| Recently, many Japanese authorities assume that China is a big threat to Japan, especially in terms of international trade. A policy of depreciation of the Yen is an answer to their concern. The main objective of this thesis is to examine whether or not this policy is practical and has the effect the authorities expected. Based on the trade structures illustrated, an empirical approach is demonstrated, and estimated results are consistent with the hypothesis. I argue that China is not a competitor of Japan as the Japanese have assumed, and Japan's depreciation policy is not an efficient instrument for Japan to overcome its economic problems. This thesis concludes with a discussion of policy responses for Japan. |
