Chinese tourists provide a fillip to Japan's economy

Japan is making increasing efforts to serve the growing number of Chinese tourists visiting Japan.

All FamilyMart stores in Japan began accepting Chinese UnionPay payment cards on Feb 2, which means all the three major chain convenience stores in Japan, namely Lawson, 7-Eleven and FamilyMart, accept UnionPay cards and allow for easy PIN-free payment.

Nearly 5 million Chinese tourists visited Japan in 2015, twice that of the year before. And Chinese tourists outstrip travelers from other countries in terms of expenditure, with each one spending $2,446 on average.

The Chinese mainland is one of the main global suppliers of tourists, and that has been paying dividends for retailers globally.

By 2019, Bank of America Merrill Lynch expects some 174 million Chinese tourists to be spending $264 billion in comparison with the 109 million who spent $164 billion in 2014.

Thanks to its cultural similarity and accessibility, Japan is one of the most popular destinations for Chinese tourists, and the ever-increasing number of Chinese tourists are bringing new business opportunities to Japanese merchants.

Japan's economy contracted at an annualized pace of 1.4 percent in the fourth quarter of last year, the fifth contraction in the 12 quarters Japanese Prime Minister Shinzo Abe has been in office. Weak private consumption was the biggest drag on Japan's economy, declining 3.3 percent at an annualized pace. December was the fourth consecutive month in which spending declined and it was the biggest fall since last May.

Out of options and desperate to boost its struggling economic recovery and ward off deflation, Japan has been forced to try its luck with negative interest rates.

The Bank of Japan added a negative interest rate policy on Jan 29 to its already substantial monetary easing policy, imposing a 0.1 percent fee on newly deposited funds. Thus, the nearly $2.5 trillion in excess reserves currently sitting at the BOJ can continue to sit there without penalty.

The ultimate goal of the negative rates policy in Japan is to guide inflation to the golden 2 percent mark by encouraging lending in the hopes of stimulating economic growth.

The BOJ governor, Haruhiko Kuroda, said the measure was intended to bolster business confidence and consumer spending.

But while the Japanese are spending, it is not in a way likely to reinvigorate the country's economy.

Following the Bank of Japan's decision to lower interest rates below zero, many Japanese consumers have reportedly rushed to hardware store in search of one thing: safes. Japanese households are squirreling away money at home instead of investing it or putting it into bank accounts.

In its statement, the BOJ focused on falling oil prices and the slowdown in China rather than any economic weakness at home.

It will soon be three years since Kuroda went ahead with a "new phase" of quantitative and qualitative monetary easing in keeping with "Abenomics", the Abe administration's policy of drastic monetary aimed at jump-starting the country's anemic economy.

But although Abenomics has raised stock prices and devalued the yen against the dollar, it has brought no significant changes to the nation's economic growth rate and consumer prices.

Japan's newspaper Asahi Shimbun says even if lending rates drop further, it is unlikely that Japan's businesses will suddenly start investing more amid sluggish domestic demand. Consumers are unlikely to start spending while their future remains uncertain.

The author is China Daily Tokyo bureau chief. caihong@chinadaily.com.cn