The Japan-US Trade Friction And The Japanese Industrial Structure Adjustment

This paper focuses on discussing the relevance between the post-war Japan-US trade friction and Japanese industrial structure adjustment, and analyses the main measures which Japan has taken to deal with the Japan-US trade friction and their effects to alleviate the Japan-US trade friction and promote the adjustment of the Japanese industrial structure. It points out that there was a strong correlation between the post-war Japan-US trade friction and Japanese industrial structure. On the one hand, the machinery industry was the mainstay of Japan and was highly dependent on foreign trade, which leads to the exportation to the United States surged. This surging exportation caused the Japan-US trade friction, and the friction continued to be worse with the upgrading of Japanese industrial structure. On the other hand, the measures, taken to mitigate the trade friction by Japan, such as voluntary export restraints, foreign direct investment, appreciation of the yen and expansion of domestic demand, improved Japan's industrial structure escalation.The paper includes introduction, text and conclusion; the text consists of two parts in seven chapters.Part 1 covering chapter 1,2,3, discusses how Japanese industrial structure caused Japan-US trade friction. Chapter 1,2, expound on the evolution and features of Japanese post-war industrial structure and the structure of its foreign trade. They point out that, with the rapid economic growth after war, Japan formed a full set of industrial structure including all industries with different advantages. The machinery industry was the mainstay in Japanese industrial structure, which is highly dependent on foreign trade, especially on trade with the United States, which was the highlighted feature. Based on the foundation of Japanese industrial structure, the structure of its foreign trade had a typical feature of the vertical division of labor. That is the export income elasticity far exceeds the income elasticity of imports, inter-industry trade was developed and intra-industry trade was backward. Chapter 3 discusses the mechanism by which the Japanese industrial structure caused Japan-US trade friction from both empirical and theoretical exposition. The specific transmission mechanism is:Japanese industrial structure led to the exportation to the United States surged, this forced the United States to carry out structural adjustment and pay to the cost, which triggered the Japan-US trade friction;The advance of Japanese industrial structure led to the escalation of Japan-US trade friction, its performance is along with the advance of Japanese industrial structure, the scope of Japan-US trade friction gradually expanded and the focus turned to high value-added and high-tech, the problems were resolved by the economic system coordination, but not the import and export adjustment any more.Part 2 including chapter 4,5,6,7, discusses the effects of the measures which were taken by Japan to alleviate the Japan-US trade friction and promote the adjustment of the Japanese industrial structure. The four chapters expound the effects of different measures, including voluntary export restraints, foreign direct investment, appreciation of the yen and the expansion of domestic demand, to ease the Japan-US trade friction and promote the adjustment of the Japanese industrial structure from the theoretical and practical aspects. The analysis comes to the conclusion that:the voluntary restriction of export played a mitigation on the Japan-US trade friction to a certain extent, but American consumers had to bear a great loss. Voluntary export restrains raised the quality of Japanese export products, but prompted the United States's import demand in the high-quality products so as to promote the upgrading of the quality of exporting products from Japan. Appreciation of the yen failed to achieve the theoretically expected effects easing of Japan-US trade friction, and digital observation showed appreciation of the yen and the Japan-US trade surplus increased and coexisted. But the yen's appreciation has increased the competitiveness of Japanese industry, and prompted the changes of the structure of Japanese import and export, and promoted the development of Japanese service industry. Japan's foreign direct investment had eased Japan-US trade friction, but caused the friction of investment. The Japanese foreign direct investment promoted the adjustment of industrial structure in Japan, but led to the hollowing-out Japanese industrial structure at the same time. Japan expanded the domestic demand to alleviate the trade friction between Japan and the United States and promoted the Japanese optimization of the industrial structure.