOK Modified: January 11, 2013 at 2:02 am •  Published: January 11, 2013

The 20 trillion yen stimulus package includes 10.3 trillion yen ($117 billion) in central government spending, about half of which will go to public works.

At a news conference Friday, Abe denied that his party was relying on time-worn spending strategies that fostered corruption and waste during the Liberal Democrats' more than half-century in power after World War II.

"That's not true," he said. "Let me make it clear that this is not a pork-barrel package."

A key aim is to promote reconstruction in northeastern coastal regions devastated by the March 2011 earthquake, tsunami and nuclear disasters. The government is also stepping up work on repairing and upgrading aging ports, tunnels, roads and other infrastructure — a priority that gained urgency following the collapse of a highway tunnel outside Tokyo in early December that killed nine people.

Among the dozens of other projects approved by the Cabinet on Friday are measures and equipment to step up police and coastal patrols, improved safety precautions at nuclear power plants, facilities related to police, traffic safety and aging military-related buildings.

The package will support research into cutting edge technology and medicine, rare-earth recycling and undersea minerals and resources.

It also includes funding for Japanese enterprises investing overseas and tourism promotion.

In his campaign for the Dec. 16 parliamentary election that returned the Liberal Democrats to power after three-and-a-half years in the opposition, Abe stressed his determination to rebuild Japan as a "monozukuri," or manufacturing, nation and to ensure all Japanese can live secure lives.

In laying out his strategy on national television Friday, Abe accused the previous government, led by the Democratic Party of Japan, of "utterly failing" to figure out how to expand the economic pie.

Many in Japan believe that long-term growth will hinge on fundamental reforms of the government's powerful bureaucracy, politics and educational system.

In picking key industries, such as renewable energy, for support Abe's administration is taking a strongly interventionist approach. Abe also has insisted that the Bank of Japan commit itself to an inflation target of about 2 percent and that it adjust its asset purchasing and other policies to allow for even more monetary easing after years of near-zero interest rates.

"Abenomics is big government, direct intervention," said Kichikawa. While that approach could end up protecting inefficient industries, it also could be used to complement new private sector initiatives, for example supporting investments in costly renewable energy development.

"We need to see how the Abe administration will conduct this 'new' strategy," he said. "Let's see what the 'new' means."


Associated Press writers Malcolm Foster and Mari Yamaguchi contributed to this story.