JPRS ID: 9627 JAPAN REPORT

• Document Type: CREST
• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000300090049-6
• Release Decision: RIF
• Original Classification: U
• Document Page Count: 107
• Document Creation Date: November 1, 2016
• Sequence Number: 49
• Content Type: REPORTS

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300090049-6
FOR OFF[CIAL USE ONLY
JPRS L/9627
, 24 March 1981
_
= Ja ~n Re ort
. p p
cFOUO ~ ai81 ~ ~
_ FBI$ FOREIQN BROADCAST INFORMATiON SERVICE
FOR OFFLCLAL U9~ ON~.Y
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
NOTE -
JPRS publications contain information primarily from foreign
newspapers, periodicals and books, but also from news agency
~r~nsmissions and broadcasts. Materials from foreign-language
sources are translated; those from English-language sources
are transcribed or reprinted, with the origxnal phrasing and -
other characteristics retained.
Headlines, editorial reports, and material enclosed in brackets -
are supplied by JPRS. Processing indicators such as [Text]
or [Excerpt] in the first line of each item, or following tne
~~st line of a brief, indicate how the original informatian was
processed. Where no processing in~icator is given, the infor-
mation was summarized or extracted.
Unfamiliar names rendered phonetically or transliterated are
enclosed in parentheses. Words or names preceded by a ques-
tion mark and enclosed in parentheses were not clear in the
original but have been supplied as appropriate in context.
Other unattributed parenthetica2 notes within the body of an
item originate with the source. Times within items are as
given by source .
The contents of this publication iti no way represent the poli-
cies, views or actitudes ot th~ U.S. Government.
_ COPY?tIGHT LAWS AND REGULATIONS GOVERNING OW~~IERSHIP OF
MATERIALS REPRODUGED HEREIN REQUIRE THAT DISSEMINATION
OF THIS PUBLICATION BE RESTRICTED FOR OFFICIAL USE ONLY.
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
F'OR OFFICIAL USE ONLY
JPRS L/9627 _
24 March 1981
= JAPAN REPORT -
_ (FOUO 18 f 81)
CONTENTS .
POLITICAL AND SOCIOIA GICAL
lliet Splits Over ArnLS Export Issue
(Yoshiaki Kohzuye; TIiE JAPAN EOONOMIC JOURNAL, 17 Feb 81)00.,0, 1
Tanaka Faction Growing in Spite of Lockheed Scandal -
(BUSINESS JAPAN, Feb 81.)..00 .....................o.,,oa,...,... 3
New Budget Should Inspire M~ve Toward Political Housecleaning =
_ (Yutaka Matsumoto; BUSINESS J.~PAN, Feb 81).....oo..a..o....o..0 5 _
MI LI TAItY
Japan Must Face Facts, Increase Defense Budget
(I~samichi Inoki; BUSINESS JAPAN, Feb 81)....o.......o.o.....o0 7
Defense Outlays Expected To Show Rapid Increase
(Yoshiteru Oka; BUSINESS uAPAN, Feb 81)......oo..ooo..oo..oo.o. 9
- Expert Anal3rzes U.S.-Japan Relations in Transition
(THE JAPAN ECONOMIC JOURNAL, 3, 10 Feb 81)..,0.0 � oo.ooo.,..... 11
Japan's Defense Budget Discussed, by Chikara Higashi
U.S. Pressure Analyzed
ECONOMIC
Japan's Commitment to ASEAN Remains Shrouded in Ambiguity
(Shiro Saito; THE JAPAN E~NOMIC JOURNAL, 20 Feb 81)...00.0... 16
Close Ties Being Forged Bet~aeen Japan, Egypt
- (Masayuki Tomita; BUSINESS JAPAN, Feb 81)....a..oo...o.o.o...0 18
Expert on Econamic Outlook for 19$1
- (Shinichi Goto; BUSINESS JAPAN, Feb 81).....oooo.oo....o.oo...0 22
New Zhoughts on (hina's Economic Outlook
(Yukichi Yanagishima; BUSINESS JAPAN, Feb 81).0.......o........ 25 .
_ - a - [III - A~IA - 111 FOUO]
.
FOR OFFICIAL USE ONLY
1
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OFFICIAL USE ONLY ,
Budget: Little Support Seen for Government's Proposal
(BUSINESS JAPAN, Feb 81).0.........oo...o.....o..o....o...o. 28
Finance : Liberalizing Trend Observed
(ASAHI EVENING NEFIS, l~ Feb 81).o.a.o.....~ooo........o...o. 30
Advent of New Age, by Shinichi Hako~ima
Nation's Finances Still Healthy, by Geoxge Murakami -
New Foreign Exchange Iaw, by Mikino ri Yoshida
Domestic Economy: Strength of Business Analyzed
(Masahiko Ishizi.~ka; 1HE J~pAN ECONOMIC JOURNAL,
- 17 Feb 81) .............o...........o...........o......o..... 43
New Five-Year Official Investment Plan for Public Works Reported
(BUSINESS JAPAN, Feb 81)..........~ 44
Oil Dollars Flcxa Into Japanese Stocks
(BUSINESS JAPAN, Feb 81).........o...........o.....o.o.o.o.. 46 ~
SCIENCE AND TEC~INOLOGY
World Trade Conflicts Over New Products Must Be Avoided
(Hirotsugu Sh imoda; COMPUTOPIA, Jan 81).,0.....oooo.o.o..... 48 -
_ Major Japanese Overseas Pro~ects Outlined
(EKONOMISUTO, 20 Jan 81) ...............o~.~.~.o.~..a~o..�.o� 55
Japan-Abu Dhabi Cooperative Development of Sateh Oil Field
Started _
(NIKKAN KO~i~O SHIMBUN, 21 Feb 81).....o..o..oo.....o........ 68 ~
. New Japanese Launchers Described
(Pierre Langereux; AIR & COSMOS, 17 Jan 81)..~o..a.......~o0 69
_ Lzniversity of Tokyo Launc~ed Satellite To Watch Solar FlarPs _
(JAPAN TIMES, 22 Feb 81) .................o....o.....o~.....~ 77 -
Ceological Survey Satellite To Be Launched in 1986
(MAINI(~iI DAILY NEWS, 22 Feb 81)..........o~~ooo.o~.~..o~..� 78
~ Drive To Expand Nuclear Energy Capability
(NIHON KEIZAI SHIMBUN, vario.us dates).o.o.o.o~~...~...ooo,,.. 79
Independently Developed Nuclear Technology -
Safety Measures
, MITI Fessimis tic on PawQr Capability
~ LDP To Promote Site Procurement
Rivalry Among Nucleai Reactor Manufacturers Obserued
, (NIKKEI SANGYO SHIMBUN, 22-24 Jan 81).0,..,o.o.~a~...ooo.0 87
- b -
FOR OFFICIAI~ USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OFFICIAL USE OidL,Y
Atomic Process in Laser Plasma Discussed
_ (Xukio Hayakawa; NUCLEAR FUSION RESEARCH, No 1, no date ~iven) 93
Genetic Engineers To Produce Vaccine
(JAPAN TIMES, 22 Feb 81).........~.o.ooo.o.o.o.o.o...oooo~.... 99
Experiment on Linear Moto r Cars Progresses
(SHUKAN SHINCEIO, 1 Jan 81; NIHON KEIZAI SHIMBUN, 28 Jan'81)... 100
Competition Between JNR, HAL
.?NR's Plan of Operations
,
- c -
~ rnT rTC rrv
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OFFICI.~L ~JSE ONLY
POLI~ICAL ~1ND SOCIOLOGICAL
DIET SPLITS OVER ARMS F.XPORT ISSUE
Tokyo THE JAPAN ECONGMIC JOURNAL in English 17 Feb 81 p 4
J ["Political Scene" Article by Yoshiaki Kohzuye: "Diet Is Split over Arms Export
Iasue"J
[Text ] ~ A serious impasse has developed in the declared themselves strongly opposed to the
Budget Committee of the House of move , at Cabinet meetings and LDP
Aepreseatatives between the Government Executive Council meetings.
and the cvling Liberal Democratic Party, on "First of aA, we have to make a clear
the one hand, anct opposition parties, on th~ definiUon of what constit~rte arms," Con-
other.'It~e problem involved is arms Qxports. struction Minister Shigeyoshi Saito stated.
'It~e Opposition parties predictably are "If a new legislation of the nature proposed
calling for a new legislation formally to pro- by the Oppasition parties comes into effect,
hibit arms exports, The Government and the Japanese construction companies may find it
ruling Qarty, on the other hand, are stmngly difficult to advance into toreign countries for
opposed to this. fear ot getting involwed in projects of
. When Hotta Hagane Co., a specialty steel ntilitary connotstions. Exports of ~ steel
- trader based in Osaka, was fo~d to have plates, sheets, caterpillars for cranes etc.
been shipping semi-finished arms products may become difficult on the�ground ti,at they
cgun barrels, to be more exact) to 'he are liable to be usedfor military purposes,"
Repubiic of Korea, the Oppoaition parties, "Electronics can be easily turned to mili-
headed by the Japan Socialist Party and tary purposes, if importers so desire," Direc-
Komeitof demanckd the Government to tor General Taro Nakayama ~ the Prime
formulate a new legislation agAinst erms Minister's Office said. "If electronics are
exports~on - the grounds that the presa~t laws judged to be potential arms on that ~o~d,
and regulations were not tight enough to plag Japan will have virtually noching to export."
all loopholes. � This sense of crisis in the face of the
Controls on arms exports are c~srreatly Opposition parties' proposal for a new arms
conduc~ed by the Foreign 'IYade Coatrol ~egislation, as a matter of kact, was so
Ordinance. Under this regulation, exportets stmng among LDP members that.the party
are required to file application with the Min- executives called on the Government to
istry ot International Trade &[ndustry when make a re~iew of its present stand on the
they want to export out-of-theordinary pro-
ducts. When the product~, are found ta be At tt~e time of the Sato administration,
arms, MITI is empowered to turn down the Japan Eormulated the following three "no"
export reyuests. principles on arms ex~orts: 1) when other
- If e~octers fail to make such requ~ts, parties are Commtmist co~tries, 2) when
however, it is extremely difCcult for MITI to a~ ~po~ are prohibited by the U.N.
detect arms exports. It is aL~o very difficutt r~solutions, and 3) when other parties are in-
in some cases for the authorities to deter- ~a~~~ or are liable to be involved in in-
mine whether the particular items are arms ternational disputes.
. or not. The regulations against arms.exports were
When t6e opposition parties deafanded a ~eatly tighteaed when the Miki administra-
new legislation to plug such loopholes, some tion adnpted the so-called "unified view of
Cabinet ministers and ranking LAP officials
~
1
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OF'FICIAL USE ONLY
the Government." 'fie "~ifled view" pro- in view of the growing international tensions
_ claimed !~at: ll arms exports to the azeas and on the strength of the conservative
covete~i by the Sato administration's three party's overwhelming majority in the Diek
principles would be prohibited, ~ 2) arms "AlI the LDP administrations have been in
- exports to other areas would also be perfect agreement in that arms are those for
- disco~aged in light of the spirit of the direcUy used for combat purposes and do not
Constitution and the Foreigii Exchange & invoive any universal products used also for
- Foreign Trade Control Law, and 3) arms- other purposes," they hold. "If Cabinet
manufacturing plants and equipment would ministers and party executives aze truly
be trested same as�arms. aware of this fact, there would have been no
LDP party executives r.ow want to have renewed discugsions on the arms problem."
the Miki administration's ~incipies mnditied
COPYRIGHT: 1981, The Nihon Keizai Shimbun, Inc.
CSO: 4120
2
FOR OF~'IC(AL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY -
POLITICAL AND SOCIOLOGICAL
' TANAKA FACTION GROWING IN SPITE OF LOCK1iEID SCANDAL
Tokyo BUSINESS JAPAN in English Feb 81 pp 15-16
[TextJ Former Prime Minister Kakuei to keep everybody happy. Neverthe-
Tanaka, who is a defendant in the less, the Tanaka faction has adopted a =
Lockheed case, is not a rrsember of the policy of expansion, making it far -
liberal Democratic Party at present. It larger than the norm. At least three
is very surprising, however, that in the major reasons can be given for the
LDP, only the membership of the faction's expansion:
faction which Tanaka leads is con~ First, recent moves of the Tanaka
- tinuing to :ncrease rapidly in size factio.n are closely related to the Lock-
despite the discrediting of its leader. heed court trial. It is said that there is
Why is the Tanaka faction growing now no possibility for Tanaka to be
bigger and bigger? Why is the faction found innocent ia the district co~~rt's _
trying to expand its strength? In judgment which is expecte~ to corrte
- Japan's political world, recent moves within two years. With an eye on the
of Tanaka and his faction have aroused outcome of the Lockheed trial, the
- great repercussions. faction is trying to demonstrate its
On Decembe; 23 last year, Diet political power. As assessed by the
members of the Tanaka faction met faction, the more powerful the fac-
for a yexr-end party held by the tion, the less the shock it will suffer _
_ Zhursday Club, the faction members' when Tanaka is judged guffty.
social organization. The get�together Second, the faction is working to
was, as explained by a faction of~cial, have its member Susumu Nikaido .
more than just a meeting of the acquire the post of the LDP Chairman.
Tanaka faction. It was better described One of the "gray government offi-
as inaugural fesdvities for the Tanaka cials" in the Lockheed case, Nikaido
party. Participating in the event were has already been reinstated in politics
_ all members of the faction of the - as Chairman of the LDP's Executive
House of Representatives and House Board when the Suzuld Cabinet was =
of Councillors, plus seven LDP Diet� formed. Faction leaders say that the
men, including Tokusabuto Kosaka, facuon with its growing power will be `
former Director-General of the Econo� able :o anange for Nikaido to obtain
mic Planning Agency, who joined the the post of Foreign Minister in a
Tanaka faction on December 19. Now possible cabinet reshuffle in July. And
_ with its 101 members in both houses in the party elecdon scheduled for _
uf the Diet, the Tanaka faction is in next year, ?Vikaido will be supported
every way the largest faction in the by the faction as the party chairman
LDP - even larger than the faction 1ed who will eventually assume the post of
_ by Prime Minister Zenko Suzuki. prime minister. Obviously Tanaka is
It is generally said that the proper behind the facdon's attempt, as his
size for a facuon is between 70 - 80 final goal is a return to the political
members, because a huge amount of stage. Expanding the faction's strength
political funds are needed to maintain and unifying the faction around
- a faction, and because important posts Nikaido is part of this plan.
have to be distributed in such a way as
3 -
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY
An attempt to check the moves The expansion of the Tanaka fac-
among some facaon members to sup- tion is worrying other LDP factions
port former Foreign Minister Noboru because its growth can overturn the -
Takeshita comes as the chird reason. power balance within the party. Even
- Within the faction are two strong Prime Minister Suzuki who is supposed
groups - one under the umbrella of to be closely linked with Tanaka can
Nikaido and former Defense Agency hardly remain calm at seeing a drastic
~ Director~General Mutotoshi Yamashita, growth in the Tanaka faction, accord-
who are directly linked with Tanaka, ing to informants. There's no mistak-
the other group composes of close ing the fact that Tanaka is behind the
affiliates with Takeshita and another facdon's growing strength, and those
former Defense Agency Director- in political circles ue watching each
Ceneral, Shin Kanamaru. ~tow that the and every move of Kakuei Tanaka
Tanaka faction has had Kosaka a who, at the moment, appears to be
strong supporter of IYikaido, joining holding the greatest power on Japan's
in, an intra-faction move toward pos- political stage.
sible formation of a Takeshita faction
are more or less disappearing.
COPYRIGHT: Nihon Kogyo Shimbun 1981
CSO: 4120
4
- FOR OFFIC[AL USE ONLY ~
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OFFICIAL USE ONLY
- POLITICAL AND SOCIOLOGICAL
- NEW BUDGET SHOULD INSPIRE MOVE TOWARD POLITICAL HOUSECLEANING
Tokyo BUSINESS JAPAN ~n English Feb 81 p 55
_ [Article by Yutaka Matsumoto, Essayist]
[Text] ^~`HE Government's FY1981 budget fare payments but had also managed "
1 draft providing for ~46,788,000 to modulate measures wherever neces-
million in the general accounts (up sary;
9.9% over the preceding year) and for 3) Considerably reduced various
~�19,489,700 million (up 7.2%) in expenditures, despite criticisms ot in-
_ government investments and loans, sufficient efforts at cutting spending,
based on a financial reconstruction the growth in general expenses being
program, was finally adopted follow- held to an ultra�stringent 4.3%.
ing several twists and tums. Kuchi Miyazawa, Chief Cabinet
A breakdown of the general ac- Secretary, also stressed that the
counts budget lists estimated tax government had formulated a budget
revenues of ~3?,028,000 million (up draft that was well in keeping with the
- ~5,873,000 million), including a tax first year of fiscal reconstruction. And
increases of '~1,396,000 million, and a w:th respect to anxiety about a whip-
general outlay of ~32,050,400 million lash effect resulting from the large tax
(~p 4.3~'0), including the issuance of increase, he pointed out three reassur-
- national bonds worth ~12,270,000 ing points:
million (down ~`2,000,000 million), 1) The domestic economy's stable
social security payments of supply and demand situation; the
~8,836,900 million (up 7.6~0), defense reserve strength of producers as a
expenditures of ~~,400,000 million result of the balance between produc-
(up 7.61co) and public works project tion and consumption; and 3) the
expenses of '~6,655,400 million (zero progress achieved in measures regard-
growth). In the main, expenditures ing prices of fresh food product and
were not reduced, and the national supply stability.
press played up the budget as the ~liyazawa stated that he believed
"be~nning of a heary taxation era." consumer prices could be pegg~d to a
Shintaro Abe, Executiv~ Chairman growth of around 5.5% but thai the
of the Liberal Democratic Party's cooperation of labor would be re-
= Policy Research Committee, rated the quired. This year's spring wage
budget draft highly, and claimed at a struggle, he said, would be watched in
_ press conference that the government connection with the price situation.
_ had adhered to the basic principle of Prime Minister Zenko Suzuki had
fiscal reconstruction. It had, he said: al; along insisted an reduc:ng the
1) Reduced the issuance of na- issuance of national bonds by '~',000
tional bonds by ~~,000,000 million million and limiting the size of
and had succeeded in limiting the size budget to a single digit percentage
of the budget to a one-digit percentage growth as compared with the preced-
groWth; ing fiscal year. He claimed that this
2) Strengthened limitations on wel- basic principle had been achieved and
5
_ FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OFFICIAL USE ONLY
that a giant stnde had been made housecleaning and administrative re-
toward fiscal reconstruction. forms as well as measures to cape with
_ Regatding the fact that the ~ro~r:th the problems of rising prices, energy,
in defense expenditures had slightly w~lfare, small and medium-sized busi-
surpassed that of social welfare, nesses, middle-aged and old people and
- Suzuki expressed the view that oudays defense - aP. under the banner of
_ for both defense and welfare were up fiscal reconstruction.
by about the same rate - 7.6~la. He did In this connection, I recall the -
not beIieve that defense expenditures words of Mencius that if people in -
a:one were outstandingly high. But as high office are covetous, the people
to the shar~: rise in the defensP budget, below would become even . more
he explained that steady efforts must covetous (a saying th~t stresses the
be made towards building up the importance of self discipline en the
minimum necessary defense strength. part of those in authority). And I,
Come to think of it, it is the task of constantly and seriously, believe that
- every Japanese, in this environment of all conservative and opposition party
t u r b u le n t i n ternational politics, members, both in the national Diet
- economic developments and diversify- and local assemblies, should at least be
ing values, to take drastic and pusitive willing to take the initiative in sharply
actions directed towards poGtical cutting their monthly allowances.
COPYRIGHT: Nihon Kogyo SY~imbun 1981 -
CSO: 4120
6
FOR OIFFICIAL USE dNLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02108: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY =
MILITARY
- JAPAN MUST FACE FACTS, INCREASE DEFENSE BUDGET
Tokyo BUSINESS JAPAN in English Feb 81 p 7 -
[Article by Maeamichi Inoki, Chairman, Peace and Security Research Institute]
[Text] S is well known, che Ministry of Finance occupies an especially high position -
A among Japanese government ministries. The fact that it was the only min-~
istry before and during the war not headed by a military man shows that it pos-
sesses an excellent tradition. However, it would appear on the basis of recent
press stories that this ministry, supposedly with a concentration of elite talent, is
making a terrible mistake.
I was astounded by a frontpage story in the December 4 issue of the Sankei
Shimbun (Tokyo morning edition). The article stated:
"In regard to defense costs in the general budgetary demands, the Defense
~tinistry's request for special treatment outside the budgetary framework has
been approved in essence and the agency has submitted a demand for a 9.7%
increase over this year's budget. This fact }ias been explained ro the U.S. and
a uther countries. However, forced to limit increases in its general account
e~penditures, excluding defense and grants to local administrations, to 4~Io in the
face of the severe government financial situation, the Finance ltinistry is
claiming that it cannot grant large�s~ale increases for defen~e costs alone, and for
this reason, it can allow an increase in the range of only 7%."
" There are two reasons for my surprise upon reading this article. One is the
Finance Ministry's claim that the need to hold down any defense spending
increase to 7~o is due to the deteriorated government finances which forced it to
limit the increase in general account expenditures to 4%. According to the
December 8 issue of the Sankei Shimbun, the Finance Ministry strongly insisted
"it is out of the question to raise defense spending alone by 9.7% when general
account expenditures are being raised by only 3.4%."
If the Finance Ministry has such a strong feeling for the need for balanced
- spendings, then I would like to ask why in 1967 when the general account was
increased by 14.8%, the defense budget was limited to only 11.8%and in 1973,
when the former was increased by 24.6%, che latter was held dewn to 16.9%.
When it is seen chat the increase rado for spendings un welfare, education and
public projects was well above that for defense, the current Finance Ministry's
- explanation of balanced expenditures is merely an excuse and the truth of the
matter is that the ministry is taking the defense issue lightly.
- Difference Between West German Dafense Capability
The responsibility, of course, for holding down defen~e spending below the _
increase level of general account expenditures normally lies with government
leadership. However, From the viewpoint of compilation processes of this
country's annual budget, the Finance Ministry must also share the blame. As a
_ result, as clearly delineated by the Defense White Paper entitled "Defense of -
Japan" apprnved for release by the cabinet last August, the various defects of
Japan's defense capability on the weapons level were made crystal clear. Was it
noi this very reason chat top priority was given to the overhaul oti defense -
equipment in next year's budget and the 9.7% increase figure set?
7
FOR OFFICIbL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02/48: CIA-RDP82-00850R000300094449-6
FOR OFF[CIAL USE ONLY
Even me*e astonishing nonsensical is the Finance Ministry's claim that even if
- the increase is limited to 7%, it would still enable Japan t~ maintain the 0.9
percent-to-GNP ~eve1 in its defense spendings and that the real increase will oe
_ 3%plus thus approximating the figur~ for West Germany. What does the
- maintenance of che 0.9% of the GNP-level actually mean? What kind of
sensitivity lies b~tund the claim of the need for only maintain a figure witich
has been harshly crii.icized by the U.S. and NATO countries as a free ride? -
Over the past 20 years, West German defense budgets have consistently been
much higher than those of Japan and for this reason, a real increase of 3% by
West Cerrnany has gr~eat significance. In contrast, Japan's defense capability has
had serious defects due to foot-dragging in budgetary appropriadons over the
past ?0 years, as revealed in "Defense of Japan." Hence it is clear to everyone _
that with the almost irresponsibly small r~al increase of 3% by Japan, there can
- be no ;.mprovement in Japan's defense capability.
COPYRI~HT: Nihon Kogyo Shimbun 1981
CSO: 4120
. 8
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2047102108: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY _
MILITARY
DEFENSE OUTLAYS EXPECTID TO SHOW RAPID INCREASE
Tokyo BUSINESS JAPAN in English Feb 81 p 56 ~
[Articlr~ by Yoshiteru Oka, Associate Erii.tor, EVENING FUJI]
[Text] THE Cabinet has agreed on the The defense budget includes -
_ 1 government draft of the fiscal ~458,600 mIllion, up 17.7% from the
1981 budget. Under the draft budget, fiscal 1980 level, for weapons and
defense spending was set at other major equipment to be used by
~2,400,019 million, an increase of the tri-service Self-Defense Force
7.6% over the current fiscal year's (SDF). The ouday for logistic support
level. With this increase, fiscal 1981 amounts to ~797,100 million, up
- has been t~:rmed as the initial year of 7.601o from the Fscal 1980 level, while
Japan's fuu-scale defense bu~ldup. the ouday covering personnel and
They've so termed the year not be� food costs, which are the largest por-
cause the gain granted is the all-time don of the defense budget, registers
high, but because the increase exceeds ~1,144,000 .million, up 4% from the
for the first time the rate set for the level of fiscal 1980.
budget for social welfare schemes, It is also noted that the budget
although the excess is as small as represents a 6.4% gain in spendings
0.01%. allotted to the Ground Self�Defense
In the past, it was an implicit Force (GSDF), while the Maritime
understanding among those concerned Self-Defense Force (MSDF) and Air -
~ with the annual budget formulation Self-Defense Force (ASDF) receive a
that a policy would be taken of gain of 8.5% and 9.8yo, respecdvely.
avoiding specia! treatment for defense Apparently, more emphasis is being
spendings in relation to the spendings placed on thc outlays for the MSDF
� on welfare, and priority was always to and the ASDF. A substantial amount
be given to welfare expenses. This of expenditures for the purchase of
practically checked any sizable in- lethal weapons such as tanks, de-
crease in the scale of defense spend� stroyers and fighters is also a marked
ings. It can be compared to a doubles feature of che budget for 1981. -
match of tennis played with defense Obviously these features indicate -
and welfare budgets against other that the government is trying to meet
budget items. Now that the rate of the U.S. requirements that priority be
increase in the defense outlay has given to strengthening Japan's air and
exceeded the rate of increase for wel- naval forces. Since the ceasefire in
- fare spendings, it is noted that the Vietnam, the U.S. has gradually with-
_ defense budget can compete in a sin- drawn its conventional forces from
- gles match. The situation has enabied Asia, while the Soviet Union has been
defense spendings t~ be increased from increasing its armed forces in the Far
now on, with little concem about East - it has sent its powerful sub-
appropriations for social welfare marine fleets and more recently Tu-
schemes. At the Defense Agency, there 22M Backfire bombers, to Asia.
are high hopes that sizable appropria- In the face of the rapid Soviet
dons will be granted without difficul� moves in Asia, the U.S. has urged
ties in the future.
9
- FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2047102108: CIA-RDP82-00850R000300090049-6
~ 1~'uit OM~F1CIAi, USi: UIvLY
lnpan to increase its defense capabili� preparedness would provide for no
ties to carry out joint operations by longer than one week's defense.
the three branches of the SDF and the According to the Defense Agency,
U.S. forces on the basis of the U.S.- even the fiscal 1981 budget is tar too
Japan Securiry Agreement. The U.S. small to cover what is actually needed,
has speciiically demanded that Japan though many see it as a substantial
1) beef up its anti-submarine patrol increase - if they consider if from the
. capability so that sea lar.es can be small defense spending so far allowed.
secured, 2) increase its naval power to The U.S. has also voiced disappoint-
counter air attacks, 3) strengthen its ment with the rate of increase Japan
overall air defense, 4) bolster its ability has set for the defense outlay; as
- to block naval instrusion with mines in Ambassador M. Mansfield says "It
' the Soya, Tsugaru and Tsushima represents a mere 3.9% gain after
Straits, and 5) increase its ability to inflation is considered."
sustain military operations. :bfeanwhile, it must be noted that
A quick review ot the budget most of the payments for the purchase
authorized for the purchase of weap� of weapans and other major equip-
- ons, although pending the final Diet ment wi11 not be settled within any
- approval, will also make it clear how given fiscal year but will be footed in
seriously the government considers it the following tiscal years. In fiscal
is to meet such requirements from the 1975, 20.5% of the total defense
U.S. For instance, the MSDF has been outlay was footed in fiscal 1976 and
authorized to buy a 4,500-ton guided after. The figure soared to 23.4~1o in
missile destroyer which will increase fiscal 1980, and it will soon reach the
anti�air attack capability, while the 30% level because the outlay for buy-
ASDF will obtain two units of the ing weapons and other equipment is
domestic�made short�range surface�to- expected to increase year after year.
air missile system and four E-2C For fiscal 1982, the percentage of the
Hawkeye airborne early warning payment to be footed in the following
planes by which to strengthen air years will have to rise at least by 10%~
defense capability to a large extent, in as the purchase of 12 F�15 and 1.,
addition to two U.S.�made C�130H P�3C is expected during the year.
Hercules transport planes which will Now that the defense outlay appears
be used mainly for laying mines. The to have broken away from its relation-
purchase of other equipment includes ship to social welfare appropriations, ~t
'45 mines - 200 were purchased in is feared that the defense outlay may
the current fiscal year. The ammuni- expand at an incredible pace. The
tion stock will be also increased by question is, how will the government
25% so that Japan will be able to sus- be able to find a source of revenue to
- tain military operations on land for balance accounts other than chrough
at least 12 � 13 days. It is estimated tax increases which will hit hardest
that Japan's current level of military Japan's worldng people.
COPYRIGHT: Nihon Kogyo Shimbun 1981
CSO: 4120
- 10
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300090049-6
_ FOR OFFICIAL USE ONLY
:
- MILITARY
EXPERT ANALYZES U.S.-JAPAN RELATIONS IN TRANSITION
Japan's Jef ense Budget Discussed
Tokyo THE JAPAN ECONOMIC JOURNAL in ~nglish 3 FAb 81 pp 20, 11 -
[Serialized Article by Chikara Higashi, Guest Scholar, The Brookings Institution:
U.S.-Japan Relations in Transition: Case of Japan's Defense Budget, (1) and (2)]
[ Text ] ~~e dialogue is still subsidies, . dumping, ad- of rigorously precise and ef-
- dif8cult between the U.S. and mini4trative $qid~qQe, or fecl[ve communication and too
Japan. M~sinterpretatiQns and whateve~r, whl~e cnore pnuCfi wlshful thinking
_ misunderstandings still Irnowledgea~ble ~-biwe ~tG~ally ci~ated an
- abound. Although exchanges of been . increasing~y av~eare of ~nrealistically - inflated ex-
pereonnel, information and raore.itindam~ntai ~proDkmg pectation among American
~ products have increased the decliNng coln~titiveness policy-makers.
ch~ametically of late, barriers :of U.~�incp~tria~ produat~ end Accordingly, they wete dis-
_ bu effective rnmmtmications the r~si~ ~o~ppetitivenes~ ot appointed and upset rather
remain unique and var}ed ir, Japaueseiwd~trial'goods, W~~ ~e Japanese
U.S.~Tapan relations, reAecting In i~ues, �foete~'ing,on p~farmance. The atory
wide gaps in.language, culture, such:~;tta~d~i~eirtat~ .and~,~tr~� ~~d in December 1978,
polieymaking and so on. tural~:~cpbleme aeft~ 4ying �.te W~n the Russians invaded -
solve~, Ehem ~fundamentally ,,~~a~~~,
T~'tlde frlCtlOn thra~e : ind~~ rev~ltaliza- administration,
In recent years, the two ~~OR' ~r ~~e, ic pertinent. wtrich had been earnestly
counfries have almoat con- ~'e~t 'p'dtchw~ic atteml~ wprking on arms~reduction and
tinuously experienced so~called g~h ~`~a'~ag'with trade SALT II with the Soviet Union,
trade fMctions. Trade im- ~B9 '~'0Wd reviewed its security policy and -
beiances on the order ot ap~ gimplq delay �genuine s~~ its priority to an in-
proximately;l0 billion per year resolutiods of the probkms, So creased military buildup.
and not intrequent, damaging would e~od~ange of~accuisations Underatandably, the U.S. -
blows by J`apanese imports to ~r asked Japan as well as
certa:n U.S. industries alone I~ naire to believe ~~~~~s NATO allies to in-
have been more than enough to ~gt effactive cornmtimication ~ease defense expenditures
explain the emergene~e and '~r0~ :rdlable tace~o-face g~i~cantly to deter Ruesian
r~aistencQ of such roblems. ~al~ ~d be a panacea
~ p for'tn~~problem eolving but aggression oollectively and
F~ictiona, however, can be at least Itshould be~a first ste ~~tively.~Since the size of the
aggravated and prolonged ~d ~ f~ ~ P free world s military buildup
unnecessac~ly by ineffective ~ was so great and the U.S. -
- communi,~~ona and lack of ~ a0 WeY ~ economic capability to allocate
~clear.~ a~tdre'e~a ot� tite furthe~' ~ ri?utual aoluteon.
~AS such res~ources was limited, it
reality and:policiea in the two &,e~f was imposeible for the U.S.
oountrles. ~:d~ ~ , Y meY alone to bear the burden.
M~ny ~Americaas st9~1 lxovide sn example of Fhe Id Merch 19a0, visiting
wroagly blame Japanese' r~~~e �g CO~~~ Japanese Foreign Minister
, gimmiclu;~,~lts clased markets, tween the two cotentries. Lack Saburo Okita expressed
_ 1i -
FOR OFFI2'IAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OFFICIAL USE ONLY
"receptiveness ; W increasing Cabinet after appeals at politicians, including the top
his ~country'~s~ilitary_ ~Detrd- minist~l levels, tends to officials who desire Japan to
ing, as uage~; ~py thQ. U~ ~Ve t~e.,le~ialative Pcocee+ haae a stronger military and
~ Stat~s, but without. aq~;: revi~F.ioa because elbser U.S.Japan relations.
mifinent"~"a'~ount~wh~ ,e~'
or~' the majo;~ity party (now Fram tt~e official U,S. point
~ whether, ~ a~ increas~.will 4beral . D~onoctatic PartY) of view, these sources were
, take place. (T!~ ~{+aehirt~on ~otms ~,~t.~.Gti~et u1. ~ supportive of assurances the
Po~t,. March 8Z,1980. ) parllau~ntaey ey~ltu.: [1.5. he8 heard from the U.S.
In ~.May;~~, Ehe late ~'rime~ .~7?,ie bua$et re~riew i~: NeA, ~4bq,ssador in Tokqo following _
Miniater Uhira reportedly signlficaot aince itcoac~re~}y His ineetings with cabinet level
pledg,Rd to .P~~sldent ~~ter fta~ctiona ~ ae~ bot6 an, auth- offiaals. �
- that Japan would m~ake a orizetian and.an appropciation 'I1~us, there was a atrong
steady and significant 'rr~cre~se tor a prqj~ct, Accordingly, ar~Y conviction that Japan would -
in defense ex~ditures in its pcoject wk~b Is apQroved is increase defense expenses at
FY 198I budget. aubc~quently itnplem~ted (or least by 9.7 per cent, possibly ~
- In August, considering the at least atarted) in ,fhe next more. Protests at ad-
serioua concera of the United Gsca1 Year, . mimstrative levels by Japan's -
- States, the MiMstry of Fln~utce ~ diplomatic corps were -
allowed the Defense Agency to Minimnm acc~table reportedly too weak to refute
request a 9,7 per cent increase ~ R.s eacly ae t~ be~nning of the misinterpretations and to
in its 1981 budget. Other SeptetK~ber; belo~e am. atatu- cool adequately the heated
ministries and agencies were Goiy budgd. revlew bad been expectation.
limited , to increases of 7.5 made by th~e F'it~?ce Mtmstry,
per cent over the previous year. rumors w~ ~spread in 7.6 per cent Increase
The budget . request was, Tokyo tt~at the �United States It was in such an atmosphere
however, subje~t to statutory grudgingly acoepted the that the Finance Ministry
review by the Finance Japanese p.~ per cent tergef:~as showed the Defense Agency its
Ministry. the miniat~bn ircebpt~lDte� , drait proposal which contained
In To&yro, the Deferise a 6.6 per cent increase for -
Earlier budget request Agency, t~e Forei~ Mini~,ry defense on December 22,1980.
Prime Minister Suzuki alao ~d p~~o~ . P'a'~~itary p~ ~~ber 30, after the
repeatedly stAted in the Diet members of the Liberal Defense Minister repeatedly
that the defense budget would ~emxratic Party lobbied ~fot appealed to the Finance
- not be sacred. The higher 1~'B~' ~rease in the Miriister for reinstatement of -
ceiling was, then, primarily defense budget and we~nt as far ~~~,ed items with the strong
intez~de~l to prot�ide the Def~se es to say ttiat a 9.? per cent support of pro-military Diet
Agency with: more maneu- ~rease waa the ~l~eiute members, the Finance Ministry
vering room in its budget m~~m~� finally agreed to a 7.6 per cent
request to conform to U.S. '17~ey argued that enything increase. '1~is was later a~ -
_ W~~ less than a 9.7 per cent increase p~~ed by the Cabinet.
- The budget requeat was would be detrimental to U.S.- the Japanese defense
submitted to the Ministry of Japan relatioaa and suggested
F~narne at the end of August,, ~at exiating trade relations budget for FY 1981 has been de
the deadline at the national could be ~reatly jeopar@izad. facto determined to increase by
level. The Ministry of Finance Suet? r~mors eventually won 7�6 per cent. _
normally takes nearly fota the support of certain in-. Since many American policy-
months from Sepeember to dush?al~ts and academtcs and makers had felt assured of a 9.7
December to a5sess the bu et ~ e~W~ ~~'e ~re Per cent increase, they
requests from all requesting a'eas?ng reverbetaEi~na in probably now feel betrayed.
departments and agenciea. Tokyo and throughout Japan. This article sheds light on how
Thia period is critically ~ usuel, Japactese mass- :his happened, who was
important in Japan since the media fuded auch speculation. responsible, and how the same
Ministry's budget assesament, T'he reverberation6 traveled mistake can be prevented from
de facto, determines the across the Pacific to happerring again.
nation's policlea for the next Washingtvn, where oDservers Among the sources, the
t"iscal year. That is, budget heard repeated reass~ances voices oi visiting politicians
propoeals accepted by the that a 9.7 per cetrt increase sounded powerful and con-
Ministry beoome legitimate would be the "iloor" of the vinced U.S, top policymakers.
policfea for Automatic Im- defense budget increase for the A~ccordingly, their contribution
plementation wh11e the ones not ~xt fiacal year. Ttte "ce~ling" must have been ' signiScant.
adopted have te he abandoned. t6en had~ become the "floor." Politicians cannot be~ however,
Eauh A4lniet bu ro- ~erican' officials generally blamed completely. After all,
fl attributed ~this to Japanese they are supposed to seek and
poesl, once an~^oved by the
12
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2047102108: CIA-RDP82-00850R000300090049-6
~
FOfc OFFICIwL USE ONLY
_ expres$ ~ thelr~ .~feliefs and ~ 01i~ the ..qttier . hand, ' the ~ defeads Japanese. diplomats by
8~,~ ~uud th~~? .may be' ex- J sti~ld be eful aM in~isting, that the true situation
~a~i3~' tor taf", t~t~king eaY fo ~ e,,,o~~ns110~ist~ites ttiat a 9.7 per cent increase
techni e a l o r ~ p
r o e e d u r
a l in e n a l y~ i ~ `
i~
t
pe r idq po
lic i
e a. , w~
s t ner e
ly a cei l i
n
g a
t or
disfi~q~etion betvv~n ldeal aMd � w~ ~ ''be~Ow which the bu~e~ request
reallty, - Dlplor~ta.''t'espoN~slbilily was ~~per~oqltted. - ad been
WH1k this ~~ight cause D~ploiriata~ are normaily explamed to Americans by
less misundereisnding , do- respbnglbte for eiteGtlve , iQ- them but ~ they ~vere
- mestiCally, it . produce terqatio~fal dlaloguea. disrggarded as overly
, more, dama~in~usions;~ or ~~f~, ~essifilstic pr.:narily because
they can hardly mor~ pieasant statements had
misuqt}erstah~tt~g inter- ~yqp~ ~ ~p~~{~Itq foc
tlationalIy, becati~e the poliey- ~p ~~m~~~ been made by higher officials
t~iakl~ig vitrlea g~piltly with the ~{~{+~y at (he cabinet level in lbkyo or
~6~~ $Y~~, Culture, histoFy, , + . by visiting Diet members In
tradttion, and_ pr~tctices ot. a u~ ~p~~ cal~st inter- W~ington.
rlaftlon, ~ aa c~ the roles of ~ti'onal mi~tfrtderaCending by -
~lolitlef~ne or buteai~crats, - ignorance ~of ~feir own '~~tional arroganCe
domeatic atfaits, ~incomplete A~}though Prime Ministet
explanation pr diatarted a~-
_ Informal power Suzuki sometimes r.esponded to
_ formation, their responslbility
Often in a country informal sbuld be calied "primary." If opposition parties in the Diet
that the defense budget was not
power exceeds real euthority in ihey do not ~ cr~te a misucl- ~cred, he too frequently said
tecros at its contrtbution . to derstanding , but fail to ~e needs of
- pulicy formulatlon. Th~ extent straighten it wrt in time, tbe~+ ir~ernational security, which
of the delegation of authority ta aze still reeponaib~?e for the p~ericans tended to regard
- .a buraaucracy may be much situation. ~~W~y as more evidence of
~eater ~n Japan than the U.S. T1tis latter responsibitity may getting at least a 9.7, per cerit
and the ~ ateeisionmaking be called "sei:ondary." In thts ~incr~se.
process . in the Japanese case, many fAngreoeional staff The same Pentagon official
- bureaucracy ~enerally is more members and State and maintains that military and
conseneual than the more Defense DepArtmeat o~ciels political attaches faithfully
_ autocratic style of tbe U.S. believed a 8,7 per ceat inerease portrayed what was likely to
Accordingly, Americans would be the minimum- a{~ happen but were ignored. If so,
should be careful not to proved. Faven respectable this reflected the traditional
averestimaf e the _ practical ~81'~~ e~erts on . Japan ~gance of American foreign
~tntluence of Japanese belleved that Japan wa~ld policy, which seea what it
[igureheads in making $pprove_a 9.7 per cent itacrease wanta in the way it wanta.
_ decisions and not under- because Jap~+n un~erstood th Unforhmately, both the U.S.
estimate the s9grdticance of internattonai s(tuation,, . ~ and Japan have long intitilged
adminlstrative ar bureaucretic A htgh off~cial in tke pen. in this. tendency in their
decision�tnaking processes. tagon, however, persisteMlj ~mequal partnership.
U.S. Pressure Analyzed
Tokyo THE JAPAN ECONOMIC JOURNAL in English 10 Feb 81 pp 20, 15
[ Text ] Since Commodore Perry's weafcer than or interior to the Tokyo recently told me that
request to Japan to open its . U,S:, that dapan- is vulnerable excessive use of the "U.S.
door to the West in 1853, the use to U.S, fiii~,ilnidation, and worse, pr~5sure'' was embarrassing to
of foreign pressure, par- that~Jape~ir catmqt decide policy the United States because it
ticularly from America, has on its ddm without outside would d~mage the sound
been an effective, convenient pressure. developmerrt of mutual respect
measure often used to expedite ' 9ome of these assumptions and an equal partnership.
policymaking in Japan where ineult the Japanese and too 7he time has come and is
the traditionai consensual many of these~measures cause even long overdue when full
decisionmaking procesa oPten the Japane3~e pubiic to become exctrange of information and
produces a stalemate, hostite to~ Americans and pro- views based on mutual openness
American Japantse. Thia ia not should replace the fragile,
- Outsfde pressure Bood for either �copntry in the sensitive and intricate
long rW, ` di omatic techni ~
Such a method, however, P~ ques which
presupposes 'that Japan is ~ a~a~~' ot�"t8ct, a high ~}~d been preferred.
ofticial in the U.S:� ~mbassy ip
13
FOR OFFICIAL USE ONLY ~
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY
Anyway, American policy- the advanced industrial the limited space but mostly
makers did not receive pcior to nations. ~e government is ~~a~e af lack of my ex-
December an ac~urate picture strongly . determined to pertise.
of 3apan's defense budget, decrease ;be detic~t as ;t~iMch However, let me repeat one
which this paper will ptesent and a~ early as po~sible. ~ oi Defense Secretary Brown's
more accurately. Ft,tcthermore, social welfare remarks: "Before you solve all
Tt~e: e is now a consensus in in JapaA is sti11 , relatively ~?e Policy issues you have to
Japan that the practice of inadeq~te.. For exAmpl~, a come up with a budget.
accepting a"free ride" on the recer~t paper by the European ~~lly, you ought to do it the
U.B. deterrent force should be Community staff criticized the Way around, starting with
ended and that Japan should ,fap8~f~~AS-'vooti~tl~otfti~Mre- what's necessary for U.S.
pay an equitabte share of the live in rabbit hutches. security, the international fac- _
burde,n to maintain world peace Under t,t~ese cireumstances, tors, your strategy, what forces
and the glob~l system of an increese of 7,g~~per cent in that, lakes, what budget that
economic pa~osperity. defense. expenditures can be takes. But you don't have time
, Sotne people think con~ider~ tmust~aUy high, to work out the world from its
strengthening the military is Mean fl`e, meilbera o1 the W~mordial atoms. You have to
_ !he most effecNve means nf North Atlaatlc T;eaty ~me up with a budget as we
peacekeeping because of ihe Orgaaizatlon ~NATO) pledged d?d a month after we came to
deterrent effect of ciefense to increase arms spending by S offiee." ( The Washington Post,
forces. per cent annually in real terms ~ember 7, 1980. )
Bnt others fear that milStary through 1988 but moat mem-
power can stim~,ilate a limitless bers, includiag We~t Germany Faithful cooperation
arms race; they think that and Britain, are Ukely to have I hope that a budgetary
economic and political stability less than a 2 per c increase.
in Third World countries is ~ dise~sion remains pcactically
- essential for world peace. Mo1'e khan NATO meaningful for dealing with
defense policies pragmatically.
M91~e Mansfield, U.S. Am- I also hope that Americans and
_ Various alternatives ~a~' to Japeq said in a, other allies will appreciate how
Thus, the Japanese see recent news confer~Ce: "Ja- sincerely and seriously Japan
various alternatives to Pan BP~ds mare o~ its defease has tried to do its best to attain -
promoting world peace. As a ~hen moet of the NATO coun- an increasing international
matfer of fact, the Government ��Japan has increaged role.
of Japan is committed to in- ~f~~ ~xP~~tia'es at an,an- ~~~i matter of fact, what ac-
creasing economic assistance nual rate of 8 per e~?t a year tually happened can be ex- _
and to a steady and meaningful over the past 10 years, .oom- plained as the absolutely sound,
increase in defense ex- I~r~ an??ua1 rateot2per faithful and painstaking
nditures. cent increase on the part of the
Pe crystalization of cooperatson
Accordingly, Japan's new NATO over the same p~iod ~ong responsible peoplQ in
role and contribution shotild be ~d ~ Z P~' ceM dQCtease in Japan. I suggest that Amer-
measured not only by the in� U.S. expeudituces." (The New icans recall how faithfully
Creese in it9 defense ex� York Timee, March 2Q, 1960.) Japan has long cooperated with
penctitures but also by its t am not so naive aa to the U.S., even at the expense of
overall periocmance in belleve that discuastng vital economic interests and
ec~onomic assistance, defense, budgetary figures is the often with little appreciation,
and trade and overse~s in- equivalent of discussing ~ in the recent economic sanc- ~
vestment promotion policies. defense policy, tions against Iran and the
~ The optimum combination of A high�Pentagon official told ~~et Union.
such measures should be me with some skepticism that Japan's GNP is the world's
determined by the people of ~re is no Defense Mlnigter in sec;ond largest after the U.S.
- Japar~ on the basis oi available Japan and that the Finance Japan's foreign economic as-
resources and the international Minister has played the role of sistance is the second largest in
situation. Close cooperation the Defense MinIster there. the world after the U.S. Japan
among allies is commendable, He insists what is fmportant ~~uces more automobiles
but any excessive interference ~s not t!?e actual increase in
in domestic policymaking budget 8gures but the effec- than any other country in the
should be strongly discouraged. tiveness, readinesa, end deter- World, having surpassed the
At -present the Japanese rence. U.S. in 1980. Japan produces
publit financial ~ituation relies I am sorry. that my more steel than the U.S.
on borrowing for nearly 30 discussion in this article has ~rthermore, Japan may be
per cent of the kotal revenue, not been as substantive as I able to act as a military super-
- one oF the hiahest rates among wou]d like, parUy beca~se of WWer very soon if it wants. Its _
14
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300090049-6
- FOR OFF[CIAL USE ONLY
military budget is already the U.S. in its peacekeeping mis- ~nance Ministry of major
world's seventh largest. sion. Second, Japan has been e9Wpment items needed for ~
determined to increase the speeding up the Defense
The polls clearly show, ~fense ca bilit y' en y pe
however, that the Ja~nese Pa Y eteadil m AS cy's 5- ear o rational
people do not want their coun- ~ Yeu'S ahead. pr'o~am by a year.
try to become a mi),itary super- 7'his wouid undot~:.edly noi _
_ power, wh~le they are in- only confottn to but also be in- Be pK)sitive, not negative
= creasing~y supportive oi more ~spensable to the U.S: overall Furthecmore, the U.S., Japan _
effective defense capzbility for Beopolitical strategy. and NATO members will be
Japan. Nor do neighboring and ~n ~~ew of current and future able to multipty their in-
tlistant vountries seem to want international ydations, unity ~ted capability through
~ Ja an to become a su r wer. ~nong the allies is critical for _
p pe po joint exercises, adoption of a
Tt~e Japanese, however, ar~ the Free World to maintain the S~e and standard for
well known for their ability to capability to encounter ~aggres- major equipineM, and joint or _
cope with cri~~~ and effectively sion. Bickering over small dif- ~~rative exploration of
adapt to a nev~ environment. ferences o!' percentages in developm~t in a
~ I hope ,~merican policy- Japan's military budget would ~e aystematic way. ~
makers have - atience, res cE, ~t be constructive ar wise.
Pe 'Ifiese are, thus, aufficient
dee a reciation for and con- A 7.6 per cent increase in ifie
P pp Japanese defense budget ~'~S�ns . w'hy I anl opEimistic
fidence in the way the ~Japanese about Japan's security policy.
handle the issues. should be appreciated in the g there is any factor to justify
proper eoMe~tt. ~In add[tion, ~in ~~ism, let's consult with
Faster implementation ~e each other to solve it in a con-
t~ ~a~ sUuctive and sensible manner,
Social anthrope'ogists apd fac~ors which wottld s~rody ea- and not accuse each other in
comparative polic~~ analysts Ja~+g and Ibd ~~ll1e's' Y
have found that while the Japa- ~ ; the emotional, h sterical and
militaryc effect~veness. ;
nese may be slower in reaching selfish manner of a child.
These,.~nclude a substantive
a decision, they are faster in We m~t rnt allow elasive
increase~in t4e future:{~rocure-
implementing it compai�ed to ment commitaibnt4,~ mot~e ac- ~6h expectations to hamper
- their American counter~arts. tual purchases . of : fdels, ~serving appreciation. My
For the defense policy, at message to the new Reagan ad-
least, two thi s aze now clear: missiles and jet tighters b~ ~~stration is be
~ canse of. the recent aubstantial positive, not
_ first, ~Japan will remain one of. appreciation oE We yen, and al- negative.
the most reliable allies of the most no actual cutting by the
COPYRIGHT: 1981, the Nihon Keizai Shimbun, Inc.
' CSO: 4120 =
15
- FOR OFFICIAL USE ONLY -
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OFFICIAL USE ONLY
ECONOMIC
-
JAPAN'S COMMITMENT TO ASEAN D"r~tAINS SHROUDr'~ IN AMBIGUITY '
- Tokyo THE JAPAN ECONOMIC JOURNAL in English 20 Feb 81 p 20
[Article by Shiro Saito]
[ Text ] SINGAPORE - The members of the bound them in the past. Stazuki's speech
Association of South~ast Asian Nations in Bangkok at the conclusion of the tour _
( ASEAN Indonesia, Ni~laysia, the is tagen by the ASEAN as having
Phil~,pines, Singapore and Thailand~ committ~d Jspan politically to the -
- ~t quietly greeted Japanese Prlme region more articulately than ever,
Minister Zenko Suzuki during his visit to although~the issues addressed by Suzuki
their,-.capitals iA January are digQSEing � in this c,onnection wer~ limited to a call
tl~e t~eaning of their encounter with the for an end to the Vietnamese military
Japaoese leader, relating it to the ~ intervention in Cambodia and
emergiz~g Asia policies of the just in- restoration of peace in th~e Indochina
augutated Reagan Administration af the country. There is a rising expectation for
Unifed-States. ~ �an environment~ conductive to
As a consequence of Suzuki's switfg in "triangular cooperation" ~ among the -
the i~egion, the relationship between U.S: under the new adr~inistration,
Japan ~nd the ASEAN has taken a big Japan and the ASEAN to secure peace
step toward political symbiosis fro~;the ~ and st~bility in Asia.
mere economic interdependence that
- What hae Prime Minist~ Vietnam's ~Radio Hanoi ealied As Hanoi sees it, Japan's
$uzuki's viait to ASEAN Suzulci's speeehes and mceting ~economic power now is going to
capitals added to Qevelopm~t with ASEAN leaders ,be naed " to underwrite a
and direction .of i~eraational ot ~ Japenese 'political scheme that binds
xdations in 9outheast Asla and fasclsm oirning for r~storation Tokyo firmly with non-Cbm�
- the Pacific region? What of Great . East Asia Co- munist nations of Asia.
Commitment has he left? What prosperity Sphere." Political togetherness of Japan
~the Japanese leader spoke and Hanoi appeared to have and the ASEAN, moreover,
dld in those capitals was so low- taken stroct~ert offense about appears to look to Vietnam not
keyed that it even did not cause the passage"ilY 3utf~d's Bstig- to be limited to the Cambodian
ripples eo far as region's inter- kok speech which said that "ihe issue but also to be meant as
natlonal politlcal envlronment fighting in Cambodia, and demonstration to check south-
w~s concerned. He simply left devastation of the cota~try that ward thr~t of the Soviet navy
_ :the impsee~ion that he was sent hundretla of thousaads of which could fhreaten the sea
~reiterating Japan'.a~ position ~ts people Aeeting the coud,ry tratfic lane of crude oil and
which already had been clear as refugees bas been caused by other essential commodities
~apd well ktiown, none but Vietnam's military bound for Japan. ~
. Ironical}y, the atcongest re- intervantion." Vietnamese Though distorted by Hanoi's
actiou to Suzuki's cemarks ~m to be taking own prejudices, there is some
i d~tring hia tour came not from Suzuki's words to be little truth to such reactions to the
~vithM but from wikhout the different fmm Runald ~Rea- Japanese rriove toward the ~
ASTAN. In what was.ita bitter- gan~s, , ASEAN. If so, Prime Minister -
~st accusatlon of Japen ever,
16
= FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300090049-6
- FOR OFFICIAL USE ONLY -
Suzuki, whether conscious of it Even though Pri~e Minister trip, Ronald Reagan was in-
- or not, has undeaix~ly given a ~~~6: AS~a'V tvur made augurated as the President of
f'irm commitment to mutual alear~ Jipag'.'s ~ommitment to the United States at~d ASEAN -
BuPito!'t and cooperation be- 4his poifticdl ~'ot~ and laid q oountries' attention cQnverged
tween,J~psaend,ABEAN, found,tiea tor~.a co0perative on Washington. Secret,ary of
Asleed abo+it ;t~e esser~tial poHcy towsrd (t, w'1~at specific State Alexander Haig, in ~iviaq -
poi~ of his Bangkok speech, meastres and� � actiona Tpkyo his view on Asian situation in
Suzuki replied that it wag on wi11 t814e 'to it~i~?lement the the Senate confirmation
the eacte~ion of the so-cailed commitmeat is etill shrouded in hearing, cited Lee Kwan Yew
Fukuda Doctrine, taid down in "Japanese ambiguity." 'Ih~ as a leader with whom he can
the apeech the the.n Pritne rhetoric of being "an econotnic ireely exchange opinions on
Minister Takeo Fukuda power~ witDout military` Asian issues and seek advice
_ delivered in Manila in August strengfh" is hard to accept nat from. The Singapore prime _
_ of 1977 when he w.as winding up only fur Europe ~and the Unlted minister hails Haig as a
a tour of the f'tve ASEAN coun- StateB but fas~ Southeast Asta as "powerful, promising leader."
tries and Burma. Md Suzuki well. Leaders ~of the ASEAN Incidentally, the post of the
added, "In line with progtess are showing a look of irrltation asaistant secretary of state in
e?nd dianBes to be made in over this "Japanese am- ~~'Be of East Asian and -
ASEAN, I hope to deveiop my ~bdguity" ba:ans~ those Asian Pacific affairs haa been as-
oam ihinking abvo~0 Japany leadera had been' expfct~ s by John H. Holdridge,
relations with the regioa." speCiCic aecurity' commitmenE W~ Was formerly U.S. ambas-
The Ftikuda Doctrine in from Suzuki aa e~ttention of the to Singapore. �
Manile was regarded as an Japae's muCh publicized Prfine Minister Lee Kwan -
_ i m p r o v i s e d p o 1 i t i c a 1 politlcal role. ' Yew also is expected to carry a
declaration aimed primarily at Singapore P~i~e Minister oonsiderable importance in his
eiuiAg ~e still..b~roh feelings I.ee Kwan Yew has, on every advice to the new U.S. ad-
ttiat existed 'towerd' Japan in o~pportunity, been'appealing for ministration on the China issue. -
the ASEAN re~on and at a Japanese milltary buildup ~ apparently is in the best
clianging the ~ way they see and non-nuclear rearmament, Position to communicate with
Japan. Suauki's .~tpeech in but he made ao ~r?entioin ~vhat=. Washington on the issue as he
Bangkok, by oontrast, can be aoever of Japan's militsi~i ~ly last year visited Pe~ng.
taken as a success in that it capabilities. whea he tnet yvitb -~'he Singapore Prime Minister
cfrew more atteation than pri~ne M~ater Suy~d, va.. also has made remarks full of
.~bktadd ~ Mao~la�.tpeech b~e- hapa, in e; ho~e tiot bo ead- $~BBestions on the polltical
solution to the Cambodian issue
ca~se ~ its being more sub~ barrase 3a~uki, the Singe~wre
_ stantlve and , concrete as re- leadet~ choee to avoid the ~d fostering of the third party
gards : Japan's readine9s for aubject, ~easipg ia advan~e oE Song Sang toward that goal. -
' Suwld's ~teption to t~eclare Now that Prime Minister
This difference between that hia :c~ountry Is d~qyipg has made the tour of
F~ilcuda and Suzuld speechea, itsdt a miHtary role ia Ae~a. ~ ~EAIV as his 6rst overseas
_ howEwer, probably can be It ia a3so ~uestionable ;t tr~P ~ Prime minister, his riext
explained more by changed Japaneee oHec oL an effort tor ~i�', diplomatic mission is a
internatiopal relations In Asian securitq thtou~fi call on th~ White House to see
3outheaet Asla rather than that economic cooperatbn is u~?der- ~e new - American leader.
Suzukl'a speech itaelf had stood aud appreciated by Asisa When he has talks with
- ~B~' app~?ls. The dif- countries themselves. See~y ft'~i~nt Reagan and his staff,
_ ference reflects tbe fact that of the Asia-PaciQc region in Suzuki is expected to make his
against the continping crisis in standing ep to the Soviet S~g~tions for the formation of
Indochine, ASEAN countries threat after all must be ~~a Poli~ies of the new ad-
have inevitably tsken sharper discuased in a global r~ont~xt of ministration. In his Ba.~gkok
interest in Japan's diplomacy, strategiea, of the Western sP~~h, Suzuki appealed for
and Japem in teturn has been world, ce�tering on the United ~ matured relations between
forced to be more conscious of States. Japan and the ASEAN," _
the ASEAN's presence. W}~A prj~e g~y~ Whereas the ASEAN is seeking
was winding up his A3EAN the "political maturity" of
Japan.
- COPYRIGHT: 1981, The Nihan Keizai Shimbun, Inc.
CSO: 4120 -
17
- FOR O~FICIAL USE ONLY
~
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OFF[C(AL USE ONLY
ECONOMIC
CLOSE TIES BEING FORGID BETWEEN JAPAN, EGYPT
Tokyo BUSINESS JAPAN in English Feb 81 pp 37-45
[Article by Masayuki Tomita, Middle East Dept, West Europe-Africa-Middle East
_ Division, International Trade Policy Bureau~ MITI]
[Text)
T HE ceremony to commemorate the conclusion of the Jobra-El�Kaima district to the north of Calro to cope with
first�stage expansion project of the Suez ~anal, con- the anticipated sharp rise in demand for electric power in
necting the Mediterranean and the Red Sea, t~ok place at the course of Egypt's economic reconstruction (Japan is
Port Said on December 16, 1980. Governmeiyt leaders of furnishing power transmission and transformer facilities).
Egypt headed by President Anwar Sadat atten~ied the In addition, Japan's ecunomic cooperation included such
ceremony. Foreign Minister Ito of Japan also attended. capital goods as industrial raw materials, machinery and
This canal expansion project called for the expansion of equipment, vehicles and communication equipment.
the canal width from the previous 99 m to 160 m, and Financial aid on a government basis including both
increase uf the canal depth from the previous 14.5 m to gratuitous cooperation and yen credits totaled ~`140
19.5 m. Thc maximum gross tonnage for navigable vessels billion as of the end of ~?ugust 1980. They are broken
was to be rai3ed to 150,000 tons in loac~ed state and down into ~�8,422 million in gratuitous cooperation and
370,000 tons in an un!oaded state. ~�131,580 million in paid cooperation.
Japanese enterprises took part in this conswction Principal items of gratuitous cooperation are machines
project. In fact, three Japanese enterprises, namely, Penta- for Jobra Center for machine operation and vocational
Ocean Construction Co., biitsui Construction Co. and Toa training and equipment for a chiidren's hospital attached to
Construction Co. acquired about 70~/0 of the construction Cairo University. Paid cooperation is entirely composed of
work Egypt contracted with foreign ~rms. yen credits for financial assistance to projects and for
In view of the importance of this project the government providing capita! goods.
of Japan twice provided yen credits totaling '~61 billion as A credit line was drawn at ~100 million for three years
an economic aid. Economic cooperation between Japan and between 1976 and 1978, and at $200 million for three
Egypt dates back to 1958 when Japan extended to the years between 1979 and 19~1. They arE earmarked for
former Arab League financial aid within the frame of 530 purchasing machinery and equipment for the development
million used for the import of capital goods ~~:n deferred of the economy.
nayments. Up to 1964, Egypt imported from Japan capital Financial aid in the private sector included deferred-
goods including a sugar�making plant and cotton�spinning payment exports totaling 565,242,000 in 1978 (a total of
plant through the fund. ~253,831.000 up to the ;nd of 1978) and investment in
It was after 1970 that Japan's economic cooperation Egypt totaling 33,712,000 in 1978 (a total of ~11,976,000
with Egypt developed more fully. Yen credits on defened up to the end of 1978).
payment have been provided almost every year so as to Other items of technical aid on a government basis
contribute towards stability and erpansion of the Egyptian include the receiving of trainees by the Japan Internationat
economy. Cooperation Agency (JICA) (128 trainees in 1978 with a
Besides the above-mentioned project to expand the total of 907 trainees up to the end of 1978) and dispatch of
width and the depth of ?.he Suez Canal, Japan furnished specialists (137 specialists in 1978 with a total of 346
~nancial aid to the project to increase the dredging specialists up to the end of 1978) in the fields of
capacity of the canal (by providing two dredgers) and the transportation, postal services and machinery and electric
construction project of Jubra Thermal Power Plant in the industries.
- 18
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY
Furthermore, an investment guarantee treaty was con- Exports of other light industrial goods, excepting non-
cluded between Egypt and Japan in January 1977, fur the metallic mineral products, dropped 2.6~Io chiefly owing to
purpose of encouraging Japanese corporations to make the downtrend in tire tubes.
direot investments in Egypt. The treaty, which is not by As regards Japan's imports from Egypt, raw cotton, the
- itself eeonomic cooperation, is structured on two points: main import item, accounted for 74.9% of overall irtlports
protection of invested assets and most-favored nation from Egypt. Raw cotton imports grew 59.6r'o from a yeat
treatment of Japanese investors. earlier and attained the import level of ordinary years.
Imports of aluminum ingots, on the other hand, de-
Japan�Egyptian ?'rade creased 42.3% since Egyptian quotations were higher than
According to IMF: DOT (1979), Egypt's overall exports the international level.
totaled ~2,348.5 million and overall imports 58,178.6
million. Exports to Japan accounted for 3.6% of the total Other Japan-Egyptian Relations
while imports from Japan accounted for 5.3%. Japan The Egyptian Petroleum Development Co. of Japan has
ranked 7th as Egypt's expon markPt and 6th as import been participating in the development of petroleum re-
partner, sources in Egypt since 1970. The company acquired the
According to Customs Clearance Statistics, exports from concession for the West Bakr ;~Iining .4rea in 1976 and was
Japan to Egypt totaled 5387 million in 1977 (up 18% from continuing trial drillings. As a result, it announced in April
the previous year), 5400 million in 1978 (up 3%) and 5397 1980 the discovery of commercially feasible deposits.
- million in 1979 (down 0.8~70). The Egyptian Petroleum Development Co. will become
Japan imported from Egypt goods totaling $78 million the third successful Japaneseestablished company after
in 1977 (up 16%), ~8? million in 1978 (up 5%) and S94 p,rabian Oil Co., and Abu Dabi Oil Co. among the overseas
- million in 1979 (up 14~'~). Apparently the trade volume petroleum development projects. When the full-scale com-
between Japar and Egypt is on gradual increase. mercial production starts, Egypt will benefit from it. Part
- Japan's main export items in 1979 were machinery and of the oil will be shipped to Japan.
_ equipment, metal products and light industrial goods. Each year since 1972 Japan has been taking part in the
Exports of machinery and equipment as a whole in 1979 Cairo International Fair initiated in 1968. Japan has already
_ increased 3.3% from a year earlier. An 11.8%a decrease in taken part in the fair seven times including 1980 and has
transportation machines and a 17.9% dectease in general been exhibiting its merchandise since 1977.
machines were more than offset by the 33.2%a increase in JETRO (Japan Externat Trade Organization) and private
electric machines. enterprises will again participate in the 14th Cairo Inter-
Rolling stock among transportation machines grew as national Fair (March 14 - 28, 1981) with various programs
much as 35.3% from a year earlier, ret7ecting an increased including the exhibition of inerchandise.
- transportation capacity. However, motorcars re~stered an
= export decrease of 3.8~~. Exports of ships dropped sharply Future Outlook
by 84.8~'o from a year earlier reflecting the shipbuilding The Egyptian economy has been eroded by several
recession. Middle East wars. Egypt was on the brink of economic
Among electric machines, heary electric machines in- collapse in the middle of the 1970s, beset with chronic
creased four to five times over 1978 thanks to expansion of deterioration of international balance of payments and
power supply and production facilities. budgetary deficits.
_ In addition, household electric appliances and com- However, the country's economic condition is in the
munication equipment increased 32.4~'o and 15.2~'0, respec- process of gradual recovery thanks to the implementation
tively. of an eco~iomic open-door policy, financial assistance from
Exports of inetal goods increased 10.3% from a year lea~ing Westem countries, growing revenue from the ex-
earlier. The export decline of processed metal products by ports of petroleum and the improvement of the trade
5.1% was offset by the 20.3~'~ export growth in steel bars balance.
and shapes. According to the Financial Times, the current accounts
Exports of light industrial goods decreased 24.7% from a in the first half of 1980 were $16 million in the red. But
year earlier. The main factor in this downtrend was the this deficit had dwindled to only 2% of the figure in the
sharp decline of 46.6~o in exports of textile products due to same period of 1979.
Egypt's determined policy to protect and expand the The main factor that had brought about such spectacular
indigenous textile industry. improvement was the sound growth of trade, especially the
19
FOR OFFICIAL USE ONLY -
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OFF[CIAL USE ONLY
Table 1, Japan's Exports to Egypt Table 3. Paid Cooperation to Egypt
(Unic: S 1 million) As coniracted in exchange of nores as of AuQ~si, 1980,
Com� totaling ~131,578 million
_ Com- paz~d (Unit: 1 milliott)
pued 1980 Wi~h
item 1977 1978 ~ 1979 with first ~me Date of Project Value
year half ~riod ~ntract
; before befote (Yen credits)
Export total 387 : 400 ! 397 99.2 285 I 136.4 73. Apr. 29 O1. Commo~fity aid 3,080
- Foodstuft' 8 i 11 ~ 7 I 65.1 9 241.7 74. 1uL 25 02. Commodity aid 7,500
Light industrial goods 56 ~ 64 ~ 48 ~ 75.3 35 164.3 75. Apr. 16 03. Expansion of the Suez Canal 38,000
(Textilegoods) (29)i (32)~ (17)i 53.4 (9) 113.5 75. Oct. 2 04. Commodityaid 15,000
Heavy industrial I i ~ 76. Jul. 19 O5. Repau of Alexandria Port 5,805
I goods and chemical 323 ~ 324 , 340 'i 105.0 i 240 131.0 76, Dea 21 06. Improvement of Greater Cairo 5,820
products ~ water supply
i
(Metal goods) (41) (58)I; (64) 110.3 (37) 131.9 77, Nov. S 07. Expansior of the Suez Canal 23,000 i
. (Machines and ~275) 'i 1256) ~(?64) L03.3 (192) 130.7 78. May 30 U8. Improvement of Greater Cairo 3,375 '
equipment) water supply
79. Jun. 31 09. Commodity aid 8,000
Table 2. Japan'S Imports from Egypt 79. May. 12 10. Improvement a~ the Suez Canal 12,000
dredging
Com- 79. Aug. 20 11. Expansion of telephone network 5,138
- I ~ Com� Pared ~ in the Suez Canal region
( i pared 1980 W~ih
Item 1977 I 1978 I 19791 with fust ~~m~ gp. Jun. 8 1?. Construction of Jobra thermal 4,862
~ year half ~~~~ad power plant
, before before
lmport total i9 83 95 114.3 62 111.0
= Raw materials 65 45 I 71 159.0 53 ~ 149.0 Table 4. Gratuitous Cooperation to Egypt
(Raw cotton) (6~) !I (44) (71) 159.6 (52) 148.8 As coniracied in sxchange oinofes as of Augusf, 1980,
Processed gouds 14 ~ 37 I 22 58.8 0.5 2.9 fotaling Y8,422 million
(AluminuminRots) l13) 137) ~21) i 57.'l' 0 0.0 (Unit: ~1 mil:ion)
Dete of pIoject Value
contract
increase in the oil revenue which amounted to 51,237 (General gratuitous cooperation)
millioTl, up 81% from the same period in 1979. Occ. 12 Machinery and materials for JoLra 360
~ Of the petroleum output of 630,000 B/D in the fitst half i Center for machine operation and
of 1980, about 20Q,000 B/D were turned to export. The vocational training
_ increase in petroleum revenue was chiefly ascribed to ~S. Oct. 5 Housing program for low-income I 2.500
soaring international oil prices. I bracket (small ste�t bars)
Although exports of petroleum were the main factor in i 79. Aug. 30 Program to counter Rift Valley fever 500 I
the improved trade balance, the following items, too, made ' ~g. No~. 24 Housing program for low-income 1,600 ~
- vital contributions: remittances by Egyptian workers ab� bracket ~
road with $1,337 million in the fint half of 1980, up 37% , Program for improving nation's 400 ~
from the same period in 1979; revenue from the Suez Cana! nucricion ~
with $329 million, up 25~0; and tourism with ~286 million, ~
- up 16%. ~ 80. Jun 8 Program for establishing Fisheries i 500 '
- The peace treaty between Egypt and Israel, signed in , Control Center at High Dam Lake ~
March 1979, created quite a stir in Arab countries. 't'hese ~ Cairo University's children's hospical 2,000 ~
i i
countries were so angered that they decided, in a confer� ~(KR foodscuif aid)
ence of Arab foreign and economic ministers held just after ~ 69. lan. 22 ; Spanish rice z'
the signing of the treaty, to impose sanctions against Egypt, ~
such as disqualification for membership in the Arab League I j(Gratuitous cooperation ,o liquidare ~ i
and other Arab organizations and discontinuation of ; liabi~icies)
eeonomic aid. 79. Mar. 25 i Purchase of general commodities ~ 30
IYevertheless, Egypt is enjoyin~ a comrarative economic a0. Mar. 23 turchase ~f seneral commodities 30
prosperity at present, althouRh the~~e was concern about the
20
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300090049-6
~OR OFFICIAL USE ONLY
possiblo effecu these sanctions might proc�uce on the B. (Technical coopention projecta)
Egyptian economy. Ctassificacion Project Years
As mentioned above, Japan intends to make a positive
conti~bution to the recovery of the Egyptian economy Planning and survey Planning and survey for improv 76-~8
through various types of economic cooperation. for o~ers~as ing Helwan iron mills
development i p~nning and survey for the , 78~79 I '
Table 5,~ Technical Cooperation
I constru~tion of d'uect reduction ~
A. (Receiving of traineea and dispatch ot speci~lists) ~ type integrated iron mills in I
~ Dikehia
([n number of persons) '
Total ~ Survey Cor project screening I 78 ;
Organi- 1978 ~ up to end ~ Field I Development f Program for management system ; 77~78 ~
zation ~ of 197$ ; survey ~ design for Suez Canal ! i
lICA 85 723 Transportation, admin- i Comprehensive development 78
' ~ istration, postal services, ~ program for southern regions
~ ; agriculture, light I ' Natio~al railways modernization I 78 '
~I industries ~ program (preliminar surve -
Receiving I y y~ ;
~ of trainces UNIDO - 10 Machines, metals. ~ National railways modernization ~ 78 ' _
~ eleccric industry ~ ~
I , I program ~
AOTS 43 I l74 ; Ships, industrial ; Technicnl Co� I Jobra center for machine 76~81 ~
; machines, pettoleum , i operation Center ~ operation and vocatioral training I ~ _
Transportation, public ~ i =
; j Arab Seamen's Academy 76-80 !
Dispatch I utilities enterprises, ,
of JICA ~ 137 346 ~ heavy industries, ; Textile R. & D. (preliminary 78 '
specialists ~ administtation, ~ survey) ~ ~ ~
light industries ! I
~ Sanitation and ; Study on educating nursing 78~82 ~
Note: Dispatch of specialists by J1G~ includes sur~ey ceams. I medical cooperation i personnel
Equipment and ~ Machinery and materials t"or ~ 75 ~ -
_ materials seismological observation
~ 1.3?4.000) '
Microwave communication 77 i
equipment (~:1,200,000) ~
COPYRIGHT: Nihon Kogyo Shimbun 1981
CSO: 4120
21 .
- FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300090049-6
FOR OF~ICIAL USE ONLY
ECONOMIC
- F~CPE~RT ON ECONOMIC OUTLO~K FOR 1981
Tokyo BUSINESS JAPAN in English Feb 8.l pp 49-54
[Article by Shinichi Goto, Director and General Manager of Research Division.�
Mitsui Bank]
[ Text ] HE ~econd oIl crisis, in 1980, An analysis of the main dernand _
1 again threw the world economy categories shows that personal con-
into an adjustment phase. The Japa� sumption, which constitutes the big-
nese economy was no exception, price gest item, maintained steady growth in
_ inflation occurred, economic growth nominal terms, but stagnated in terms
slowed, and Japan's current account of real growth because the inflation _
balance in external trade recorded a rate of consumer prices was high.
big deficit. I~ome construction was extremely
As a consequence of t~'~e rise in the depressed due to the big rise in land
crude oil price, wholesale prices surged prices and construction costs, the
upward and in the peak month of increase rate was higher than that of
April 1980 showed an increase of ?4% income. ln addition, public works
_ ovez ths corresponding month of the espenditure was held down in order to
year before. Subsequently, the upward check inflation, _
thrust weakened, but the average in- [n view of the above, the leading
crease for the year as a whole was still factors in economic growth were the
_ expected to reach 18r"o. Consumer steady growth in exports and equip- _
prices, too, :ontinued to rise stub- ment investment. Exports, led by
bornly, abetted by the increase in the n.otor cars and electric appliances,
prices of seasonal goods caused ~y the registered high growth in terms of
unusually cool summer. For the year volume because the yen's exchange _
as a whole, the rise in consumer prices rate remained low from the start of -
was expected to reach cluse to 8%. the year. In the April � June quarter,
Economic growth rate was erratic. exports expanded by 21% over the
in the first quarter (January � March) corresponding quarter of the year
- of 1980, the GNP increased by 1.8% before and have continued to increase
(annual nte 7.4%) but in th~ 2nd at a high rate. Equipment investment -
quarter (April � June) it sagged to 0.8% continued its vigorous growth from
(anntial rate 3.2%1 and in the 3rd 1979, Equipment investment has been
quarter (July - September) it re� in a expansion phase since 1978 as
bounded to 1.5% (annual rate 6.1%). aging equipment necessitates replace-
The high rate in tha 3rd quarter was ment. Good corporate eamings in
due to a temporary :i~crease in im� 1980 also helped spur equipment
ports. If orily private domestic demand investment. Taking the March 1979
is taken into account, the gowth rate term as 100, the current profit of
in the 3rd quarter compared with the companies capitalized at more than
preceding quarter would be minus ~1,0('~ *nillion in the September 1980
- 0.6%. Economic growth led by private term rose as high as 158.9. Even when
demand, condnuing since 1978, is the electric power and gas industries,
beginning to falter. which realized big earnings gains as
22
FOR OFFICIAL USE ONLY '
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2047102108: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY
result uf hikes !n rutes, are excluded, economy and the large stockpIles, the
the f3gure was a high 156.8. This increase in the price of crude oil in
earning performance was due to the 1981 will probably be held down to
~trengthening of corporate constitu- the 10% level. Aside from crL~ciP oil,
iions through drastic "weight�reduc- the intemational commodity .,,arket
ing," the stabilizatior. of prices of seems stable. Therefore inflationary
imported raw materials as a result of pressure from imports will probably
the rise in the yen's exchange rate lessen. As for internal factors, the
after mid-year, and the raising of point will be the extent of wage
product prices. increases in the spring, Prices rose
As a result, the real economic sharply in 1980, but it was mostly
growth rate in calendar 1980 was import inflation. Domestic inflation-
expected to have been around 5%, ary factors were effectively checked.
lower than the 5.9% of 1979. The This was due in large measure to the
Japanese economy's growth must be . fact that, Ieaming from the lesson of
considered as being very high com- the confusion that followed the first
_ pared to the average real growth rate oil crisis, the average wage increase was
of the 24 OECD countries, expected held down to 6.9%, or under the
to be around 1.2`~0, growth rate of labor productivity. The
Einally, the trend of Japan's inter� same outcome is expected in 1981 and
national balance of payments shows the balance between wage increase and
that the current balance rontinues in productivity growth is expeeted to be
the red. The fact that the current maintained. On the basis of the above
balance continues in the red despite assumptions, it is believed that the rise
the high growth of exports is due, it in wholesale prices over the preceding
goes without saying, to the big in� year will be several percentage points.
- crease in the crude oil price. The price Consumer price inflation is expected
of imported crude oil in the January � to cool down to a rise of 6% or so in
March period of 1980 reached a peak January - March and of 5% or so in
of 115.?% of the corresponding period April - June over the year before levels
of the year before. [n the same despite the expected increases in post-
quarter, the current account deFcit al rates, lapanese National Railways
also reached a peak of 55,800 million. fares, and other service charges.
However, the current account deficit With the anticipated settling down
has been contracting since then, of inflation with th~ tum of the year,
becoming $4,500 million in April � personal consumption is expected to
June and $900 million in July � Sep� recover gradually and become the pil-
tember. This was due to the slackening lar to hold up the economy. Adjust-
of the upward tempo of the crude oil ment of ~orporate inventories will
price, the slowdown of domestic de� keep in step with this and be com-
mand, and the falling off of oil im- pleted in the January - March period.
ports because of the war in the Middle Mining and manufacturing production
East. The long-term capital balance, on will hit bottom and start rising again.
the other hand, generally showed an Corporate equipment investment
excess of in-flow, except for the time remains deep-rooted in the midst of
- when the difference in interest rates - rising energy prices and intensification
high overseas and low in Japan - of international competition. In addi-
became exceptionally big. The capital tion, the lowering of long-term interest
in-flow resulted in pushing up the rates will exert an effect, and private
yen s exchange rate and attested to the equipment investment, principally of
high international evaluation of the big corporations, can be expected
Japan's economic growth power. to increase steadily. Home construc-
On the basis of the above percep- :ion, too, is expected to tum upward.
tion of the present situation, let us The outlook for 1981, thus, is growth
_ attempt a prognosis of the Japanese led by domestic private demand cen-
economy in 1981. tering on personal consumption.
_ The key to forecasting tlie econo- Externally, it is anticipated that
my in 1981 lies in how one assesses trade friction with the United States
the trend of prices. Wi:h the Iraq-Iran and the countries of the EC will
war in the background, it is difficult to increase while the yen's exchange rate
forecast the oII situation. However, will remain strong. Therefore, a
because of the stagnation of the world
23
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OF~ICIAL USE ONLY
slowdown in the growth rate of ex� budget on bonds to around 26% from
ports seems inevitable. Exports, how� che prece~ing year's 33.5%. Treasury
ever, are expected to continue expand- loans and investments are expected to
ing because efforts will be made to be trimmed by about 9% compared
diversify export goods and destina- with the original program of the pre-
- tions while dollar-based export prices ceding fiscal year. The efforts to put
will probably be increased. Imports, fisca! finances on a healthy basis
~ on the other hand, will stay weak, should not be limited to these steps. It
As a consequence, the current account is hoped that greater efforts will be
balance will continue in the red al� made to restrict expenditures in an
though the size of the d~ficit will be all-out attempt to rehabilitate fiscal
' reduced conspicuously. finances.
All in all, busness in 1981 will tum The second task is greater efforts to
towards a moderately paced recovery. economize on energy and to accelerate
The real economic growth rate, how� the development of energy sources
ever, is expected to be about 5%, or altemative to oil. For Japan, which
- the same as in the preceding year, depends almost entirely on imports for
because the growth in the early part of its oil supply, the securing of a stable
the year will be low. The easing of the supply of oil and alternative energy is
monetary situation is expected to con- more important than anything else in
- tinue, but it will be necessary to keep order to ensure economic growth over
the increase rate of the money supply the long term.
, to 1- 2`~o above that of the present (7 � The third task is to accelerate inter-
8%) in order to maintain the balance nationalization. The new Foreign Ex-
with the economic growth rate. change Law wEnt into effect from
The first task of economic manage� December l, 1980, easing many
ment in 1981 will be the rehabilitation former restrictions, with particular
of fiscal finances. If nothing is done to emphasis on liberalization of capital
check the ballooning of the fiscal transactions. As a result, capital ex-
dificit, it will invite fiscal intlation. change with overseas will become
~fureover, it may even weaken th.e more vigorous and monetary inter-
vitality of the private economy which nationalization will take a major step .
is the foundation of Japan's economy. t'orward. At this time when the move
On the basis of this perception, the towards trade protectionism is becom-
issue of government bonds in fiscal ing stronger throughout the world, it is
1981 should be reduced by vital for Japan to make efforts to set
~`'?,000,000 million (amount after an example for spurring free trade by
- reductiun would be ~14,270,000 mil� taking such steps as reducing residual
_ lion), thus bringing down the depend- import restrictions and lowering tar-
ence of rhe general account of the iffs.
COPYRIGHT: Nihon Kogqo Shimbun 1981
cso: ~i2o
24
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OFFIC[AL USE ONLY
_ ECONOMIC
- NEW THOUGH'rS ON CHINA'S ECONOMIC OUTLOOK
Tokyo BUSINESS JAPAN in English Feb 81 pp 46-47
[Article by Yukichi Yanagishima, SANKEI SHIMBUN Correspondent]
[Text] ApTER having covered the first Marx, Lenin and Stalin that have
f-j. ministerial neeting held between already disappeared from the Dianan-
Japan and China recently in Beijing, men Plaza, large signboazds for Jaga�
it is my frank impression that the nese companies, among them Sanyo
economic situation of China is ex- Electric Co,, are occupying large
tremely severe, and quite beyond spaces around the plaza. At a corner of
my expectations. The economic ad� the plaza, which was so famous for its
justment that started in 1979 will now wall newspapers, are now manv com-
take another four or five years, accord� mercial posters and signboards. People
ing to Toshio Komoto, Japanese are crowded in front of movie theaters
minister in ~harge of the Ecvnomic all day long. A discotheque is open
Planning Agency who attended the every, other day next door to the
meeting. Vice Chairman Deng Xiaop- famous People's Restaurant in the
ing of the Chinese Communist Party center of the city. Every weekend,
made a reflective commsnt by saying, foreigners and young people spend
"Our targets have been disproportion- many hours at the disco, dancing all
: ate to our means." Large projects tor night through.
industrial development have been Prime ?:~inister Zhao Ziyang is said
suspended and it has become clear that to have told Japanese visitors recendy,
China's supply of oil to Japan that was "We are not trying to follow a capital-
once promised cannot be fully real� ist way for our economy." But as far
ized. What China now wants to sell to as we see these phenomena, the wave
Japan is coal instead of oil. The of capitalism seems to be rapidly
following is my impression of today's surging over China.
China after covering the three-day
- meeting. Econamic Structure of An Oil Produc-
ing Country
Streets in Beijing Vice Chairman Deng Xiaoping once
The streets 1 visited in Beijing after said, "Though China is promoting its
a lapse of eight years have undergone a modernization in four ways, what we
complete change. The new Beijing Air- have tried to do is beyond our capa-
port that was opened January last year bility. How to achieve the modemiza-
has now extended its ternunal building tion from now on is the largest prob-
on both sides and now bears a close lem for our country." At the ministe-
_ resemblance to the terminal building rial meeting held in Beijing in the
at the New Tokyo International Air- beginning of December, leaders of' the
port at Narita. A more marked surprise Chinese govemment were all loud in
than this is a huge advertisement tower their critiasm concerning the econo-
� far Mitsubishi Motor Company that mic policy.
one sees immediately after coming out After purging the Gang of Four,
of the airport. Instead of the busts of China has been positively promoting
25
FOR OFF[CIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY
industrialization with its abundant oil time and money to complete these
resources as a strong support. In other facilities. It is then doubtful that it can
- words, China has been purchasing in� export a large volume of coal to Japan
dustrial products and large industrial aven though China increases coal pro-
plants wlth the money it has earned by duction. .
exporting oil. China has thus adopted
an economic structure typical to oil ~conomic Adjustment -
_ producing countries like the Arab It was in 1979 that China envisaged
countries. promoting its economic adjustment in
- However, it has become difficult 1980 and 1981, and starting its new
for China to fully supply oil to other 10-year economic development pro-
countries as it promised. gram from 1981. But it has become
_ Vice Prime Minister Yao Yilin, who doubtful that this economic adjust- _
is in charge of the State Economic ment can be completed in 1981. -
Committee, has recently made it clear Prime Minister Zhao has disclosed
that China would continue to curtail the difficulty by saying, "The Chinese
_ crude oil production until the latter economy is low in efficiency and
half of the 1980s. He meant in saying wastes too much. What we have to do
this that due to a failure in devel~p- from now on is improve the excessive-
ment, the current annual production ly concentrated economic setup. We
of 106 million tons is expected to level must revise the unrealistic targets we
off or decrease and that this situation early set.
would continue for a decade or ;o. As The inefficiency of the Chinese
a result af the fact that China t;as economy is serious beyond expecta-
promoted its industrialization too tion. In 1979, 23.7%of the enterprises
rapidly, domestic oil consumption has owned by the people were in deficit
increased and caused a vicious circle operation. No improvement had been
that has reduced the country's capa- made from the previous year.
city to export crude oil. In its trade T7'?e state finances had a large de� -
with Japan, the rate of crude oil ficit ~f 17 billien yuan, equivalent to
~ assumed 42.1% of its total exports in ~2,380 billion or 511,900 million, in _
the first half of last year. Vice Chair� 1979. The tinances are estimated to
*nan Deng has confessed, "Though we have caused a deficit of 8 billion yuan
promised to supply 15 million tons of last ear and are expected to cause a
crude oil to Japan in 1982 alone, this deficit of 5 billion yuan this year. The
- was too ;arge a figure." pace of domestic construction has to
China is now trying to sell coal to be curbed. The economic adjustment
Japan instead of oil. China is said to has thus started. Simply stated, the -
_ have coal reserves totaling 600 billion adjustment is intended to shift the
tons and produces 600 million tons a previous emphasis on heavy industrial
_ year, the third l,argest volume in the projects to the light industries and
world. But the price of coal is only agriculture, a far more realistic ap-
one�sixth that of oil. proach.
_ Though Chinese sources expected This shift of emphasis was revealed
to be able to export some $3,000 at the ministerial conference in Beijing
million worth of crude oil in 1985, the by Vice Prime Minister Yao Yilin. He
foreign currency China would receive said, "Large industrial projects which
through oil exports would remain at a have been introduced from abroad
level of only $1,500 million or so even must be closely reexamined, and some
though ihe price of crude oil further of them must be cut." If any projects _
inereases in the future. Even if it tries for which contracts have already been
to compe'hsate for this drop with the concluded are stopped, those Japanese
export of coal, China can obtain only enterprises concerned with them will
$400 to $500 million by exporting 10 be dealt a severe blow.
million tons of coal. Furthermore, if After Prime Minister Zhao assumed
China tries to export this volume of his post, the decentralization of
coal, it has to complete port and authority and the expansion of inde-
harbor facilities near the coal mines. In pe~tdence of enterprises as well as
. fact, the infrastructure in China is not other reforms have been attempted,
complete yet, and it demands both esDecially in the economic systems.
26
FOR OFFICIAL USE ONLY -
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OFFICIAL USE ONLY
But none of these new reforms is Japan will be convened." If the eco-
functioning smoothly. Because of the nomic adjustment continues till 1984
traditional lack of liaison among the or 1985, the Chinese economy is
buteaucratic organizations, similar pro� expected to be sluggish and no im-
jeCts are being conducted at che same provement can be expected. Further�
time in many areas, wasting money more, China is suffering from a high�
and labor. Even though factories have paced inflation and the current rate of -
been built, they cannot go into opera� price increases is 5.6% a year.
tion due to the lack of electric power. At the meeting, Japanese Finance
In order to sell low-quality tractors Minister Michio Watanabe complained
produced locally, it is prohibited for by saying, "The Chinese government
people's communes to purchase high� must let us know if it is to attempt
quality but less expensive tractors pro� any new adjustment in the overall
- duced in other areas. economic planning." When Vice Chair-
: The problem is how long this eco- man Deng asked Rokusuke Tanaka,
nomic adjustment will continue. Every biinister of International Trade and
leader of the Chinese government is Industry, "Are you disappointed in _
- ambiguous on this point. Vice Prime the Chinese economy?" he ceplied,
~finister Yao says, "The adjustment "We are not disappointed, but anxious
could continue until 1983." Even Vice about its future." China is expected to
Chairman Deng is vague in this respect undergo changes through trial and
by saying, "T'he Chinese economy error just as some other developing
could improve in 1984 or so when the countries have done. The injury the
fourth ministerial conference with Chinese economy has been sufferinE is
very serious inde~d.
~ COPYRIGHT: Nihon Kogyo Shimbun 1981
CSO: 4120
27
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02108: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY
ECONOMIC
BUDGET: I~ITTLE SUPPORT SEEN FOR GOVERNMENT'S PROPOSAL
Tokyo BUSINESS JAPAN in English Feb 81 pp 16-17 -
[TextJ The Finance Ministry decided on result, the new budget, though a high- _
the draft of the fiscal 1981 national ly retrenched one, forces taxpayers to
budget last December, and after re- bear a much larger burden.
porting on it at an extraordinary A severe retrenchment policy has ~
Cabinet meeting, informed other been adopted in allocating expenditure
government departments concerning in many areas, and while an increase of
budget appropriations. According to some 15% has been approved for
the draft, the general account amounts measures to save energy, the highest
to ~46,788 billion, up 9.9% from the priority item, no increase has been
original national budget for fiscal made in expenditures for public works
1980. T'he Finance Ministry kept the and for measures for smaller enter- -
growth rate of the new budget at prises. The promotion of science and _
9.9%, a one-digit rate of increase for technology has been pegged at the
the first time in the past 22 years since same level as in the previous fiscal
fiscal 1959 when the growth rate of year.
the national budget was kept at only Treasury investment and loans have
8.2%. However, the new draft budget been increased by 4.9% to '~19,063 -
involves large tax increases amounting billion, but will be increased by 7.0%a
= to ~�1,390 billion, a record high. As a or more to some '~19,500 billion
The Finance Ministry's Draft for the Fiscal
1981 National Budget
, i (Figurcs in panntheses are ratios over the fscal~
1980 budget, in percentage) !
! General Account
I
_ i� Revenue 4W6,788,000 mil. ( 9,9) i
- Tax and stamp revenue 32,?84,000 22,2) ~
� ~ Revenue other than tares 2,234,000 ( 17.1)
I National bond issues 12,290,000 (-14.0) i
~ ' Expenditures 4F46,788,000 ( 9.9) ~ -
Expenditures for bonds 6,650,000 ( 25.3) ,
! Revenue transfers to local
j governments 8,083,000 ( 23.5) ~
I General expenditurcs 32,055,000 ^ ( 4.3)
Pubtic works 6,b~5,4G0 ( 0)
~ Economic cooperation 420,000 ( 9A or more) ,
' Measures for energy 488,000 ( 15.0 or more)
~ Defensc expenditures :,377,000 ( 6.0 or more) '
~ Treasury Investment and Loans ~19,063,000 ( 4.9) ! _
2$
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL U5E ONLY
through interdepartmental budget ses- sharply curtailed and budget appro-
sions with other ministries. priations for measures for smaller en-
Before compiling the new budget, terprises will be kept at the same level
the Finance Miniscry was determined as in the fiscal 1980 budget. No new -
to start the reconstruction of the measures are lilcely to be approved for
deficit-ridden state finances and cut by the promotion of science and tech-
~�2 trillion the tiscal 1981 deticit- nology.
covering national bond issues. As a Thaugh the Defense Agency has
result, such bonds to be issued will required the Finance Ministry to in-
total ~12,270 billion and the rate of crease defense spending by 9.7%, this
dependence on bonds has been re- tar et is not ex cted to be realized.
duced to 26.2% from 33.~% in fiscal g ~
As far as national revenues are
1980. concerned, in otder to compensate for
- Drastic retrenchment measures have automatic increases, attempts will be
been adopted in budget appropria� made to secure revenues other than
tions, and the increase rate for general taaces, and the estimated amount of
~ expenditure, excluding expenditures such revenues will reach ~2,230 bil-
for national bonds and revenue trans- lion or an increase of 17.1~0 over 6scal
fers to local governments, has been 1980. Furthermore, corporate income -
~ retained at a level of only ~1.3% over taxes will be sharpiy increased. In
fiscal 1980. fiscal 1982, a large-scale consumption -
- In view of this fact, as to even such tax will be introduced to secure more
priority items as measures for saving tax revenue.
on energy, the promotion of smaller The government seems to be trying
enterprises and science and tech� to rebuild state finances by increasing
nology, as well as public works, budget the burden of the workers as well as -
appropriadons will be closely re� private enterprises. All government -
examined. No ir.crease will be made in departments, the ruling Liberal
the budget appropriation for public Democrati~ Party and industrial circles
works by keeping the volume at the are showing great opposition to the
same level as in fiscal 1980 in real new draft budget.
terms. The proposed construction of Meanwhile, the government has -
the new airport in Osaka is not likely completed a supplemental budget for
to be approved at the current stage, fiscal 1980 totaling ~1,092 billion,
- Requirements by the Ministry ~f including expenditure for damage
International Trade and Industry for from cool weather and natura! dis-
measures to save on energy have been asters. The final size of the fiscal 1980
budget is now quoted at ~43,681
bi:lion.
COPYRIGHT: Nihon Kogyo Shimbun 1981
CSO: 4120
29
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02108: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY .
ECONOMIC
FINANCE: LIBERALIZING TREND.OBSERVID
Advent of New Age ~
Tokyo ASAHI EVENING NEWS in English 18 Feb 81 p 5
[Article by Shinichi Hako~ima] _
[Text] Tho Japanese economy in 1980 purcbases of Japanese stocks and
showed performance ahich was out- bonds. This led the value of the yen
standing among advanced industrial againsi the U.S.- dollaz to rise nearly
nations. Although the nation's cus- 30 per~ent from around ~260.00 to
- toms-cleared foreign trade had a the dollar early 1980 to ~203.60 at
record deficit of $10,700 million for the close of the Tokyo foreign ex-
the whole yeaz, quarterly figuros im- change market on December 31.
proved in the lattec half and produced The good performance of the Japa-
a surplus ~ in the October-December nese economy continued into 1981.
period. The current account de~cit ''~c wholesale price index rose early _
narrowed substantially from $5,086 in the year owing to a sbatp increase
million ia the January~-March quarter in the prices of vegetables causcd by
to $433' million in the October-De- heavy snowfall in many districis of
_ cember quarter, mainly reflecting a the country. But the uptrend of prices
marked increase in eaports. is expected to calm down in time
Among factors responsible for the refleciing continued appreciation of =
nation's economic growth, personal the yen.
consumption increased only moderate- 'Most bf the- OPEC aations raised
ly, but capital spending expanded tbeir crude o~7 prices starting from
- satisfactorily for energy-saving, ration- January ~in accordance with an agree-
alization, and other purposes. The meat reached at the OPEC general
~ wbolesale price indez displayed a meeting held in Bali in December.
year-on-year rise of 30 percent early However., the increases were by four
in 1980 under the pressure of rising to ~ve dollars a barrel at most indicat- -
crude o~ prices, but both wholesale ing that they have switched from the
and consumer prices levelled off previous policy of raising their prices~ -
steadily in the second half of the year. sharply at a stroke to one of piece-
Such strength displayed by the meal hikes in line with the price trend
~ "fundamentals" of the Jap~anese in advaaced indusirial countries.
economy encouraged foreign capital, Although there will be further in-
espocially oil moaey, to flow into creases in oil prices at the next general
Japan, resulting in large net foreign meetiag of OPEC to be held in Geneva _
30
FOR OFF[CIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY
in May this year and other occasions~ the background of a~scal policy
there is liide danger of a sharp rise failure eaemplified by the massive
that may disrupt ihe market, So long flotation of government bonds, which
as the ~ present quaatity of oil is have reacnad an outstanding balance
ensured. of ~7 trillion.
As for wages, which represent On the other hand, however, the
another factor affecting ~rices, in- massive bond flotarion has seriously
crease this year is l~cely W be restricted flexible operation of the
moderate, as will be secn from the monetary policy. Under the heavy
fact that labor uaions are demanding pressure of large government bond .
wag~ hikes averaging 10 �percent for issues, long-term interest rates in
the shunto (spring labor offensive) Japan, which should be declining to
this year. ~ pave the way for a cut in the official
discount rate, have not fallen, but
Diseount rate eut twice have actually increased in some cases.
While such an unusual developmenit
The same is we with the monetary is taking place on the market, it is
. policy. The official discount rate of obvious that a cut ia the official dis-
the Bank of Japan was cut twice in count rate, forced against the mazket
August and Nove~ber, last year by environment, aill not produce the
a total margin of 1.75 percont from desired effects.
9 petcent to 7.25 percant. Another Postal saving made a big leap for-
cut in the rate is believed inevitable ward last yeaz W add fresh fuel to the
this spriag. because wh~e prices are rivalry between the Finance Ministry
expected to stabiliu reflecting ihe and banks on the one hand and the
yen's appreciaiion, economic slow- Post and Telecommunications on the
down has been intensifying svongly other concerning ttu introduction of
affecting smaller enterprises. The the "Green Card" system in 1984 for
aumber of bankruptcies has been identification of taz-free depositors.
steadily above the so-cailed peril line T'he increase in postal savings
of 1,500 cases montt}ly in recent caused the flow of funds on Japanese
months. money markets substantially. While
As evidenced by the fact that the the channel for the movement of funds
national budget of the Japanese Gov- from postal savings to the Finance
~rnment for fiscal 1981, starting ncxt Ministry's Trust Fund Bureau widened
April, showed only a one-digit increase coASiderably, movement of , private
over fiscal 1980, no meaningful sup- funds has been affected adversely by
port to improve business conditions the development.
~an be expected from fiscal ezpen- As a result, financial institutions
ditures this year. ' related to agriculture and forestry,
- 1fie so-caHed "budget for recon- regional banks, and credit associations,
struction of public finance," which which used to be buyers of government
cuts government bond flotation by bonds, could no longer acquire fu~ds
~2,000,000 million and covers the to continue their operations.
shortfall with taz increases, cannot be The Trust Fund Bureau was thus
e~pected to spend much money on compelled to intervene in �ihe second-
public works io boost business. ary market to buy ~government bonds
As public finance has now lost in support of their prices.
~flexibility, time has atrived for the That such intervention was con-
monetary policy to play a big role. ducted repeatedly clearly indicated the
The Bank of Japan is said to bave maldistribution of funds caused by a
"recovered its lost powers" against sharp increase in postal savings.
31
F6R OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY
Overseas interest rates were another foroign investors' investments in Japa-
, factor which seriously affected Japan's nese stocks.
monetary policy last year and are ex- 'The enforcement of the law was a
pected io play even a more important highly significant~development, in that
role this year. it publiciztd the principle of h'berali-
The prime rate in the United States zation the Japanese Government was _
rose to 21.5 percent in January 1981, pursuing both in Japan and overseas,
while discount rates in Italy and th~ although the Financa Minister retained
United Kingdom increased to 16 per- the power of application of controls
cent and 14 percent, respectively, in an emergency and the law itself
reflecting high inflation rates in Eu- was not of a character that was e!c-
rope. Similarly, Eurodollar rates also pected to brings forth marked changes
jumped to an abnormally high leveL immediately following its enforcement
If in these circumstances Japan Sincj liberalization begets liberali-
alone lowers its level of interest, there zation, it should not be easy for the
is a danger of overseas iavestors Finance Ministry and th^ Bank of
switching their funds ont of yen assets, Japen to invoke the emergency powers
strong as the fundamental of the Japa- as a trump card.
nese cconomy m~y be. The tren3 toward liberalization is -
In this respect, ]apan should be bound to enoourage the internationali-
particularly' cautious about the attitude zation of the yen. The Tokyo Market
of Arab oil-producing nations, which. will tbus necessarily discard its closed
have been leading buyers of Japanese natute and gra~ually open itself to out- .
bonds and stocks. Wbilc :??e monetary side forces.
policy is counted on to play a leading An increase in the holding of the
role, a coordinated judgment based yen by non-residents will naturally
on the assessment of complex factors pose difficult problems to the Japa-
has become indispensable. nese monetary suthorities.
Several noteworthy refocros have The yen's position is thus liable to
been canied out on the Japanese be disturbed by externa] factors,~ mak- -
financial system in the past few years. ing 7apanese monetary policy less
They include the liberalizatioa of in- ~f~~t~ve than before. On the other
terest rates on the bill-discounting hand, resistance against the trend of
_ market, permission to issue negotiable liberalization arould mean refusals for
certificates of deposits in yen, flotatioa Japan to let the yen play its appro- -
of inedium-term government bonds priate international role and distortion
_ thraugh auctions, and tmergence of of the international nature of the -
mutua] funds based on medium-term Japanese economy.
- government bonds. They have all Japanese monetary authorities are
- been developments in �line witti the thus faced with the need for acquir-
trend toward liberalization. ing advance technology to reconcile
- Another important developm~nt was the s[abilization of the yen's value
t'~e enforcement on December 1, 1980, ~with the acceptance of the trend
of a new Foreign Exchange Concrol toward its internationalization.
Law, designed to open Japanece 'I'his makes it all the more impor-
money markets to foreign countries. tant to resolve the problem of mascive
The new law liberalized in principle flotation of government bonds, which
foreign cunency bank deposits by constitutes a stumbling block for
Japanese depositors, thc supply of for- lil~eralization. Coupon rates of gov-
eign currency impact loans by Japa- etnment bonds are fixed at a low
nese banks to Japanese companies, aad Ievel by artificial means, because the
32
FOR OFFIC[AL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OFF[CIAL USE ONLY
Finance Ministry abhors the burdoa baaks will be at a disadvantage in the
of high interest rates oa public finance. future, while leading city banks
~Thia disturbs zfforts to ' foster ,the equipped with international informa-
secondary mazket for government iion networks and an outstanding
~n~s� capacity ~of crodit irivestigation will
' have the advantage. ~
T~ie seeondary market Two developmeats concerning the
monetary policy and the financial sys-
It is impossble in the long run tem in Japan are attracting particulaz
_ to maintain the coupon rates of ,gov- attention this year. One is that the
ernment bonds alone at a rigidly-con- bill for amending the 1927 Banking
trolled low level at a timo whea all Law is expected to be presented to
other interest rates are moving toward the National Diet for deliberation.
liberalization. It is thus inevitable ~ The ofher is that the Counc~ on
that the trend of the secondary market Pnstal Savings has starced its work
should come to be takeri into con- for the unification of monetary sys-
sideration in determining the issue tems ia Japan.
terms for new government bond issues. 'Ihe proposed amendment of the
This should also turn out to be aa Banl~ing Law has gone through many
effective brake for an endless increase ups aad downs due to rivalry between
in die goverament bond flotation. baaks and securities firms, but it is
For Japanese ~nancial institutions eapected that, if the amendment is
liberalization of interest rates will approved, banks will be allowed to
mean the advent of an age for the deal in securities in a limited way
survival of the 5ttest.~ The economies through the sales of government bonds
of scale .will work in supplying profit- to the public through bank offices.
able loaas, so it cannot be denied that They are both natural developments
smaller banks, such as regional baaks withia the trend toward liberalization.
and sogo (mutual loan and savinga)
Nation's Finances Still Healthy
Tokyo ASAHI EVENING NEWS in English 18 Feb 81 pp S, 7
[Article by George Murakami] ~
[Text] How are Japan's finances respond- It sounds smug and compacent to
ing in a time of uncertainty in the say so but Japan on the whole is do-
world econom}~, of double-digii infla- ing quite well, and so aze its finances.
tion, of heavy deficits in the balance �Wholesale prices in April 1980 were
of payments, of growing unemploy- 24 percent higher than in the same
ment, of sky-high inierest ntes? month of the previous year but the
The situation is particularly serious rate of year-t9-year rise declined to
in the United States where the Reagan 9.6 percent by December. . The rate
_ Administration is speaking of crisis. of rise in consumer prices has been
It is bad in Britain, France, Italy, the between seven and eight percent.
Ben~lux countries, Scandinavia. Even The payments balance has been
West Gezmany, long the powerhouse heavily in deficit but has shown con-
of Europe, is having uouble. siderable improvement in recent
- 33
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY
, months and the official foteign ex� ?here was in 1980 the growing
change reserves have risen from S18,- recognition abroad that Japan was
543 million in April 1980.to $26,502 performing well in the "fundaUCentals"
- � million in January�. Interest rates have of price stability and payments bal-
~ased notably and aze much lowet ances. As a result, a heavy inflow
than in other countries. ~ The prime developed during the year of foreign
rate is 7.5 percent in Japan, around funds into the Japanese stock market,
= 19 percent in the U.S. The yen's bonds, "free yen" (yen freely conver-
ezchange rate against che dollar, which tible into foreign exchange} accounts
had been as high as 3F264 in the and short-term lending such as cer-
spring of last year, is now around tificates of deposit. Most of the in- ~
~'204. ' flow was petrodollar capital, from the
oil countries via westem Europe, plus
Inflation, defi~tion money from American and European
The current voublrs in the world pension funds, insurance companies
economy, it is generally agreeti, come and other institutionals. T'he monthIy
chiefly from ihe second oil crisis u;flow was well over a billion do~lars
spazked by the revolution in Iran. and this recycling of petrodoUars ,
The st~ep 1979-80 boosts in the oil helped to offset the deficits in the
~ price pushed up prices as a whole and cunent account. ~
also worsened balance-of-payments This is a relatively new development
deficits. Inflation had as well a defla- in Japan's balance of payments and
tionary effect in the reduction of real international finance. The bulk of
purchasing power by the rise in prices. recycled petrodollars has been going
= The oil price boost had the further into America and European banks and
deflationary effect of transferring in- other financial channels and very
come and purchasing poaer from the little into Japan. The Japanese Gov-
oil-importing ~ to the oil-exporting ernment lacks a payments balance
countries. . policy and effective measures to en-
Japan is in better shape than most sure a steady inflow of long-term for-
other industrial countries because it eign capital, particularly petrodollars.
- has adjusted more rapidly to the
_ strains and stresses'of the second oil The hi~her yen
crisis. In the aftermath of the first The yen-dollar ezchange rate has
oil crisis, it developed the industrial fluctuated widely, more so than the
capacity to outcompete other nations ups-and-downs in the economy and its
in the world market and rolled up in external position. In April 1980, the
1977-78 enormous trade surpluses. rate, as has been said, had been down
The capacity represented by these sur- to ~264. It closed out the year
pluses, a tight credit policy, restraint around ~206. Early this year, a surge
in fiscal policy despite a massive bud- of speculative buying sent it briefly
get deficit and moderation by labor in to ~198 and there was heady talk
�its wage demands are.what has enabled it might approach or Fven exceed
Japan to come through the second oil its alltime ~high of ~175 in October
crisis. - 19'78. Although the rate has since
By getting down to a considerable eased a bit into the lbw 'f200 range,
_ extent the price rise in 1980, Japan the general view is that the yen will
reduced the deflationary effect of in- stay suong this year, fluctuating in a
flation. By increasing exports to off- band between ~185 and ~210.
set the higher . import price of oil, it What has sent up the yen are the
also reduced ~he transfer of income relacively low rate of inftation, the
from Japan to the oil-exporting coun- improvement in the payments balance
and the inflow of foreign capital.
34
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02108: CIA-RDP82-00850R000300090049-6
~ FOR OFFICIAL USE ONLY
Foreign investment in the stock mar- Japan had the most complea and con-
ket was heavy again in January. Also, fining of exchange controls. In theory,
interest rates iqthe U.S. oased slightly without specific' administrative permis-
during January. . sion, foreign exchange transactions
Nevertheless, U.S. interest rates re- were ~ forbidden. Every penny of
main high and continue to be a foreign exchange was deemed the pro-
- seriously disturbing factor in intema- perty of the Government and could -
tional finance. They are not only a be used only for purposes approved
product .of inflation but contribute to by public policy. ~iJnder the new law,
it worldwide. They upset the normal foreign ezchange transactions are as -
flow of funds by acting as an abnor- a general rule free of official control
_ mal attraction pulling money into ezcept in situations specified by law.
the U.S. T'hey pull up in.terest rates 1n pr~cEice. the shift to the new sys-
in other countries, depress bond maz- tem has been gradual and red tape
kets and impede the raising, of - long- and the spirit of Big Brother is watch-
term investmeni capital. ~ ing remain but the change has been
In the Japanese bond.market, as in made and it is watching remain but
other bond markets, ihe jump in U.S. the change has been made and it is
interest rates sent down bond quota- considerable.
tions of new lows. Ten-year 6.1- Residents (Japanese), for example, _
- percent government bonds in March may now hold foreign currency bank
were down to 77.30 (100=par) de- accounts in any amount. Before, _
spite efforts by the Finance Ministry aside from �'irms engaged in foreign
and the Bank of Jap3n to prop up trade and services, individuals were
the price. U.S. interest rates, how- limited to fnreign currency accounts =
ever, began to ease in April and this of not more than ~3 million. The
' brought a firming in the bend market ceiIing has been removed. During
Another reason for the weakness of December, the first month, such
the bond markct was the ezcessive accounts iacreased by $1,400 million
issues of government bonds-~14,2'70 to $3,750 million. ,
billion in fiscat 1980. The banks and Yn Januar~~, however~ there was a
- other financial institutions, forced to drop~ of 5450 million. Bankers ex-
accept governmenu, took heavy losses plain the novelty has wom ~off, the
on them. The situation improved rise in the yen's exchange rate dis-~
~omewhat as the Finance Ministry couraged foreign currency . accounts
issued a larger proportion of short- and the yield on short-tetm funds in
term governments end made other the Japanese iinancial market is better
- adjustments. Also, for fiscal 1981, than the interest rate on foreign cur-
the Fina4ce Ministry is cutting the rency de~osits. Interest rates on
volume of government bond issues by domestic yen deposits are subject to
- ~2 trillion and reducing further the official regulation. 'I'hose on forei.gn ~
amounts of bonds to be taken by the currency deposits are not, the authori-
b~nks. When U.S. interest rates rose ties h~d feared the banks might com- .
- again from the fall of 1980, the bond pet~, to raise them in order to attract
market, although it eased, held up depositors but this has not happened.
- fairly.well. By and large, this step in decontrol,
- like the other steps, has gone fairly
New exchange law smoothly and has not had seriously
1'he new Foreign Ezchange and upsetting effects on ~Japan's payments
Trade Control Law went into affect position or the yen's exchange rate. -
in December 1980. Under the old The great gap in interest. rates tx-
laws, althaugh they have been liber-
alized in practice in recent years,
35
FOR OFFiCIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02108: CIA-RDP82-00850R000300090049-6
FOk OFF(CIAL USE ONLY
~
conccrn but it is not as seriously as BOJ and the Government will also'
had been feared. International hot reduce across the board interest rates
money has tended to flow to the U.S., subject to official regulation such as
- attracted by the high interest rates those on bank deposits, trust accounts, -
~ there, and there has also been an out- postal savin=s, bank debentures and -
flow of domestic- funds from Japan government bonds.
for the same reason. In Japan's gay- ?here is still a gap between the
ments balance, however, the deficit in coupon rate on govemment bonds and
, the lo.^.g-term capital account in re- their yield in the trading market. The
cent months has been small, the yen going yield on 10-year, eight�percent
has stayed firm and the official policy governments is around 8.3 percent, a -
of pushing down interest rates has situation which makes difficult a new -
made some headway. . ~ reduction in the interest rate on them.
Interest rates in Japan have been There are other concerns for Japa-
" affected by trends in U.S. rates but nese finance this year and in the years
_ not too closely. Japanese rates early ahead. For one thing, an offshore '
in 1980 rose whcn U.S. rates did, banking center is opening in New York
_ came down in Apri] when U.S. rates in October, and ?4 ]apanese banks
did. However, when U.S. rates beean are to participate in this new market,
t~ rise again from August on, rates in which should grow in scale t~ match
Japan did firm but were less affected London's Eurodollar market. What
than they were oarl}� in the year. has made possihle the creation of the
~The Bank of Jspan cut the discount New York offshore banking center are
rate twice in 1980, in August and action b~~ the Federal Reserve Board
November, and the rate is now down to waive the reserve rate, interest rate -
w 7.25 pe~cen~ The situaUon has and other controls on funds in non- "
- permitted the discount rate cuts and resident accounts in this center and -
a policy of easier credit to stimulate a agreement by the New York state and
sagging economy-prices are .fairly city authorities not to levy taxes on _
stable, the yen is strong and the over- the center's business.
all payments balance has been in sur- In f{sia, Hongkong and Singapore, _
plus since July 1980. ~ and also Bahrain, in the Persian Gulf,
The authorities are now studying have flourishing offshore banung cen-
J the matter of a third cut in the dis- ters. There is no reason why Tokyo
count rate, probabIy in early March, should not have a similar facility and
and other measures to give more life every reasoa it should as Asia's lead-
to the econom~~. 'I'he Govemment ing financial and commercial center.
cannot do much in fiscal policy to help There should be pressure as well from
the economy~ through such measures New York for Tokyo offshore bank-
as cutting taxes or stepping up ez- ing. Under the principle of reciFiro-
penditure because of the enormous city, if Tokyo banks can take part in
budget deficit. In fact, the Govern- che New Yorl offshore banking
ment in fiscal 1981 plans to raise facility, then Tokyo should set up a
taxes and hold down expenditure. This similar center in which the New
means credit policy will have to carry York banks can participate.
the burden of official action to stimu- To set up offshore baoking in Ta
late the econom}~. kyo would b~ a simple matter. In-
The present indications are that that terest rate, reserve rate and o:hcr
the Bank of Japan will lower the re~ulations would, have to be dropped
discount rate by one percent or so. on non-resident accour.ts and the with-
The remaining question is whether the holding taz waived on interest of such ~
36
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OFFICIAL USE ONLY
accounts. A degree of deconuol has Japan has thus far made its way� in
- already been applied to non-resident the world economy with its industrial
accounts. streneth-solid work, technological in-
_ T0~0 of~shore banking novation, tight management, quality
control, hard selling, foresight, adap-
The azguments for Tokyo offshore tability. These qualities have been
banking sound persuasive. The inter- applied to goods. To make a living
national financial market in the in future; Japan may have t~ apply
- recycling of petrodollats, intemarional them to monev as well.
- trade and investment and the funds of Another change that needs to come
multinational corporations is rapidly deconvol, and the principle of
growing and Japan would benefit with
its own offshore banking center giving liberalization in thc new Foreign Ea-
it direct access to th~se funds. In change and Trade Control Law should
particular, with surplus pctrodollars be applied to banking and finance as
giling up so heavily, keeping payments a whole. If Japanese banks are to
in balance throu~h trade no Innger compete against foreign banks abroad,
seems possible. The bulk of recycled "the tight controls the Finac~ce Min-
- petrodollars .g~oes to American and istry puts on them as to the nu~ber
European banks and the oil states are ~ of branches, overseas as well as
now setting up their own cummercial domestic, they can open should bo
~ and investment Uanks. Japan needs eased. They could use authorization
a direct channel to such funds and as to issue bonds and long-term cetiifi-
part of a new, thoroughgoing payments , cates of d~posit, engage in the secu-
policy. � rities business, and so on.
New Foreign Exchange Law
Tokyo ASAHI EVENING NEWS in English 18 Feb 81 pp 6, 7
[Article by Mikinuri Yoshida]
[ Text J A new Foreign Exchange and For- monetary order and monetary policy
- eign Trade Control Law was enacted in Japan, based on a rigidly-controlled
oa December 1, 1980. It represents interest structure and government con-
- a wholesale rovision of the old For- crol of financial institutions such as
eign Exchange Control Law and For- the authority"to permit them to open
eign Investment Law enacted shortiy branch offices.
after the end of World War II and Actually, however, r.he Fina~ce _
their unification into one single legis-. Ministry has been providing "admin-
lation. .istrative guidance" openly and covertly
on the prete~t of "making a soft land-
The new law made a volte-face from ing on a new age," so that liberaliza-
- the old laws' principle that everything tion is only superficial. Financial in- .
which is not specifically pcrmitted is stitutions are also secretly welcoming
banned to a aew principle that every- t3e intervention by monetary authori-
thing which is not spec~cally banned ties; beCause it preserves the old prac-
is permitted. tice of giving protection in,ezchange
This will lead to the unification of for controls.
money and capital markets in Japan It may be said that the present
and ovecseas and undermine the aituation is that while the � historic
�37
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-00850R040340090049-6
FOR OFFICIAL USE ONLY
~ trcnd toward liberalization cannot be in an emergency to place all capuai
changed, both the Japanese Govern- cransactions under control requiring.
ment and private institutions are col- approval.
- luding with each othcr to retard the The "emargency control powers"
_ trend as much as possible. may be invoked if circumstances arise -
T3e old Foreign Ezchange Control which may be judged to fall under one
Law and the Foreiga Investnaent Law of the following three conditions:
were enacted shortly after the end of 1) it has become difficult to maintain
World War II with emphasis on ways an equilibrium of Japan's balance of
to save foreign ezchange and protect payments, 2) erratic fluctuations aze
a weak ecunomy in Japan against liable to be caused in the exchan;e
foreign capital. rate of the yen, and 3) monetary maz-
Capital transactions and foreign ket or capital market in Japan is liable _
trade settlements were banned in prin- to be affected adversely by a massive
ciple under the laws, with only specific movement of capital into or out of
cases approved. The laws thus had J~F~n' ~
rigid frameworks for controls throu~h Invocation of the "emergency con-
- permission and authorization. trol powers" will make it possible to
However, � as Japan grew into an take measures for restricting the' inflow
economic power, the old laws became of foreign capital, such as requiring
a target of criticism by Westem na- prior approval for the supply of im-
tions as a symbol of the closed natur~ pact loans (term loans ia foreign
oi the Japanese economy. The new currency without specifyin; its use)
Foreign Ezchange Control Law was or banning the flotation of external -
a measure taken in response to the bonds by Japanese companies, or
pressure from foreign countries to measures for controlling the outflow
- open the door of Japanese markets of capital, such as banning acquisition
almost cumpletely to the twaway flow of U.S. Treasury bills and other for-
of fimds across the border in a way eign securities by Japanese and restric-
becoming the second largest economic tions on overseas lending by Japanese
power in the free world. banks. In addition to direct controls
mentioned above, indirect control may
Freed in prineiple also be applied through foreign ex- -
- The law thus freed in principle for- change banks by prohibitino payment -
- eign exchange transactions under nor- of interest on ye? deposits for
mal conditions. It must be pointed foreignen (non-residents) or raisin;
out, however, that the authorized reserve requirement ratios for such
foreign exchange system has been deposits. - _
retained, while a new system of ~e "emergency control powers"
designated securities companies has maY chus be described as a trump card
_ been newIy established. for the monetary authorities. How~ver,
officials of the Finance hiinistry and
The system of prior reporting of the Bank of Japan are inclined to be-
transactions to the Finance Ministry lievP that the emergency concrol
and the Bank of Japan and the system powers "are not something that can
of ez-post fact reporting to them were be invoked frequently; if you con-
combined to enable the monetary sider the spirit of the law and inter-
authorities to grasp the movement of national public opinion."
money precisely.
Foreign currency deposits
Moreover, the Finance Minister can Forei n currenc de
invoke his "emergency control powers" g Y posits means
~ literally the depositing of foreion cur- -
rency such as U.S. dollars or sterling
38
FOR OFFICIAL USE ~NLY
,
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY
with Japanese banks. Under the old rates, if the bank concerned so de-
Foreign Exchange Control Law cides. T'hat will make foreign cur- .
depositing of proceeds from ezpons rency deposits attractive to the de- -
or collecdon of overseas investments positor. '
were free to deposit, but deposits by Attraetive interest rates
general depositors were limited to the On the other hand, however, such
equivalent of 'i'3 million per depositor. a measure increases the among of in-
Under the new Foreign Ecchange terest to be paid by the bank, thus -
Control Law there is no limit for inereasing its fund raising cost. In
such deposits. other words, competition for solicit-
Foreign currency deposits are free ~ng foreign currency deposits becomes
from the controls over interests paid a race for offering attractive interest
rates to depositors. This wi31 r,ot only
on domestic yen deposits, which are be a menace to those financial in-
restricted by the Extraordinary In- sdtutions that are not allowed to en-
terest Rate Adjustment Law. :~Iore- gage in foreign e~change business or
over, foreign cunency desposits can relatively weak in this area, but is
take the form of ."foreign currency liable to develop into a battle in which
deposits with forward cover," which the overall financial position of each
means that thC datc of withdrawal oE bank, including its earning power and
the deposit is set on the day of de- fund-emplo}�ment capacity, will be at
positing and forw~ard cover is sup- atake.
plied by buying forward yen at the For thie point oF view, the Fi- -
- forwazd market rate. aance Ministry and the Bank of Japan,
This allows the clepositor to avoid pcior to the enforcement of the
the risk of foreign exchange fluctu- new law, issued a warning that "set-
atSons. Since the amount of deposit ting of interest rates out of step with'
on maturity is iadicated in yen, the sound management of a bank is un- -
foreign currency deposit is to differ- desirable."
ent from yen deposit from the ~a Responding to the waming, foreien
positor's point ~ of view, except for exchange banks decided that bank's
tfie rate of interest. handling charge of two percent per
_ The interest rates for "foreign cur- annum and selling or buying commis- -
rency deposits with forward cover," sion of one yen per dollar should be
which ref~ects the differentials be- charged for small-lot deposits of
tween Japanese and overseas interest ~ 100,000 or less.
: rates, are related to the interest rates The actual situation since the be-
on Japanese short-term money mar- ginning of December has been com- -
kets, such as the call loan market pletely in favor oE yen deposits. In ~
and bill-discounting ~arket, where sh~rt, competition among foreign ec-
_ large amounts of money move be- change banks for solicidng small-lot
tween financial institutions for short- foreign currency deposits has virtual-
term funding. ly ceased to exist. In addition, those
Short-term money market rates aze financial institutions which were not
usually at a far higher level as do- allowed to engage in foreign exchange
mestic yen deposit rates. For this business or weak in the area no -
reason, interest rates for foreign cur- longer needed to fear that their de-
rency depasits may be substantially posits might be attracted to stronger
= higher than domestic yen doposii financial institutions.
39
_ FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02108: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY
As for larger-lot foreign currency Impact loans -
deposits of more than $100,000, the In the past a limit for impact loans
principle is that each bank should was set for each bank as a result of ~
use its own judgment. But foreign
exchange banks say they are obliged consultations between the Finance
_ to submit reports regularly on their for- Ministry and the Bank of Japan. This
eign currency deposit positions to the has been freed under the new Foreign -
_ Finance Ministry and the Bank of Ezchange Control Law. Impact loans
Japan, are outside the framework of the
, Finance Nlinistry officials said: "we "window guidance," unofficial con-
are receiving reports, but we are aot trol over net additional lendings by
providing administra[ive guidance. commercial banks, which is the one
However, if" the banks give thought of the most important way of mone-
to sounding management of their ~ tary adjustmen: by the Baak of Ja-
busirzess, a line should naturally p~�
come out," stressing that the so-called It will' be a big question for the
line is the outcome of a natural de- Finance Ministry and the Bank of
velopment. Japan to control impdct ]oans in
A general feelin~ among bankers times of credit squeeze.
~ is that, realistically thinking, the ad- Be that as it may, there is little
ministrative guidance provided by the danger at present of a sharp increase
Finance Ministry, tho~gh provided ia impact loans, because overseas in-
under the" leadership of the Finance terest rates are relatively high.
l~finistry, is not producing unfavor- tiloreover, the domestic monetary
- able effects on the banking world. policy is movin~ toward ezsing, so
Against the background of such that a moderate increase in impact
developments, forei~ currency de- loans will post no serious problem.
posits increased only moderately by For these reasons, the supply of im-
51,400 million in December and even pact loans should be completely free-
declined in launa,ry in their outstand- in accordance w~th the principtes of
iAg balance. the new Foreign Ezchange Control
' Foreign curnncy deposits without Law.
- forward cover are ezposed to the Foreign exchange banks are re-
risk of foreign exchange fluctuations. quired to submit their schedules� for
This also means, however, the de- supplying impact loans in the next
_ positor may get foreign ezchange month to the Finance Ministry and =
profit, if the forei~n exchange maz- che Bank of Japan during the last
ket moves in his favor. It is thus ten days of each month.
- possible that a large amount of specu- They are also required to report
lativ~ funds may be invested in for- every ten days of a month on their
eign currency deposits of this type. actual impact loan positions.
There is no possibility of such On each occasion thcy must report
- speculative activities at preseat, details of each loan, including the
Ezchange speculation has been borrower, the type of cun~ency, the
going on for a long time centered rate at which the foreign currency
- round oveneas investors. More quick was raised, the bank's margi? added
and effective measures than taken in to it, etc.
- the past are required to deal with B~kers are strongly inclined to
future speculation. believe that the Finance Ministry -
must have quantitative guidelines for
_ � 40
FOR OFF[CIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OFFICIAL USE ONLY
- impact loans to be supplied by each ezcept for 1) "direct investmen2s"
_ foreign eachange bank. for the purpose of participation in the
In December, bankers say figures management of Japanese industries
- of S 150 million to $200 million were and 2) acquisition of stocks of "de-
- given verbally to each of top foreign signated enterprises" in which an in-
exchange banks. crease in the share of foreign capital
Furthermore, bankers say that the beyond a certain limit (to be deter-
Finance ~finistry seems to be think- mined by the Finance Ministry, but
ing that leading banks should charge generally considerod to be 25 per-
a bank's margin of at least 0.5 per- cent in principle) is liable to produce .
cent per annum. ill effects on "security or order" or
Finance Ministry officials deny "the management of the Japanese -
that the ministry is providing admin- economy." That is the general princi- -
istrative guidance, saving that they are ple of the new Foreign Ezchange
_ only receiving explanation of schd- Control Law.
ules and reports on actual positions to The "designated enterprise" in-
- grasp the market situation. Senior clude at present Sankyo Co., Ltd.,
o~cials of the miniscry said: "a sud- manufacturer of vaccines, Katakura
den inflow of a large amount of for- Industry Co., Ltd., producer of s~lk-
eign capital is not desirable. For this worm eggs, Fuji P,lectric Co., Ltd.,
reason, some officials in charge of a nuclear equipment maker, Hitachi,
impact loans may have told some Limited, Tokyo Precision Instrument
- banks that the~ felt their supply of Co., Ltd., related to aircraft industry,
impact loans was rather large. How- Arabian Oil Co., Ltd. and Showa _
~ ever, that should not be taken as g Oil Co., Ltd., both energy-related
guidance for cuts in impact loans. Of firms. They total eleven in all.
course we have not given any figures 'Designated firms'
at all to the banks." As for the
_ ' banker's mar~=in, th~:y said" a margin ~e Finance Niinistry plans to de- -
of one percent to 0.5 percent is neces- signate more companies in these
sary for sound mana~ement of banks. areas, when and if foreign share hold-
They will settl~ down on that level ing increases to around 20 percent. _
as a natural course of e~~ents." Securiries firms inter~+rete the fact
Some foreign ezchange banks re- that the number uf "designated firm~"
- portedly declined requests from their was limited to eleven as "a measure
customen for replacing import designed to achieve liberalization of
usance, short-term trade credit, with securitics business to some extent."
lower-interest impact loans, on the I~ was a[so fortunate for the Finance
- ground that fheir quota for impact Ministry that forei~n investments in
loans has been e:chaused. Japanese stocks resulted in net sales
Administrative euidance thus turns of ~8,600 million in December, ac-
~ out to bt useful for banks in some cording to the Tokyo Stock Exchanee,
cases. indicating foreign interest in Japa-
Actual supply of impact loans by nese stocks was at a bottom, and no
all banks amounted to S1,500 million rush for foreien investments in Japa-
_ in December and about 5800 million nese stocks developed in Jaunary
in Jaunarv. either, eliminating any nezd for Fi-
Foreign investmen~s in Japan has nance 1~tinisUy intervencion. -
been freed, if selling and buying are Not that there are no problems
made through Yeading securities firms about the liberalization of securities _
- designated by the Finance ~linistry, business. The Finance I~iinistry re-
fused to accept a prior notification
- 41
_ FOR OFFtCIAL USE ONLY
J
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OFFICIAL USE ONLY
from a Hon~kong investor of acquisi- that stocks should be acquired u+ithin
tion of stocks of Katakura Industry 40 days ignores the nature of the
Co., Ltd., a"designated enterprise." market where selling and buying may
The notification said the investor not necessarily proceed as planned
would like to acquire 3,400,000 and constitutes a procedural obstruc-
stocks (9.9 percent of total share tion of stock acquisition, whieh may
_ capital) of Katakura durin; the aezt be against the law�.
_ one year through the stock mazket. The Finance titinistr}~ reFuses to
The Finance Nlinistry refused to ac- budge, saying that one sin~le foreign
cept the notification for technical rea- investor's application for acquisition
sons, because a ministerial re, ilation of a large block of stocks over such
rules that stoclcs should be acquired a long period as one year will virtual-
within 40 days of notification. ly exclude other forei~ investors
A Hongkong investor is reportedly from the market, while an attempt
considering a law suit on the ground at getting a monopoly of the marke[
that 1) the designation of the com- on a first come first served basis is
~ pany as a"designated enterprise" be- not desirable."
cause i[ was engaged in the produc- If the case is taken to court, the
tion of silkworm egg production runs principle and ~ctual policy of the
counter to the spirit of fore;gn trad~ Japanese Government will be jud~ed.
and foreign exchange liber~lization, This is why, the case needs close
and that the miais~erial rewlation watching. '
COPYRIGHT: ASAHI EVENING NEWS 1981
CSO: 4120
42
FOR OFFICIAL USE ONLY
I .
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OFFICIAL USE ONLY
ECONOMIC
DOMESTIC ECONOMY: STRENGTH OF BUSINESS ANALYZID
Tokyo THE JAPAN ECONOMIC JOURNAL in English 17 Feb 81 p 4
[Article by Masahiko Ishizuka]
' [Text] ~ tHe past s~veral months, dation would be over soon. No Liberal Democratic Party
the business pages of news- ~onvit~ciog a~wer has been leaders last week agre~l on the
papecs beve heen full of reports offered yet, ~xcept by those need to discuss the measures
~a~tt~'!'!fe alowdown of domestic~ who tend to take a rather early next month, but the
business. It is not really a re~ severe view of the underlying Ministry of Finance was quick
- cession theugh, as the economy strength of the Japanese eco- to express a cautious view
is expanding at a reasonably nomy, especially about per- about lowPring of interest rates
high 4 ipei cent-pius annual sonal consumption. These so soon as favored by Komoto
rate. High marks given inter- people who ter?d to discount the and International Trade &
nationally to performa~ices of sUength of -end demand say Industry Minister Rokusuke
= the Japanese economy in riding that even the currently Tanaka.
out the consequences of the vigarous businesa capital in- The cooleng of personat con-
_ second oil crisis seem to make vestment may eventually lose sumption and housing couid be
this clamor about business momentum if the slump in likened to just a flu tor the eco-
slump all the more irr.plausible. personal consumption and nomy as a whole and nothing
Few people say that the housing persists. more serious. Yet it dces cause
Japanese economy is in a How aerious ia the slump and unpleasantness and pains and
serious trouble as a whole, but when 1s a turnaround coming? could complicate. Tf personal
personal consumption and There is a vague consensus that ~nsumption keeps depressed,
housing have been em- the recent unquestionable ~e Japanese economy will
barassingly weak for months, stsbilization of the price trend }~ve to depend on exports and
kQeping inventories of basic will l~ad consumers to spend ~siness capital investment as
materials at a high level for an more soon, but even among the it has in the past year, and it is
_ unexpectedly long period and economista at the Economic obvious that this wiil cause
sending a record number of Planning Agency opinions are constraints on the country's ~x-
businesses bankrupt month split as to how soorr, while the ~rnal economic relations. The
a[ter month. Agency's director-general, �~nomy appears to be at a
_ The question is why in- Toshio Komoto, a known pro- very difficalt, crucial stage as -
, ventories have been staying at ponent of stimWation of the to the judgment of its underly-
a high level for such a long economy, keeps stressing an ing strength.
. time, while most economists early policy to shore up bu9i-
have kept predicting liqui- ness. Government and ruling
COPYRIGHT: 1981, The Nihon Keizai Shimbun, Inc.
CSO: 4120
~+3
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OFFICIAL USE ONLY
ECONOMIC
NEW FIVE-YEAR OFFICIAL INVESTMENT PLAN FOR PUBLIC WORKS REPORTID
Tokyo BJSINESS JAPAN in English Feb 81 pp 17-18
[Excerpt] 'I'he Finance Ministry announced its 3,650,000 units given by the Construc-
preliminary budget program for the tiun Ministry, Instead, those wholly
new five-year official investment plan financed by private sector have been
- for public works (1981 - 1985) on the estimated at 4,300,000 units against
basis of the appropriation requests 4,050,000 units as presented by the
- filed earlier by each sector. Out of the Construction Ministry. The Finance
14 public works projects under the Ministry made . such adjustments in
direct control of the government, the order to keep away from possible
budget covers eight projects whose unfavorable effects anticipated from
term will expire at the end of fiscal reducing the scale of total housing
1980. The eight projects are construc- consttuction assessed during tr?e
don of housing, sewage systems, parks period while trimming the ouday for
- and public gardens in urban districts, fmancial assistance to private house
coastal facilities, special traff c safety construction.
_ setups, port facilities, airport facilities
and waste disposal systems. Sewage Systems, Parks, and Port Facil-
According to the preliminar~~ ities
budget program, a total af ~34,000 For these three projects requiring a
billion has been set to proceed with huge amount of appropriations, the
these projects excepting the housing date of completion originally set at the
construction. Although the amounc end of fiscal 1985 has been postponed
represents a hefty ~5.3% increase over until the middle of 1986 in line with
the spendings of the existing five-year the extention of the period of the New
plan, it actually shows a reduction ot Seven-Year Economic and Social In-
31.3% from the budgetary require- vestment Pro~ram on wMch the new
ments earlier presented by competent five-year pubLc works plan is based.
authorities. For the project to build sewage
systems, a sum of ~11,800 billion is
Housing Construction expected to be appropriated - 57.3%
The Finance Ministry has fully more than the amount spent for the
agreed with the Construction Ministry current program. Consequently, the
on the number of private houses to be nationwide dissemination rate of the
built ~uring the period of the new sewage system is expected to reach
five�year plan, yet it has reduced the 47�lo at the end of fiscal 1985. The
number of houses to be built with rate, however, is 8% lower than the
financial support from the Public original g~al set by the Constructi~n
Housing Financing Corporation. Of ~try. As explained by the Finance
the private houses tocaling 7,700,000 ~try, extension of the date of
units expected to be completed completion for this specific project
during tlie period, those officially constitutes the nason for a lower
~nanced are assessed at no mure ~~~ation rate at the end of fiscal
than 3,400,000 units, as compared ]985.
with the original assessment ol'
44
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOI~ OFFICIAL USE ONLY
The Budgetary Progrem of the New 5-Year Public Works Plan
(Unit: ~1 billion)
' Preliminary program Original requests Current 5-yeat
by the Finance by competent program
Ministry� authorities' (1976-1960)'�
I Housing construction (Phase 4) 7,700,000 units 7,700,000 units 8,600,000 units
(Houses completed with official financin~ (3,400,000 units) (3,650,000 units) (3.500,000 units)
Sewage system conatruction (Phase 5) ~11,800 ~17,400 ~7,500
Construction of parks in urban districts (Phase 3) ~2,800 ~4,500 ~1,650
Construction of voastal faalities (Phase 3) ~9U0 ~ 1,350 ~ 580
. Special traffic safety setups (Phase 3) ~900 ~ 1,365 ~ 570
Construction of port facilities (Phase 6) ~4,250 ~�7,300 ~ 3,100
Construction of ~irport facilities (Phase 4) ~ 1,700 ~ 3,030 ~ 920
Construction of waste disposal faciliries (Phase 5) ~F 1,650 ~�2,520 ~ 1,130
_ Notes: 1. . Based on the 1980 price
Based on the 1975 pria
The appropriations for the public organized. The Construction Ministry
park construction project amount to has accordingly filed its requirements
~2,800 billion, an increase of 69.7% for the reinstatement of the cuts made -
over the current program. Under the by the Finance Ministry so an addi-
- new plan, before the end of fiscal tional sum of ~'1,720 billion will be
1985 residents in urban districts will appropriated to bring the total sum for
be provided with 125 square meters of the sewage system construction pro-
park facilities, instead of the present ject to ~13,520 billion. For the pazk
4.1 square meters. canstruction pruject, the ministry has
_ In contrast to the port facilities also requested an increase in appro-
construction project which shows a priations by ~`730 billion to total
37.1% increase in the budget program ~`3,530 billion. The Finance Ministry, -
as compared with the sum expended however, has been showing reluctance
under the current program, an amazing to accept such requirements
84.8% gain is noted in the appropria-
tions made for airport facilities con� New Kansai Airport Construction
struction projects. No doubt the Of a number of expansion and
generous outlay represents special improvement programs for the aiiport
official emphasis on improving and facilities projected under the five-year
expanding facilities for domestic air plan, the proposed construction of the
transport. Despite such substantial in� new Kansai Airport is perhaps the
- creases from the level set for the most important issue for the Transport
current program, the Transpcrt Ministry. For this particular project,
Ministry has remained dissatisfied be� the ministry has requested a total sum
cause as much as 43.9~0 of its appro� of 'r`4.1 billion covering expenses to
_ priation request has been trimmed. design and construct facilities wltich
Voices of dissatisfaction have also amount to '~3.7 billion plus pre-
been raised by the Construction limir~ary survey expcnses of ~400
Ministry and other authorities respon- mill~,on, but the Finance Ministry has
sible for implementing public works agreed upon spending no more than
projects under the new five-year plan. ~300 million for preliminary surveys
All consider that a certain degree of under the five�year plan. At the Con-
increase in the appropriations is not at swction Ministry, the greatest con-
all impossible in view of the budgetary cern is how much of the proposed
scale of the New Seven-Year Economic expenses to design and construct facil-
and Social Investment Program under ities will be reinstatcd in the course of
which the new five-year plan has been negotiations with the Finance
Ministry.
COPYRIGHT: Nihon Kogyo Shimbun 1981
CSO: 4120
45
FOR ~JFFICIAL USF. ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY
ECONOMIC
OIL DOLLARS FLOW INTO JAPANESE STOCKS _
Tokyo BUSINESS JAPAN in English Feb 81 p 57
[Text] HE comparatively strong outlook about S1 billion dollars each month.
~ for the Japanese economy in Observers estimate that these funds
1981, in general, and for certain high- came almost entirely from Middle
growth, high-technology industrial East investors. And while the big
sectors, in particular, is helping to pull OPEC buying spree may be over
_ more funds from foreign investors into temporarily, the consensus in Kabuto-
the Tokyo stock market. And despite cho - Tokyo's Wall Street - is that
dizzying interest rates in the U.S. and the flow will pick up again before too
the recent spurt in the yen's strength, long. Such forecasts are based on the
observers feel that this flow of over� perception that OPEC money man- -
seas investment funds will continue agers have become better acquainted
and, perhaps, even gather considerable with the Japanese capital market and
speed in the months ahead. will look increasingly to Tokyo as a
Tokyo's recent easing of the rules receptacle for oil dollar surpluses. -
goveming foreign exchange transac- At the end of 1979, it is estimated
tions (which also pertain to dealings in that Middle East oil producers had a
stocks and bonds) has also helped pave total of about 5230 billion in in-
the way for greater foreign access and, vestment assets worldwide. Of this
therefore, interest in the capital mar- amount, only about 4~1o was in yen
ket in Japan. This is particularly true assets, compared to approximately .
for the flow of investment funds from 75% in dollar assets and 12% to 13% in
countries in the Middle East. By the Deutschemark assets. The total figure
end of Augusc (1980), foreigners held is now estimated to have ballooned
the equivalent of approximately $54 to $350 billion with the yen occupy-
billion in yen assets (S 10 billion in ing a 7% share. But securities brokers
Japanese equities, S18 billion in bonds, in Tokyo woutd like to see that ratio
~14 billion in Europen deposits and increased and feel that 12% share is a
- S 12 billion in free�yen deposits), realistic target for the medium-term.
compared to approximately S36 bil� Middle East investors are not the
lion at the end of 1979. onty ones casting a more interested
The fi�ure is now thought to ex� eye on Tokyo these days. The inflow
ceed ~56 billion, about two-thirds of of petrodollars has recently been
which is, in turn, thought to come accompanied by an influx of U.S.- and ~
- from OPEC members in the Middle European�based pension fund money
East. As 1980 progressed the initial into the Japanese stock market. The
foreign investment surge into Japan magnitude has been smaller than that
abated somewhat. The major excep� uf OPEC investment, sources say,
tion, however, was investments in the but such funds are likely prove a
equity market which, on average, con- steady and stable source of investment
tinued to grow rather quickly. in the future. Of the ~5 to S6 billion
Foreign funds fluwing into Japa- estimated to have flowed into the
nese equities did hit a temporary peak Tokyo equity market in 1980, 30~/o to
in AuRust and September (1980) of 40% is thought to have come from
46
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
~ FOR OFFICIAL USE ONLY
panies which look for lucrative com- of identifiable OPEC funds ttave
missions on handling such interna- avoided speculative issues and opted
and "internationalizing" their invest- for basic industaes with solid, long-
ment portfolios. term growth prospects,
The growing popularity of Japanese Perhaps the biggest worry is that
eauities among foreign investors has large foreign shareholders will demand
been welcomed by securities com� a hand in the actual management of
panies here who look for (ucrative the company. Exceptions do exist, of
- commissions on handling such intema- course, but most of these have tended
tional deals. But not everyone is over� to be companies with an overwhelm-
joyed at the prospects oF a large pro- ingly large ratio of exports to domestic
portion of shares or domestic com- sales. At present, few Japanese com-
panies being held ~y non-Japanese. panies are actively seeking out foreign
Since the December 1 liberalization of investors. And, while investment by
- Japan's foreign exchange law (which, non-Japanese is permitted up to 100~0
in principle, eliminates previous ceil- in most cases under the new foreign
ings on the amount of shares for� exchange law, the Ministry of Finance
eigners are able to hold), a number of has reserved the right to exercise
corporate managers are cuncerned that "emergency" powers to designate in-
- the move could have some trouble� dividual companies for limits on
some side-effects. foreign ownership.
While there is recognition that such But a sudden and overt return to
investment could help enhance a com� protectionism on the part of the pub-
. pany's international image and, there- lic or private sector in Japan with re�
by boost its fund�raising options, gard to foreign stock ownership would
many worry that should non-Japanese undoubtedly idnite criticism from
buy large protions of a company's investors overseas who have recently
stock and then sell them suddenly the "discovered" Japan as an attractive
_ movement in stock prices could prove investment option. And none in Japan
harmful to the company's well-being. - at least for the moment - seriously
So far, however, there appears to be expects Tokyo to attempt such a
little evidence for this, as the majority move.
COPYRIGHT: Nihon Kogyo Shimbun 1981
CSO: 412Q
~ 47
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OFFICIAL USE ONLY
SCIENCE AND TECHNOLOGY
WORLD TRADE CONFLICTS OVER NEW PRODUCTS MUST BE AVOIDED
~ Tokyo COMPUTOPIA in Japanese Vol 15, No 172, Jan 81 pp 55-59
[Article by Hirotsugu Shimoda, associate editor of the journal]
[Text] Growing Use of Microprocessors
A great change has occurred in the structure of the machine industry due to the
- development of LSI in the late 1960's and the appearance of the microprocessor in
the early 1970's. Conventional machine industry products have entered the new
category of "mechatronics" (mechanica.l + electronics) through the active applica-
tion of microelectronics technology.
This qualitative change in mechanical products, the unification of machinery and
electronics, began in the 1950's, way before LSI and microprocessors appeared. It
was stimulated by the development and ir.dustrial application of the transistor.
This technological revolution brought new products into existence such as indus-
trial robots and numerically controlled machine tools. However, the appearance of
- LSI and the microprocessor had a wide-rangir?g inf luence on all products related to
the machine industry, from machine tools to precision machinery, automobiles, ships,
communications equipment, and home electrical products. In particular, the appear-
ance of the microprocessor dramatically raised the cost performance of industrial
. robots and NC (numerically controlled) machine tools as well as greatly changed the
product character of office machines, communications equipment, measuring equipment,
optical equipment such as cameras, medical equipment, h~me electrical products, and
audio products. And as a result, the structure of market competition is undergoing
tremendous changes.
For example, in the field of machine tools, the use of nume-rical control with the
application of IC's and LSI's has brought about changes in the composition of parts
used in manufacturing machine tools. Electronic parts now account for a large part
of the total cost. Also, the importance of microelectronics has grown in tech-
nological development--the key to success in market competition. This technology
is central to NC machine tools, and a growing number of machine tool manufacturers
are setting up new electronics technology development departments. In this field,
el.ectronic equipment manufacturers such as Fujitsu ranuc and Mitsubishi Electric
are taking the lead in the application of electronics to machinery.
= ~ 48
= FOR OFFIC~AL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02108: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY
This trend of applying electronics to machinery by use of the microprocessor is
widespread. In addition to machine tools, it includes packaging machines, scales,
. agricultural equipment, freight-handling equipment, and also sewing machines,
cameras, and recreational equipment. It could be called a new wave in the machine
industry, and in general this gro~ath of "mechatronics" increases the added value of
machine products, makes product discrimination possible, and increases international
competitiveness. But at the same time, dramatic changes are underway in the struc-
ture of machine industry market competition due to the progress of "mechatronics."
The biggest change is that electronics-related industries such as computer, semi-
conductor, and electrical products manufacturers are beginning to have a great deal
_ of influence on the machine industry. In the NC macfiine tool field, the added value
accompanying improved performance and greater use of electronics, which in the past
- would have gone to the machine manufacturers, is being taken away by the the elec-
tronics manufac~urers. In the field of packaging machines, cnmpanies which
previously had no connection with the field whatsoever, such as Tokyo Electric and
Ishida Koki Seisakusho, have come in with microcomputer technology and are rapidly _
eating away at the market. The wrapping and packing machine industry has had a
market of less than 150 billion yen, and wi~h 400 manufacturers struggling for it,
- competition has been excessive. Now, the advent of the microprocessor is a new -
cause of competition. This is also true for weighing and measuring equipment and
automatic knitting machines. The appearance of the microprocessor has had a great
impact on the structure of sectors dominated by small and medium enterprises as well
as on the home electrica]. produc:.s market, which is dominated by large industries.
~ The Role of Small and Medium Enterprises and System Houses
The term "microcomputer revolution" probably has a more insistent impact on the
- smaller machine manufacturers than on large industries. At any rate, this kind of
technology has the power to directly affect the life of. a business. Stated dif-
ferently, a pattern is emerging in which getting behind in "mechatronics" means
losing out and, conversely, fast application means growth for a company. But there
are many medium and small enterprises that develop unique "mechatronic" products and
expand the line of business, even with real limitations in personnel and devel~~pment -
_ time in f ields which are difficult for larger industries to enter.
- For example, Teraoka Seisakusho, a long-established manufacturer of scales, is noted
for actively absorbin~ new technology. It leads the industry with an electronic
tariff scale with digital ciisplay, and it has ridden the wave of the new era
to successfully defend its traditional position by maketing the SM 20 electronic =
scale, an electromechanical product with multiple functions. Along with this,
- Teraoka Seisakusho, Tokyo Electric, and Ishida Koki Seisakusho are the three
strongest m3nufacturers in the new electric scale market replacing the traditional
spring scales. Of these, the newcomer Tokyo Electric has managed to obtain almost -
20 percent of the market share within a short time, changing the picture of power
in this industry. In addition, representative electromechanical products introduced
by the Small and Medium Enterprise Research Center (corporation) have become known.
These include Iida Seisakusho's NC embossing and contouring machine, w�hich won the
small b usiness-oriented automation machine development prize, and in industrial
sewing machines the multiple-head embroidery machine by Tokai Industries Sewing
Machine Company, Ishida Koki's computer scale, and the moisture content detector
operated together with the grain drier produced by Shizuoka Seki.
~ 49�
F'OR OFFICIAL USE ONI.Y
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPR~VED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY ~
These small and medium machine manufacturers began this development of electronics _
applications in mach?nes between 1977 and 1978, and more kinds of companies are
becoming involved every year. Among them are local industries that organize micro-
computer application study groups which include industrial sectors connect~d ~dith
prefectural industrial development. The applica tion of electronics to machinery
_ has become a major trend that cannot be avoided by small and medium machine manu-
facturers trying to open up new markets.
In connection with promoting the application of electronics to machinery by small
~ and medium machine mar.ufacturers, we must touch on the role of the system house, an
industrial organization set up for development. The definition of a syster.i house
is not definite yet, but in geueral it is understood to be an enterprise which _
specializes in system design with the use of microprocessors or microcomputers. -
There are some 170 system h~uses established throughout Japan, with wide-ranging
activities including production and sales of the ir own products using microcomputers,
commissioned de~elopment, cooperative development, and consulting (on the use of
microcomputers). There are two main types of sy stem h~uses: enterprises which do
subcontracted work for large industries and develop speciall}~ ordered products, and
enterprises which develop mass-production products such as personal computers and -
- system analyzers in order to manufacture tl~e sy stems themselves. _
- Hosaever, viewed as a propelling for~e for "mechatronics," they are staking out ter-
ritory in their fields of specialization supporting the use of microcomputers in
various fields of machine industry products, sucr~ as measuring instruments, machine
tools, agricultural equipment, ~aedical equipment, data communications terminals,
etc.
Strengthening of International Competitiveness _
The unique "mechatronics" products recently being unveiled one after another by
small and medium machine manufacturers ar~ becoming very competitive in overseas
markets as well as in domestic markets. For example, the automatic dicer for IC
wafers developed by Disco K.K. has secured 98 p ercent of the domestic market share
' and 60 percent of the world market. Originally, this compaay manufactured grinding
stones for machine tools. However, it made ef�orts to develop cutting technology
for IC silicon wafers as the semiconductor indus try grew. The results became known
and contributed to the growth of the company. The company developed the wafer dicer
_ in 1975, and in 1979, after further improvements, it developed the world`s first
fully automatic dicing saw (a totally automated device for the silicon wafer cut- _
- ting process). 'fhe motiv~tion of this "mechatronics" product development was the
fierce battle among the semiconductor manufacturers to lower costs. AlI semicon- ^
ductor manufacturin~ companies are working hard to achieve more automation as the
key to reducing costs. Because of tliis situation, che Disco Company, as a manu-
facturer of grinding and cutting stones, develop ed an ultrahigh-precision cutting
machine. The company is small, with 81 million yen in capital and 380 employees,
but with this new technology it has made a vigorous entry into the world market as
. we11 as the domestic market. In 1975y it opened an American branch in Mountain
_ View, Silicon Valley.
- . 50
F'OR OFFICIAL U~E ONLY
I
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6
~
FOR OFFICIAL USE ONLY
The success of Disco is a spectacular example of the application of electronics to
- machinery in the small and medium machine industry. Generally speaki:~~, however,
_ the,role of the small and medium companies in promoting the growth ~`~nechatronics"
in the Japanese machine industry, including the systems houses sp~:~.ializing in
microcomputers, has centered on subcontracted work for the la~~e industries. The
role of these companies is to promote the growth of "mechatronics" from the bottom
up in the various fields of machine products, from machine tools to all types of ~
labor-saving equipment and testing and measuring equipment, with the exception of
mass-produced consumer devices.
Comparison of Japanese and West German :~achine Tool Exports to the American Market -
(units: 1 million dollars/per~ent)
Total Machines
'Cool Imports From Japan From West Germany
1977 536.0 100 127.9 24 125.4 23
1978 969.4 100 264.7 27 216.2 22
~ 1979 1300.5 100 371.3 29 247.4 19
(Jan-Nov)
Date source: U.S. Department of Commerce, "Highlights of U.S. Export and Import
Trade"
While large-scale industries keep plenty of electronics engineers inside the company, _
they also utilize the strength of systems companies which are more flexible as they
work hard to increase their competitiveness in electromechanical devices. By this
method, Japan has come to be recognized as a leader, along with the United States
. and West Germany, in the applic~~ion of electronics technology to the machine indus-
- try. For example, METALWORKING NEWS, a machine industry trade journal, predicts -
that Japan will achieve tremendous international competiveness in the 1980's in all
- fields of machine industry, including NC machine tools and industrial robots.
This trend is already materializing. For example, in the area of NC machine tools,
a typical "mechatronic" product, Japan has become more competitive than either the `
Uni~ed States or West Germany. At first, Japan had a chronic import surplus in
machine tools from the United States and West Germany, which had had advanced
- machine indus;.ries for a long time. In the late 1970's, however, as the use of NC
devices with built-in microcomputers became co~mnon, exports to the United States
and West Germany had a sudden spurt of growth, and in 1978 Japan had an export
surplus in trade with [dest Germany. In particular, the amount of exports to the
United States in 1979 was 12 times the amount of imports, and Japan was 180 billion
- yen in the black. In trade with West Germany, we were 4.5 billion yen in the black~
The machines exported to both countries are of the most advanced types, including _
NC machines. In 1979, 49.2 billion yen worth of exports to the United States, or
73 percent of the total, were in NC machines. Some 79 percent of the amount of ~
exports to West Germany was also in NC machines. (.See table).
A rapid growth in exports is also expected in the 1980's for industrial robots, ~
which are closely associated with machine tools. A~cording to a survey by the ~
Japan Industrial Robot Industry Association (corporation) the annual production '
of industrial robots amounted to no more than 400 million yen in 1968, but it
S1 -
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OFFICIAL USE ONLY
reached 42.4 billion yen in 1979, exceeded 60 billion yen in 1980, and there is a
good possibility that it will reach 29C billion yen by 1985 and cross over the big
hump of S00 billion yen by the end of the 1980's. (See graph). Also, the amount
of exports is expected to reach 20 percent of total production between 1985 and
1990. ~
~1~ f~~lBo~~~ h~iiel~~ Graph: Estimated Production of Industrial Robots
- tt 'S250
(100 mill~,on y.n) ~1
- sooo
, i
~
- Estimated overall demand �as~o
from 1979 survey s5e~u1~T�m~a~~t
4000
~
Estimated overall Estimated ~ ' ~ ~
300o demand from 1974-5 domestic 29000 ssa~q3~i�m~~lf~ _
survey demand from a~oo ~Fg~~
1974-5 " ' Estimated
~ ~ domestic demand `
S49�50~q~ET~ ~ 6 ?365
~~~~~sae�so~q~ ; from 1979
~ T�m~~Nlfi , % [250
, suTVt)
2000 ~ ~
,
.
,
, ~
,
_
i
I ~
I ~
900 ~
790 ~ �
1000 ~ .
,
~ ~~650 .
~~s'~,~ ~640
/ ,4242
~Source: Nomura ,_;~�~~~M ~~,g~Actual results (production)
'Research Institute
- ;i,~rr : !t~�r~�~~~Ph ~~o ~~s ~eo ~es ~so
I (8B1q145~�) (~9)(SO) (55) (60) (B5)
Wariness af Japan Spreads
Industrial robots were developed in the early 1960's, but early examples were large
in size and low in capability. With the advent of LSI's and pro~ress in micro-
computers, all types of industrial robots were reduced in size, and performance
_ i.mproved significantly. At present, there are 140 companies in Japan which produce
- indu~trial robots, and there are 55,000 such robots installed in Japan, the Zargest
_ number in any country in the world. The automobile industry has been especially
acCive in installing this type of machine. Next in lir.e are the electrical machinery -
52 .
- FOR OFFiCIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPR~VED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY
and appliance industries, the chemical industry, safe and vaul.t manufacturers, and
the steel industry. The automobile industry began using robots very early to
improve productivity and become mo~re competitive internationally. 1980 has been
called the "base year of industrial robot dissemination." Many government measures
have been carried out, such as establishing an industrial robot leasing system with
~ government loans (from the Japan Development Bank) and inclusion of industrial -
robots in a special loan system for industrial safety and hygiene facilities.
However, these moves on the part of Japan are being looked upon with suspicion by
the countries of Europe and the United States. For example, the "United States
_ . Japan Trade Report" presented last Sep~ember in the Trade Subcommittee of the U.S.
House of Representatives mentions that industrial robots and machine tools are
moving in, along with computers and semiconductors, as long-term industrial prob-
lems between the United States and Japan in addition to the present causes of
economic friction such as the automobile and NTT problems. Chapter 5 of the report ,
states that in the advanced technological fields of semiconductors, computers, and
the "mechatronics" products described above, Japan is gaining the lead or has al- -
ready surpassed the United States. In response to this trend, the report warns,
. the U.S. Government and U.S. industry must work out e`fective countermeasures.
The following kind of awareness about industrial robots and machine tools under -
scrutiny here is presented. "Japan is the world leader in the field of robot
engineering--the use of inechanical operatin~ devices for groups of machines which
carry out repetitive or dangerous assembly operations. The use of robots not only
aids in controlling costs and impr�oving productivity, but it also helps improve
quality by eliminating the human. error which creeps into monotonous or difficult
work. Robot technology was originally systematized in the United States, but ac-
cording to the estimate of Nomura Securities, there are now 135 robot manufacturing
plants in Japan and only 40 or 50 in the United States and Western Europe together.
It is said that there are 10 times as many industrial robots in operation right now
in Japan as in the United States and Europe."
In short, there is a huge difference between Japan and the United States in the
field of industrial robots. Also, on the basis of this awareness, the report
- analyzes the role played by MITI in the development of Japan's industrial robots
and suggests that tax measures and technological development like that being car-
_ ried out in Japan are necessary for the United States.
- The following stat~ment is made with regard to machine tools: "Japan is becoming
a major exporter of machine tools, and this will probably lead to future trade
friction. Japan is especially competitive in the development of high-level, -
numerically controlled (NC) machines using microprocessors."
- The threat of NC machine tools is more real than that of industrial robots. In
_ fact the rapid growth oE NC machine tool exports to the United States, chiefly
medium-grade machines, has been an issue since last year in the Joint Economic Com-
mittee of Che U.S. Senate and House of Representatives. When international competi-
tiveness grows rapidly and exports expand through the use of microprocessor~, as in ~
- the case of machine tools, a clash with local manufacturers in the importing country
is inevitable. It is h~ghly probable that Japan's "mechatronics" products will cause
a decreased market share and business difficulties for local industries in the coun-
tries where they are exported. There is a growing a~wareness that cer.tain measures -
53 .
FOR OFF[CIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02/48: CIA-RDP82-44850R000300094449-6
FOR OFFICiAL USE ONLY
should be included in the world market strategy of Japanese industry to cope with
this situation. These measures would include suitable industrial coordination and
steps to avoid friction, such as local production, sales agreements with local =
- mariufacturers, and mutual development projects.
Increased trade friction may be considered harmful to Japanese industry over the
long term, so our influence on local industry in the countries that import Japanese
goods must be considered carefully. Especially with electromechanical products,
there is a great possibility of causing labor and social problems as well as -
adversely affecting local industry. For example, in the past few years a negative
influence on the microcomputer industry is drawing attention, especially in Europe,
and a nu~ber of surveys and reports are being prepared by both the public and
p:.ivate sectors. Labor officials are especially concerned about this problem. This
is because "mechatronics" products such as industrial robots are usually developed
- as effective labor-saving devices for the factory or office, and there is great
concern about resultant unemployment. Microprocessors are referred to in Europe
as a new teehnology, and their impact on employment is feared. As this tendency
develops, the international competition related to Japanese eldctromechanical pro-
ducts may take on new dimensions that go beyond simple business strategy.
COPYRIGHT: 1981 Computer Age Co., Ltd.
9651
CSO: 4105
w
� 54 .
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY
SCIENCE AND TECHNOLOGY
MAJOR JAPANESE OVERSEAS PROJECTS OUTLINED -
Tokyo EKONOMISUTO in Japanese 20 Jan 81 pp 42-49
[Article by EKONOMISUTO editorial staff]
[Text] Japanese National Project Method _
At th~ end of 1979 the cumulative total of Japanese postwar overseas investment ex- -
ceeded 30 billion dollars. The expansion in overseas investment has resulted in
many so-called "big projects." Big pro,jects are, gen~rally speaking, large-scale
pro~ects in which large amounts of capital are invested. Each of these big projects -
involves a number of companies or whole industries, and has great significance for
- both industry and the national economy. This report is an overview of big projects
which involve large-scale plant and equipment, such as resource development pro-
~ects and steel and petrochemical pro~ects. -
Although all are called big projects, they take a variety of forms. They can,
however, be roughly classified into three groups based on how averseas expansion is
achieved. -
Japanese Enterprise Leadership: In these projects Japanese firms bear the financial,
operational and sales responsibilities, and receive all or most of the resources
developed. Japanese f3rms generally provide all the financing, or more than 50
- percent. Most projects are promoted in developing countries. Examples are Arabian
oil, Abu Dhabi oil, Asahan aluminum, Alaska pulp, Zaire copper mines, Mamut copper
mines, Iranian petrochemical and Singapore petrochemical projects. The Qatar steel
mill belongs to this category even though Japan has a minority share.
Import-heavy Participation: These projects are usually undertaken in combination
- with enterprises of advanced countries, with 3apanese firms holding up to a 50
percent interest and a corresponding financial responsibility. The Japanese firms
sometimes receive developed resources over and above the investment share. Operation
is generally left to partner firms. Examples are ADMA oil development, Indonesian
oil, Brunei LNG, Malaysian LNG, Niger uranium, Ranger uranium, NZAS aluminum, VENALUM,
- Robe River iron ore and Bowen coal.
Investment-Purchases/Advance Payment for Imports: In these projects, financing is
providing to the operating entity as development capital for new projects, or capital
is provided for expansion of existing projects, or import costs are paid in advance;
= 55
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY
in return Japanese firms receive long-term imports of ore or other resources. This
- method is widely used for Indonesian LNG, enriched uranium, iron ore, unprocessed
coal, copper and so on. Recently there have also been projects involving oil from
Indonesia or Mexico, although in the past these countries had been developing oil
products independently for the most part.
The term "national projects" has come to be much used lately. This term generally -
indicates those projects where, a~ in the case of the Iranian petrochemical project,
the government ohtains a cabinet decision to nrovide necessary assistance via con-
~ cerned government agencies or via the Overseas Economic Corporation Fund (hereafter
referred to as the Fund). The terms "national project" suggests government manage-
ment or leadership, but these are large projects wiiere decisions and risks belong
entirely to private firms. Still, from the perspective of economic cooperation
with other countries and in terms of securing resources and industrial sites for
Japan, the government and the private sector do have a large degree of unity whi:h
can be characterized as "Japan Incorporated."
Thus the government provides aid by negotiating with the other government to formu-
late the project, and to lay out the foundations for the work. Financing is pro-
vided in tt-.e form of yen loans, investment by the Fund or the Petroleum Development
. Corporation, (both government-relatecl bodies), and in the form of borrowing,
usually in all cases, from the Export-Import Bank or from others.
But a close look at "national projects" shows that they correspond almost exactly
with big projects of the Japanese enterprise leadership type; the main ones are ADMA,
Asahan, Amazon Aluminum, Japan-Brazil paper and pulp, Alaska pulp, Usiminas iron
mi11, Mexican large-diameter pipe/cast-forged steel, Iranian petrochemicals,
Singapore petrochemicals, Saudi methanol, Japan-Brazil agricultural developmenti etc.
Here are the main "big projects" classified by industry.
Oil
With the OPEC price increases and the rush to participate in oil development projects, _
Japan has increasingly encouraged oil exploration and development projects during
the mid-1960's and the mid-1970's. But there have been few development successes; -
there are now only about ten pro~ects which provide Japan with imports of crude oi?_
Japan's "independently developed crude" secured from overseas projects came to 25
million kiloliters in 1979, about nine percent of all the crude oil Japan imports.
The greatest source of imports is Arabian oil (13 million kiloliters), followed by
ADMA (5 million kiloliters) and Indonesian oil (3 million kiloliters).
- Arabian Oil Co. (Saudi Arabia-Kuwait border zone)
- This was the first of the Japanese-leadership overseas oil development pr~jects. -
In 1957 President Yamashita of the Japan Export Oil Co. took the in3.tiative and the
_ project was started after a cabinet understanding was obtained on necessary measures
for assistance. The resulting Arabian Oil Co. concluded a concession agreement
with the governments of Saudi Arabia and KuTaait, and production in the Khafji oil -
field began with a high-volume well in 1960. This was followPd by more successful _
wells and production increased rapidly--sales to Japan reached a level of 18 to 19
million kiloliters from 1970 to 1973. But the khafji oil field produces a heavy
56 ,r
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPR~VED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY
crude with high sulfur content, and sales to Japan have fallen off since 1974. The
sales volume increased following the Iranian revolution, but has not returned to
former levels. Although it is highly significant that this project provided an in- ~
dependently developed source of oii throughout the past 50 years of operation, it
has now encountered problems. Japan's take has been reduced because the Kuwaiti
government has increased its take.
Arabian Oil Co. was established in 1958 and now has 25 billion yen in capital. The
largest shareholders are the governments of Saudi Arabia and Kuwait, each with a 10
percent share. Other major shareholders are Japanese steel, electric power and -
trading companies. -
ADMA (Abu Dhabi marine areas)
- The Japan Petroleum Development Co. has developed the Zakum and Umm Shaif oil fields
- in cooperation with BP, CFP and the government of Abu Dhabi. Inves~ors in the Japan
~ Petroleum Development Co. are the Japan Petroleum Development Corporation (68.3%),
The Overseas Petroleum Uevelopment Corporation (14.8%) and eibht other companies.
Aid for participation in this project was promised in a cabinet decision of December
1972, and tne iollowing year a 22.5% share was obtained from BP for $780 million.
But in September 1974 the government of Abu Dhabi suddenly increased its participation
in the pro~ect from 25% to 60% and its take from 55% to 85%, so Japai~'s share dropped
to 12%. Thus the project's environment has become less successful. The production
level has been about SOO,OQO B/D for the past few years. Japan has plans for secon-
dary recovery from the upper level at ^akum by pumping in water, and for development
of smaller oil fields like Sateh.
Indonesian Oil Co.
This project is based on production sharing contracts with Pertamina and carries out
oil production in conjunction with Conoco of the U.S. and Total of France, (both
operators) in such oil fields as Attaka Handel and Bekapi off East Kalimantan. Pro-
_ duction has gone well; it ranks second to Caltex among Indonesian producers.
Other production/impor~t projects in which Japan has participated are the Abu Dhabi
Mubar.raz oil field (Abu Dhabi Oil Co.), Indonesia-Japan Low Sulfur, and Zaire Oil
Co. In addition, Gabon`s (Baliste) oil field, Qman's (Smar) oil field and Egypt's
West Bakur oil field began or are to begin production ir~ the second half of 1980 and
the first half of 1981.
_ LNG
Recent years have shown a sharp increase in demand for natural gas, as clean energy
or as an energy alternativE to oil. In the 10 years after the power industry intro-
= duced LNG from Alaska in 1969, it became the source of 15 percent of the electrical
power produced, and over half the resources of the gas industry are in the form of
LNG. This increased demand is met not only by simple importation, but also by par-
ticipation in joint ventures in Brunei and Abu Dhabi and long-term deals in return
for financing in Indonesia.
57
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPR~VED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY
Indonesia LNG (Badak in East Kalimantan and Arul in Northern Sumatra)
_ Pertamina will build liquefaction plants--two systems in Badak and three in Arul
(using the MCR method of America's Air Products Co., 1.6 million tons per system).
Mdst of the funding will be provided by Japan, in return for which Kansai Electric
and five other users are to receive 7.5 million tons of LNG per year for 20 years.
This concept was firmed up by Pertamina and Nissho Iwai between 1972 and 1974.
Japan provided a yen loan, and five users, seven trading companies, 16 banks and one
other company set up Japan-Indonesia LNG Co. (Jilco) as the funnel for fi:~ancing.
_ By 1975 construction costs had swollen from 1 billion to 1.5 billion yen and the
problem of cost overruns arose, but additional financing was found, and since then
construction has g~ne as it should. LNG production began in Badak in July 1977 and
- in Arul in August 1978, and about a month later the first tankers arrived at the
Senboku nr. 2 plant of Osaka Gas and Chubu Electric's Chita base respectively. Pro-
duction and shipment have ~one along well; this is a ma~or import source which pro-
vided over half of the approximately 16 million tons of LNG Japan imported in 1980.
Brunei LNG
Brunei LNG was established as a joint venture of Shell, Mitsubishi Corp and the
Brunei government (with shares of 45%, 45%, and 10%); it liquefies LNG and sells
the entire volume of 5.14 million tons to three Japanese users including Tokyo
Electric. The ~oint venture contract was concluded in December 1969, and a lique-
faction plant from America's Air Products Co. (five systems of 1.05 million tons
per year) was consCructed with engineering by Japan Gasoline and America's Procon.
Operations and shipments have gone smoothly since production began in 1973. -
This was Japan's first overseas LNG project. Because construction was done in an
~ earlier period the construction costs were reported at only 250 million dollars.
It is a good example of a successful pro~ect.
Another is Abu Dhabi's Das Island, where Mitsui & Co. and Bridgestone liquid Gas
(total share 24.5%) ~oined with the Abu Dhabi Government (51%), BP and CFP. This
project produces 2.05 million tons of LNG per year, all of which is to be sold to
Tokyo Electric Co. for 18 years. The first ship arrived in May 1977.
In addition, Mitsubishi Corp. has joined with Shell and the Malaysia Petroleum
Corp. in an LNG production plan in Bintula, Sarawak. An annual million tons of LNG
will be sold to Tokyo Electric and one other company for 20 years beginning in
_ 1983. Construction of three liquefaction plants [will have three systems]--each
with a 2 million ton capacity-- is now underway with Japan Gasoline Co. and Kellogg ~
as general contractors. The Japanese users are negotiating for increases of 3.2
million tons of Indonesian LNG from Badak and 3 million tons from Arul. And there
is a western Australia continental shelf project in which plans are being worked
out to supply gas to Australia and 6 million tons of LNG per year to Japan.
Uranium
Japan now has 21 atomic power plants with an output of about 15 million kilowatts.
Seven plants now under construction will have a capacity of 5.8 million kilowatts.
58
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPR~VED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY
A construction plan for another seven plants with a total capacity of 7 million
lcilowatts is also being forabe d. The supply of uranium ore which is necessary to
operate these power plants is not well distributed; over 70 percent comes from
Canada (Denison Mines and Rio Algom Mines Co.), South Africa (Nafcoal) and Aus-
tYal~a (RTZ). Z'hus to secure a stable supply of uranium ore Japan has used adv~ttce
payments, loan-purchases and direct participation in overseas projects.
Niger Project (Akouta Mines)
- The Overseas Uranium Resources Co., an investment corporation which comprises nine
Japanese electric power companies, 10 nonferrous mining companies, six trading com-
panies and others, has a 25 p ercent share of a uranium mine development joint v~nture
with France (COGEMA, 34%), Ni ger (31%) and Spain (10%). Over a period of 19 years
Japan will take back 13,000 tons of uranium concentrate (enough to keep i0 light
water reactors of a million kilowatts operating for 10 years). The Akouta mines
are loc:ated in the S~:hara des ert 100 km from Niamey. CO~~MA, the operator, extracts
a very high-grade ore averaging 0.48 percent from the mine pits. The ore is pro-
cessed to a concentrate (yellowcake) by the sulfate mixture method; the concentrate
is transported 1500 km by road and 500 km by rail, then loaded onto ships at
Cotonou, Benin.
Excavation began in July 1975; extraction began in February 1978 and production
_ that Octo~er. Incidentally, Japan ~oined other countries in providing funds for
construction of a 650 km paved road betwean Arlit and Tahoua.
Ranger (Australia)
This is a joint venture of th~ Japan-Australia Uranium Resource Co.[(formed by
Kansai Electric Co and ;.hree others), which has a 10.1% share,] and West German
capital and the Australian op erators, PEKO and EZ, to excavate the Ranger Mines
220 km east of Darwin. The Japan-Australia Uranium Resource Co was formed by
Kansai Electric Co and four o ther Japanese companies and has a 10.1% share in the
project. For IS years beginn ing in 1982, Japan will receive a total of 15,000
tons of uranium concentrate, about 13 percent of the total output. The first rnine
developed by the open pit met hod has a relatively high-grade ore of 0:3 percent;
construction is now going ahead with production scheduled to begin by the end of
1981.
In addition, there have been advance payments for uranium enrichment services from
10 Japanese power companies t o the U.S. Department of Energy, and advance payment
, from 8 Japanese power compani es to France's Aurodif. Until the second Japanese
facility is completed, Japan must rely on other countries for reprocessing, so
- Japan has financed construction of British and French Nuclear Fuel Corporation re-
processing facilities (Windsca le in England and La Hague in France) and will rely
on these facilities between 19 82-1990.
Aluminum Refining
As a result of the jump in the cost of electric power because of the first and
second oil shocks, pawer expenditures have come to constitute more than a third of
the cost of refinin aluminum. Domestic refinin
g g plants with a total capacity of
530,000 tons have been shut d own or have remained idle since 1978; domestic pro-
= 5~
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY
duction is now held down to 1.1 million tons per year. Demand, on the other hand,
exceeded 1.8 million tons in 1980; it is expected to grow by about 5 percent per
year to 2.3 million tons in 1985. The shortfall must be made up by importing re-
fined metal. In order to obtain cheap metal, the aluminum industry is actively
participating in overseas pro~ects, and its large-scale projects are being imple-
mented one after another. .
Japan will import about 700,000 tons of aluminum ingots in fiscal 1980. Of this,
about 250,000 tons will be development imports. By 1985, 1.2 million tons will be
_ imported and development imports will increase to 700,000 tons.
NZAS (New Zealand) ~
NZAS is the first of the overseas aluminum smelter projects. It is a joint venture .
of Showa Aluminum and Sumitomo Light Metal Industries (25% each) with Australia's
COMALCO, The Japanese receive the raw material alumina from COMALCO and have it ~
refined by the NZAS smelter. Each participant takes the refined metal in proportion
- to their investment. This is the c~nsignment refining method. The purpose is to
secure a long-term, stabl~ supply of aluminum ingots at cost using COMALCO'S hold-
ings of bauxite and the inexpensive electric power of southern New Zealand. Plan-
ning for this project began in the beginning of 1970 and operations began in July
- 1971; since then the scale of. production has increased steadily to a level of
- 150,000 tons annually. The cost of electricity increased in October 1977, but power
costs are still low, and operations continue at full capacity. Japan has been
receiving 75,000 tons of refined metal per year.
Asahan (Indonesia--North Sumatra)
P. T. Asahan Aluminum, a joint venture of Japan Asahan Aluminum (75%) and the govern-
ment of Indonesia (25%), constructed power pZants at the harbor of (Tanga) and the
(Sig~iragura) falls of the Asahan river in northern Sumatra (513,000 kilowatts com-
bined maximum output) and is using that power to refine 225,000 tons of aluminum _
_ per year. Japan receives two thirds or more of that aluminum. Planning for this -
project began around 1970. Swnitomo Chemical Co headed studies and negotiations
within Japan. Following cabinet approval in July 1975, Indonesia Asahan Aluminum
Co was established as the executive entity in January 1976. Although total funding
required expanded during this period, full-scale bidding and construction began in
the second half of 1978.
Almost all the equipment has been ordered now, and ihe work is going forward with
a plan to.place some facilities in operation at the beginning of 1982. Full oper-
_ ation is expected by 1984. Indonesia is considering do~estic development of the
- raw alumina.
_ Japan Asahan Aluminum, the Japanese conduit for investment, was established in
November 1975. The Fund put up 50 percent, and the remaining 50 percent was
invested by five refiners and seven trading companies. .
Aside from these two projects, the greatest amount now being imported from Japanese
- development import sources is the 120,000 tons from VENALUM (in Guayana, Venezuela). _
Originally Japan had the leading role in this project, but in 1974 Venezuela began -
60
FOR OFFICIA~ USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300090049-6
FOR OF:'ICIAL USE ONLY
nationalization and the Japanese (Showa Aluminum and six other companies) have been
_ reduced to a minor share of 20 percent. The smelter began opera ting in February
1978 with technical guidance from the Reynolds Co. From 1981 on, when the smelter
operates at its full capacity of 280,000 tons, Japan's take will be 160,000 tons.
Moreover, projects like ALPAC (in Canada), a joint venture with Canada's ALCAN,
- and the South Carolina joint venture with ALMAX of the U.S. have entered the pro-
_ duction and deli~ery stage. ,
A noteworthy future project is the Queensland Project (Queensland, Australia).
Seven Japanese companies includinb rolled aluminum producers have joined with
Australia's COMALCO and Kaiser of the U.S. to set up a smelter. Of the annual pro-
duction of about 200,000 tons, Japan is to take about 100,000 tons of ingots, in
- praportion to its investment. Production will begin in 1981.
The Amazon Aluminum Proj ect (in Brazil) is a plan to use the hydroelectric and
bauxite resources af the Amazon region in an 800,000 ton per year alumina plant and
a 320,000 ton per year smelter. Japan is to import 157,000 tons of ingots each
year. This project was launched when President Geisel visited Japan in September
1976, and in September 1978 two Japanese-Brazilian ~oint venture companies were
_ formed to implement the project: ALNORTE (alumina production, Japanese share 39.2%)
and ALBRAS (aluminum production, Japanese share 49%). The original plan was subse-
- quently modified, and preparations are now being made for the construction work.
In September 1976 the cabinet approved support for this project, and the Fund paid
in 40 percent to the Japanese investment company, Nihon Amazon Aluminum Co (NAALCO).
Private stockholders are 30 companies including 10 trading companies, and Mitsui
Aluminum and four other refiners.
Paper and Pulp
There are many overseas development import projects in the paper and pulp industry.
In the next 10 years, however, chip imports will decline. i:nsuring a supply of raw
materials for domestic paper manufacture will be difficult even though pulp imports
will increase. Thus there is a growing trend to push large-scal e projects includ-
ing development imports of pulp, overseas production of lower grade products and
even afforestation.
Japan-Brazil Paper and Pulp (Caxias Escura in Minas Gerais)
_ The Japan-Brazil Paper and Pulp Resource Development Corp. (JBP), in a joint venture
- with Brazil's Rio Doce group, is carrying on large-scale operations from affore-
station to chip and pulp production and exporting half the amount produced to Japan.
JBP is composed of 16 paper produ cers and other companies. Part of this is the MG
plan to produce pulp from eucalyp tus trees in Minas Gerais. Und er this plan,
CENIBRA, a Japanese-Brazilian ,joint venture in which Japan has a 49.375 percent
share, was established in Septemb er 1973 with a budget of about 300 million dollars.
CENIBRA constructed a plant to produce 255,000 tons of bleached, broadleaf kraft
- pulp per year. There was a period of unstable operations after operations began in
October 1977, but production and sales have gone as expected since 1979.
Another large-scale operation is the ES plan which will plant and harvest eucalyptus
trees in Espirito Santo and Bahia and produce chips and pulp, each at three different
61
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPR~VED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6
- FOR OFFICIAL USE ONLY
plants. Total investment will be 1.3 billion dollars. Partial implementation of ~
the af5~restation woxk has begun through the Japanese-Brazilian joint venture _
FLONIBRA ~JBP, 39.6%; CENIBRA, 21.1% Rio Doce Group 38.3%), but the work plan is
currently being reviewed.
- JBP, the Japanese investment company, was formed in June 1963 by 14 paper and pulp
companies--primarily those from the old Oji group, including the Oji Paper Co--and
a~oint pulp import company consisting of 19 smaller paper and pulp manufacturers,
and ane trading firm. The Fund has provided 39.6% of the investment; cabinet
approval was given in November 1973.
- Alaska Pulp (Wrangell, Sitka)
Through its U.S. suhsid~ary, Alaska Pulp has acquired timber rights in Tongass
National Forest; it produces dissolved pulp (DP) for synthetic textile and lumber
products and buys chips from other companies, of which the major portion is sold to
Japan. The Sitka plant, which provides dissolved pulp for rayon, has been in full
operation since December 1959. In 1962 its capa~ity was increased to 180,000 tons -
per year, but because Japanese synthetic textile manufacturers switched to polyester
production,demand for rayon pulp has been slow and prices have been depressed. In
1967 lumber capacity was expanded by purchasing the AWP plant (65 million broad-
feet--1 bd-ft is a board one foot square and one inch thick) to add to the plant [on]
at Wrangel (100 million board-feet). In addition, chips were purchased from the
- U.S. and sold to Japanese users. Cooperation in this, the fi~st large-scale postwar
overseas pro~ect, was sought from all quarters and in February 1956 the cabinet
approved efforts tu promote it. The prim~ry stockhalders in Alaska Pulp are 17
banks and 29 textile, trading and other companies.
- In other projects, Japan obtains chips of tropical woods from Malaysia and elsewhere
in Asia and Oceanis; the largest of these is the Harris-Daishowa project (New South
Wales, Australia). This pro3ect was originally a joint venture with local capital,
but now it is completely owned by Japanese firms. It produces eucalyptus chips
- and buys waste chips from other sources, s~lling its total output to Japan. Between
1965 and 1975s several overseas pulp-related projeets were organized as joint
- ventures wir_h 1oca1 capital in Canada and New Zealand. A pulp plant for newsprint
that was constructed by the Carter, O~i, Rokusaku and Pacific firms in Napier on
New Zealand'~ North Island sends its full production of about 200,000 tons of pulp
each year to Japan. There are also pro~ects for overseas production of finished
products: Jujo Paper Co joined with Weyerhaea~ser in the Norpac newsprint project
- in the U.S. (200,000 tons per year and is now being expanded), and Oji Paper Co
~oined International Paper in the NBIP project in Canada (expansion of the Dalhousie
plant is in progress).
Iron and Steel Raw Material
In the past, raw materials for iron and steel making were secured mostly in the
form of imports through trading companies. In the mid-1960s, however, greater
, quantities of raw materials were needed from about the mid-1960s on, and steel com-
panies began to participate directly, in management of mining operation, and to
finance and purchase ore. There are, however, no "captive mines" under the direct
control of Japan's blast furnaces.
62
- FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02108: CIA-RDP82-00850R000300090049-6
FOR OFFICIp~ USE ONLY
For 7 years since crude steel production peaked in 1973, the level of production has _
stayed around 100 to 11U million tons. There has thus been little enthusiasm for
taking part in new pro~ects during this period, but now crude steel production is
expected to increase, and new projects may now be undertaken.
Robe River Iron Mines (Western Australia)
= A Japanese-U.S.-Australian consortium (unincorporated joint venture) has carried on
open pit mining of the Robe River and East Deepdale iron ore deposits; the ore is
crushed at the port 160 km distant and part is pelletized and sold to Japan (9
million tons in 1979). In 1977 production was expanded to ZO million tons. Both
_ Nippon Steel Corp. and Sumitomo Metal Mining Co. joined Mitsui & Co. as consortium
- members by acquiring part of f~ustralia's holdings. The share of the Japanese
partners totals 35 percent, but operation of the project is left in the hands of
the American partners.
In 1979 Japan's iron ore imports totaled 125 million tons, of which over 40 percent
came from Australia. The lar.gest source is the Ha~ersley Mine (18 million tons
imported); Japanese trading and steel companies have 6.2 percent of the stock in
its holding company. In second place is the Mount Newman Mine (16 million tons);
- Japanese tradin~ compar.ies hold 10 percent of the consortium. Japanese and U.S.
companies have the Savage River Mine on Tasmania which has been producing pellets
since 1967.
Bowen Coal (Queensland, Australia)
In 1966, Mitsubishi Corp. formed a consortium with Utah Develo~ment, a U.S. compar.}~.
- Since 1971, they have successively developed the Goonyella, Peekdowns and Salagee
Mines in the Bowen coalfield. These are all open pit mines, and the coal is shipped
- mostly to Japan from Hay Point, 200 km distant. At present Japan's take of Bowen
- coal is 9.7 million tons, about 15 percent of tne total. Mitsubishi Corp. control-
led 15 percent of the consortium at the time of development, but its holdings have
dropped to 12 percent with the participation of other partners. -
In Brazil, Jananese blast furnace operators and zrading companies have a 20 percent
share in development of the Agunas Cuteras iron mine at Belo Harizonte in Minas
Gerais. The mine began producing ore in November 1973. Kawasaki Steel Corp. is
participating in the development of the Capanema Mines. Production will begin in
1982. Capanema iron ore will be supplied to Rio Boce, Kawasaki's partner, and to
_ the sintering plant wnich Kawasaki Steel and Tubarao iron mill (described later)
operate on Mindanao in the Philippines.
To secure coal from the U.S., which has the highest quality unprocessed coal,
financing and purchases began around 1970 for development imports ~f Virginia Poca- =
h~ntas No 4 coal, Cello coal and Blue Creek coal.
- Nonferrous Metals =
As early as the 1950s Japan sought to secure copper ore overseas to cover domestic
shortages by investment-purchases, primarily in the Philippines but also in Canada "
and Latin America. In the latter half of the 1960s the scale of mine development
began to increase, and there were more [and larger] instances of icrvestment-purchases,
first in Canada, and then in Chile, Africa and Malaysia.
63
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY .
_ After the oil shock occurred, cooper prices became depressed while development
- costs increased because of inflation. Copper development pro~ects fell on hard
times worl~wide. Although there have been few new development import projects in
the late 1970s, there is a growing need to promote such imports to meeC expected _
increase in the demand for foreign ore and metal. -
- Zaire (Musoshi-Tshinsenda Copper Mines)
This is tr?e first of the overseas copper development projects in which Japanese
companies played a leading role. The N;.ppon Mining Ca and five other nonferrous
- metals companies from Japan fo?-med the .nvestment company Zaire Mining and Develop-
ment Corp. (Codemisa) , which in turn joined with the government of Zaire to form -
the Zaire Mining and Mar.ufacturing Developing Co. (Sodemisa). Japanese investment
- is 80 percent. Sodemisa is developing mines at Mus oshi and Tshinsenda in Shaba
Prov ince and sells all copper concentrate to Japan. The Mus~shi mine began oper-
ating in October 1972, and the high-grade Tshinsenda mine began to produce ore in
October 1977. R~~~: mines extract ore from mine shafts. Present copper concentrate
exports to Japan amount to 30,000 tons per year. B eca~ise of disputes with neighboring
- countries in recent years , shipments of the concentrate have been forced to pass
through East London, South Africa, a detour of 3,32 7 kilometers.
Manut Copper Mine (Sabah, Malaysia) -
The Overseas Minerai Resource Development Corp. and the government of Malaysia
- formed the joint venture company OMRD-Sabah (called the Sabah Co.) for open pit "
development of the Mamut mine the investment ratio is 51.49. Mitsubishi Metal
Corp. and six other nonferrous metals companies invested in the Sabah Co. through _
the joint investment company Mamut Mines Development (MrID). They export equipment
on a deferred payment basis to Malaysia, and in return take all the concentrate
produced. Production began in October 1975, and ab out 100,000 tons of concentrate
is exported to Japan each year.
- Other copper concentrate and crude copper investment-purchase projects include Rio
Blanco mines in ChiZe (100,000 tons of concentrate to Japa�.1 each year), Bouganville -
mines in Papua-New G�sinea (80,000 tons of concentrate), Toledo and Sipalay mines
_ in the Philippines, and Low Necks and Fox mines in Canada.
Nonferrous metal projects other than copper are represented by Indonesia's Soroako
Nickel (joint venture with INCO; Japan's share is 3~), the Philippines' Rio Tuba .
- (independently developed by Japan, exports nickel to Japan), Australia's Glenbarry
(investment-purchase; exports nickel and cobalt to Japan), and Peru's Huancayo -
(independent development; exports zinc and lead concen~rate to Japan).
Iron and Steel -
Overseas iron ore projects began witti the Usiminas iron works, a joint venture with
Brazil. In these projects Japan runs all operations, from building an integrated
steel mill to producing finished products. Motivations for the venture include
economic and technical cooperation, acquisition of overseas sites, of protectian
of expQrt markets.
64
FOR OFFICIAL U SE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2047102108: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY
- Tubarao Iron Works (Brazil)
Rawasaki Steel Corp. and 14 trading and other companies, in a joint venture with
the Italian and Brazilian public steel corporations (Japan 24.5%, Italy 24.5%,
Brttzil 51%), will construct an integrated steel mill and take back the semifinish~d
slabs produced there in proportion to investment. The project was planned in 1973
and the basic agreement was concluded in May 1976. Because of Brazil's financial
- diff iculties and changes in market conditions for steel in Japan, changes were sub-
sequently made to the plan. The first phase of the project is underway, however.
- Three billion dollars is being invested to produce 3 million tons of slabs. Work
- is going on at the site and operation is scheduled for November 1982. This project
came about because of Brazil's policy of exporting iron ore with a higher added
- value, and Japan's interest in supporting local processing of semifinished products
to ensure supplies c:f raw materials for steel from abroad.
Qatar Iron Works (Umm Sa'id)
= Kobe 3t~elt Tnkyo Boeki and the government of Qatar formed the joint venture Qatar
Steel Co. (QASCO; Japan 30%, Qatar i0%), which produces iron by the direct reducti;:�:..
method using natural gas. QASCO produces billets and rods for reinforced concrete
and sells them within Qatar and to neighboring countries. Operations began in
August 1978 and are going smoothly.
_ On a crude steel basis, the scale of production is samll--400,000 tons per year--but
it is the first direct reduction iron project in the Mid-East that is supported by
Japanese investment. This is of great significance because it is an investment in
a full-scale manufacturing industry.
Usiminas Iron Works (Itipanga, Brazil)
This was the first overseas cooperation pro~ect for Japan's steel industry. The
project started when President Kubitschek requested Japan's cooperation in 1956.
In 1957, the Nippon Steel Corp., six other steel companies, and seven machinery manu-
f acturers established Nippon Usiminas, the investment company. Nippon Usiminas
invested in Minas Gerais Iron Works (Us3min3s), a Japanese-Braailian ~oint venture,
and participated in construction of a 500,000 ton iron works. The construction was
_ delayed by Brazil's severe inflation and a shortage of funds. Moreover, after pro-
duction began, the operation of Usiminas was still not very successful. Both Japan
. and Brazil toak steps in support of Usiminas, however, and the company streamlined
its operation. Since 1968 the pro~ect has been going in the right direct:ton. In
line with subsequent demand for steel in Brazil, production progressivEly increased
to 1.4 million tons, 2.4 million tons, and now 3.5 million tons. Japanese industry
has cooperated in the expansion by expor.ting equipment on a deferred payment basis
- and increasing investment by Nippon Usiminas. At present the share held by N~'npon
, Usiminas is 17.3 percent.
The industry is now pushing other cooperative steel projects in Mexico. These are
Japanese-Mexican joint ventures that plan to produce large-diameter pipe (290,000
_ tons per year) and cast and forged steel (20,000 tons of each). Japanese investment
companies have been set up, with Sumitomo Metal Mining Co. the principal investor
in the large diameter pipe project and Kobe Steel the principal investor in cast
_ and f orged steel project. In each case, an investment of 30% from the Fund is
- scheduled. The investment required is 33 billion yen for the large-diameter pipe
_ project and 58.4 billion yen for the cast and forged steel pro3ect.
65
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
- FOR OFFICIAL USE ONLY
- Petrochemicals
Iran Petrochemical (Bandar Khomeine)
This project is a plan to construct a comprehensive petrochemicai complex whiCh
would produce 300,000 tons of ethylene annually from gas and naphtha produced in
Iran. The ethylene would be used to produce IDC, vinyl chloride monomers, high and
low pressure polyethylene, polypropylene, benzene, synthetic rubber etc., and also
LPG as a byproduct. The entity implementing the pro~ect is the Iran-Japan Petro-
chemical Co. (IJPC), a joint venture in which Iran and Japan eaciz invest 50 percent.
Singapore Petrochemical (Merbau Island)
This pro~ecr. will construct a 300,000 ton per year et~ylene center and in the first
_ stage produce (1) high-pressure polyethylene and polypropylene, (2) low-pressure
polyethylene, and (3) ethylene oxide and ethylene glycol as derivatives. The man-
aging cor.ipany, Petrochemical Company of Singapore (PCS), was established in August
1977 as a joint venture in which Japan and Singapore each hold 50 percent shares.
Equipment is being ordered with operations sched~iled to begin in early 1983. Com-
panies to handle the derivatives are being formed as joint ventures between Japan
- and Singapare for derivatives (1) and (3), and between Sumitomo Chemical Co.,
Singapore and the Phillips Co. of the U.S. for derivative (2). The Japanese invest-
ment company, Japan-Singapore Petrochemical Co. (JSPC), was formed in July 1977,
with a 30 percent investment from the Fund. There are 28 private stockholders,
including Sumitomo ~hemical Co. and 11 other chemical companies.
Besides these two projects there are ~oint ventures to handle derivatives at the
Yoch'on petrochemical complex in South Korea and the Camacari petrochemical complex
in Brazil. Moreover, in the Jubayl area of Saudi Arabia, the first example of
Japanese-Saudi ~conomic cooperation being implemented. This is a plan to produce
methanol for chemical use (2,000 tons per day). Production will start in 1983. A
feasibility ~tudy for a Saudi petrochemical pro~ect is also in progress between
Saudi Arabia and the Japanese survey company, Saudi Petrochemical Development Co.
The basic concept of this project has not been firmed up yet.
Agriculture, Coal and Others
Cerrados (Brazil)
This is a Japanese-Brazilian plan to develop 180 million hectares of brushland for
agricultural use in the Serrado region of west-central Brazil. In the first stage,
50,000 hectares in Minas Gerais have been select~.:d for experimental production of
foodstuffs, such as soybeans, wheat, corn and coffee. The managing entity of the
pro~ect is the Japan-Brazil agricultural Development Corp., a~oint venture (50%
for each country) which was established in September 1978. It is now buying land,
bringing in farmers, and inviting agricultural enterprises.
Other agricultural projecrs worthy of note include a project to buy or lease grain
elevators in the U.S. to store wheat for import to Japan, the Mitsugoro project to
cultivate corn in conjunction with Indonesian cooperatives for import to Japan, and
_ a pro~ect to raise cattle for beef in Brazil and Paraguay.
- . 66
- FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OFFICIAL USE ONLY
Pro~ects for coal for general use are in progress primarily in Australia: New
South Wales coal (Lithgow, Barsrock, Workworth, Drayton), Queensland coal (Bracewell)
, etc. Preparations for coal extraction are already being made at some projects, but
- the ,~,ro~ect structure and f inancing for most of the large projects is still being
formulated.
The above projects are those financed by Japan. To conclude, here are three
- representative examples of large-scale plant exports:
Algerian gas processing plant: This is a 300 billion yen plant exported to SONOTRAC
- by the Japan Gasoline Co. and C. Itoh & Co. It is a large-scale plant constructed
in the northern Sahara.
Baoshan (PRC) steel plant: This is an integrated iron mill (6 million tons per
_ year) constructed in the Baoshan area of Shanghai. Engineering was undertaken by
Nippon Steel Corp., and exports of about 370 billion yen are projected for the first
phase (3 million tons per year).
_ Hong Kong Subway Construction: The subway is to connect Kowloon and Hong Kong. The
civil engineering for the first phase is a large-scale project of about 230 billion
yen. Japanese construction companies are responsible for nine areas of construction
costing 60 billion yen. Deferred payment Export-Import Bank financing has been
approved for this work.
COPYRIGHT: Mainichi Shjmbunsha 1981
9601
CSO: 4105
67
FOR OFFICIAL USE ONLY'
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2047102108: CIA-RDP82-00850R000300090049-6
FOR OFFICIAL USE ONLY
SCIENCE AND TECHNOLOGY
JAPAN-ABU DHABI COOPERATIVE DEVELOPMENT OF SATEH OIL FIELD STARTED
Tokvo NIKKAN KOGYO SHIMBIJDi in Japanese 21 Feb 81 p 1
[Article: "Development of Sateh Oil Field Started: the Japan Oil Development Co.
to Produce 40,000 B/D in 1984"]
[Text] The Japan ~il Development Co. (JODCO, headed by Takeki Tanaka) and the Abu
Dhabi National Oil Co. (ADNOC) have be~un a joint exploitation of the Sateh oil
field, which is part of the Abu Dhabi Marine Area (ADMA) drilling concessions.
AlthouRh Japan's overseas oil development ventures usually take the form of parti-
cipation through investment, in this venture, JODCO is the operator. The Japanese
oil development industry has long wished to be operators, and much is expected
from this project. Oil production is projected to be 40,000 B/D by the end of 1984.
JODC~ and ADNOC reached agreement on the Sateh oil field development project last
summer. The nrojer_t includes the development of (Jarnayn), Dalma', and Sateh fields.
The existence of crude oil and natural gas has been proven by two experimental
drillings made by ADMA OPUCO. ADMA OPUCO is a consortium of JODCO, British
Petroleum (BP), Companie Francaise des Petroles (CFP) and ADNOC.
Sateh crude has an API of 31 (American Petroleum Institute Scale) and contains
0.7 percent stilfur. The estir~ated oil reserve in Sateh amounts to 800 million B.
_ The project wil~. hegin with three drillings at the Sateh oil field. About $30
million will be invested. Japan's share will be 40 percent of expenses. Drilling
of Dalma' and (Jarnayn) will begin if Sateh drilling is successful. The JODCO's
take from these oil fields will be 40 percent of production, and ADNOC's take will
be 60 percent.
= The ADPtA drilling concessions were o~tained in 1972. Drilling interests are
distributed as follows: JODCO 12 percent, BP 14.7 percent, C~'P 13.3 percent and
ADNOC 60 percent. JODCO has since participated in the development of Umm Shaif,
lower Zakum, upper 7,akum and iJmm al-Dalkh oil fields. JODCO is the operator o� the
Umm al-Dalkh oil field development project. Between 1972 and 1980 it has drilled
19 wells. Production of oil will begin by the end of 1982. Thus, JODCO will be
the operator of two oil fields in ADMA, at Umn al-Dalkh and Sateh.
In addition to these development pro3ects, Japan's Abu Dhabi Oil Co. and Godo Oil
Development Co. are also promoti nt level
may be thought to be a rebonding, however, the rebonding rate for ~his process
ab ti 3.7 x 10~17z4nt -1T~'3~2 exp(It/kT) cm3 s-1 (3.4)
_ is so small that it may be disregarded, Since the n> nt level does not con-
- tribute to the z electron rebonding, the z electron rebonding rate decreases.
Now, the three-body rebonding to which two free electrons contribute is impor-
tant in high level plasma, and this rebonding rate increases as the result of
the electron collisj.on effects. The three-body rebonding rate when there are
two separate electrons i*~ actual free sCate is given in the following manner.
ac2 ti 6.1 x 10`142-2N21T~ -2 cm3 s'~1. (3.5)
~ This rate is larger than that of (3.5)
ab2 ti2.0 x 10~13Z-2nt-2N21T~-2exp (It/kT) cm3 s-1 (3.6)
95
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
NOR OFFICIAL USE ONLY
4. Radiative Process
As indicated by (3.1), there are few effective restricted levels at n< nt,
and radiation is discharged mainly by radiative rebonding and bremsstrahlung~
The respective rPaction rates for these processes are given in the following
manner.
q,, 'L 3 x 10-15z2 T~'1/2~~3 s-1 ~ (4.1)
Rb ti 1 x 10-15Z2 T~-1/2~m3 S-1, (4.2)
As a result, the time required for radiative discharge is the fallowing
tr -(a +Rb)N ti 2 x 10-~ T1~2/N21 z2 s. (4.3)
0
In this manner, the radiation time is very much longer compared to heating
time, and the entropy generation due to radiation associated with initial
_ compression is small.
Even whQn a weak radiation is emitted, there is need to consider transport of
this radiation before it can have any effect on external items. The Thomson
scattering is effective in the transport of high energy x-ray. The optical
depth in plasma of thickness k cm with respec.*_ to this phenomenon is the
- following
Tes ~Th NQ ti 6.0 x 10-4 N21 Q. (4.4)
In this manner, there are many instances when optically thin situations are
encountered at high energies, and i~ may be thought that radiation exits
~ directly. When heavy elements retain the orbital electrons, the photoelec-
tric effect takes hold. When an element of atomic number Z retains a single K
electron, the pliotoe?ectric absorption cross section of x-rays with higher
energy than the K absorption edge IZ is the following
6k(z, hv) ti 6.3 x 10-18 Z-2 ~hv~7/2 ~1+ 6(I-� - 1)~ ~m^2� ~4.5)
z
This value is approximately the following for a neutral atom ~f Z ti 6.
I
Qk(z, hv) ti 3.6 x 10-19 ~10~ 2.2 ~~v~8I3 ~m-2, (4.6)
The optical depth is greatly dependent on the energy and the degree of ioniza-
tion. When ionization is by way of photoionization, radiation goes deeper,
and the prc~pagation rate is dependent on the rate of generation of radiation
and is of the order of R,/T tr.
96.
FG~R OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850ROOQ3QOQ9Q049-6
I
FOR OFFiCIAL USE ONLY
Should nt z, Lyman lines and similar lines are radiated. They are resonantly
- scattered. The cross-section with respect to photon number of vibration number
= v at resonance vibration number vo and Doppler width vo = vo(kTi/Mc2)1~2is
2
Q(v) _~r m~2 ~ exp [-(v - vo)2/ vD2]. t4.7)
D
The line width 10-4(T~/A)1~2vo with respect ~o the Lyman a is smaller than the
- shift in level of 8aB/ZD ti 6 x 10-2(N21/T~)1 ?2-1 due to the finite Debye radius
- effect, and resonant scattering is with no great effect should there be a den--
sity or temperature gradtent.
Free-free absorption takes hold at low energy, and the accompanying optical
effect is
' T ti 1. 3 x 10'~5 N21 p T~-7/2 ~kT)3 E z2 N~Z~ ~4.8)
f f - hv N
z
As a result, there is optical thick~less with regard to visible light, and the
~ spectrum approaches a Rayleigh-Jean,s spectrum,
The above discussion can be summarized in the following manner. Plasma of
NQ ti 1021cm'2 is optically very thin except for near the K absorption edge and
the visible region. About half the radiation generated at the surface of the
target solid is radiated from the surface while the remainder is absorbed into
the target solid body. The a.attez is converted to radiation similar to black
body radiation, but the black body temperature is lower than the electron
temperature so that a soft x-ray or ultraviolet radiation is the result.
When low~ temperature black body radiation and high temperature electrons inter-�
act, Compton heating occurs. The heating rate depends on
- y = Tes (kT/mc2) (4.9)
y� under the present experimental conditions.
The effect of the magnetic field was disregarded in this discussion, but cyclo-
- tone [phonetic] radiation appears in tt~e radio region of laser plasma.
Should a strong radiation be generated in the long wavelength region, it is
transported outside as a light bubble. These interesting phenomena have no
direct relationships with atomic processes but should not be disregarded when
the entire phenomenolot~ical effects are considered.
5 . S ununa ry
- When plasma is created with laser, first of all, ionization occurs, and the
_ actual situation is the formation of ions with essentially no restricted levels.
Radiation is so weak at this stage that it can be disregarded. Effective re-
strictive levels gradually begin to appear during the period that irradiation
9~ 7
FOR OFFICIAL USE ONL!'
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850ROOQ3QOQ9Q049-6
I
~OR OFFICIAL USE ONLY
ends and plasma expands while rebonding proceeds slowly. This is accompanied _
by generation of radiation as a result of which the plasma is continually ioniz-
- ing during the caurse of formation after which it makes the transition back to
a plasma undergoing rebonding. Radiation is observed mainly at the latter
state.
As shown in modelized form below, the level strucCure differs from that of an ~
individual atom. The*_�e are the shielding effect of the plasma (effective Debye
radius effect), plasma vibration effect on the electric field, and the electron ;
collision effect. These effects propose new subjects to the area of atomic
- physics, and there should be no shortage of research subjects for the next '
several years. At the same time, these effects not only are related to plasma
formation, heating, cooling, and instability but are also directly tied in with
diagnostic methods where plasma physics is concerned. Research on high density
plasma is bringing up new sub~ects in the areas of atomic physics and plasma
physic~.
- (1) iJ UI ~ ~ ~FJ ~Pl'~ G~G~z ~t ~ ~ )7' "7 ~ 7 ~.;~/j ( I ~ 3'
.
- '~'6~~ L~ f~3) re) ~
~ ( 7 ) . ,~~1~~~~ m.t
>
- ~ :r ~T~~~~ ~ ~ ~ . . .
~'r~iS~- . ,
Key:
(1) free atom (5) continuous band
(2) finite Debye radius (6) infinite level
(3) plasma vibration (7) finite level
(4) electron collision (8) quasicontinuous
REFERENCES
l. K. M. Roussel and R. F. 0'Connel, Phys. Rev. A9, 52 (1974)
2. J. C. Weisheit and B. W. Shore, Astrophys. J. 194, 519 (1975)
3. B. V. Rozsnyai, J.Q.S.R.T. 13, 1285 (1973); 15, 695 (1975); 17, 77 (1977)
- 4. S. Hayakawa and T. Kato, JAERI-M 8060 (1979)
5. H. R. Griem, Plasma Spectroscopy (McGraw-H~.11), (1964)
COPYRIGHT: Nagoya Daigaku Purazuma Kenkyusho, 1981
2267
CSO: 8129/0582-B
98
� FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OFFICIAL USE ONLY
~CIENCE AND TECHNOLOGY
GENETIC ~1GINEERS TO PRODUCE VACCINE
Tokyo JAPAN TIMES in Engliah 22 Feb 81 p 2
[ Text ] The Science and Technolo~v The goal �of the proJect is to Research w1U also t>e carri~d
Agency anrrounced Friday that produce antlgenle pro[ein out to ensure efficient
lt wi? start a threNy~ear 1' i:3~ which ln the body will stlmulate production o[ antigenlc protein
million project to produce che production o( an antlbody by the '�tactories" ot colon
vaccine against Intluenza and w~ith immunity against in- bacilli lhat have recet~~ed an-
type-B hepatitis through [lucnzaortype-Bhepatitls. ' tigen-[riggeringgenestakenout
geneticenglneering. !n the genelic engtneering ofviruses. .
_ Akira Otani, chiet o[ the project, genes which trigAer the The school o[ medicine at
virus-rickettsia sectlon ot the productton o[ antigenlc protein Osaka liniversity will find w~}�s
Health and Weltare ~tiltnistry's w.~li ~ taken out of irn to improve the abilfty o[ colon
;~ational lnstitute ot Health. ~~~nza or t B he atitls bacilll to read the intormation
will dlrect the ti~cal 19t30-83 ~i~~ ,~n e~ ~ for antigenic protein production
pro)ect to be participated in by carried by the implanted genes.
varlous universities and em~~ ro~on bacilli
with the help o( special enzymes The Educalion btinistry's
research institut~~. ~ so that the protein-producing National Institute ot Genettcs
So tar. It has been impossible ~~ractorles" ol colon bacllll wlll will tind ways to keep the
to make vaccine to pre~~ent produce antlgerlc protein, ribosomes or protein-producin~
type-B hepatitls becauae it is factories,ot colo~ bacllliactive.
extremely dit(icult to cultivate As a ti~st step of the pro}ect, !t is expected that vacclnes
the vlrus which causes the the Health and Welfare
dlsease. But Otani said that :~Ilnist 5 tiational Instltute o[ w'hich use antlgenic protein
ry' produced by colon bacilli
genetic en~ineerinR wlll enable Health and Irtstitute of Public
theproductionofthevaccine. Heaith will be engaged In the manipulated by ~enettc
At present, tnfluenza vaccine work ot taking antf-gen� engineering w~ill have slight
Is produced by cultivatinR ~~irus trigqering genes out o( in- differences fr~m vaccines
in fertUlzed hen's eggs. But the tluenxa vlruses. The work of directly produced from viruses.
vaccine sometfines has sicie takinR antl~en-trt~gering genes Therefore animal tests a~ill be
ettects because of impurities. out of Cyp~B hepatitls viruses repeated to contirm the etfects
Genetle engineering is expec[ed will be entrusted to the Chemo- oi vaccines made through
to produce genuina~ vaccine and Serotherapy Research ~enetic engineering.
whlch wfU have no side etfects. Institute in tiumamoto.
COPYRIGHT: TEIE JAPAN TIMES 1981
CSO: 4~.20
99
FOR OFFICIAL USE ONd,Y
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300094449-6
FOR OFFICIAL USE ONLY
- SCIEIVCE AND TECHNOLOGY
EXPERIMENT ON LINEt~R MOTOR CARS PROGRESSES
Competition Between JNR, JAL
Tokyo SHL'KAN SHINCHO in Japanese 1 Jan 81 p 25
[Text] The magnetic lift type linear motor car, being developed by National Railways
Corporation as an innovative hypersonic train of the new post super-express train era,
~as at last entered into the unmanned running test stage using test cars with enough
space for people. The test cars have finally started "lifted runs" at the experimen-
tal center in Mlmitsu, Hyuga, Miyazaki prefecture since December 16th.
On the 16th, Car MLU 001, weighing approximately 10 tons, recorded 240km/h for 26
seconds. -----JNR mainta~.ns that the tests would be repeated some more, and,
"Practicalization target date is set for the decade starting from 1985, and a speed
of 500 km/h will be realized."
On the other hand, Japan Air Lines is also developing a similar linear motor type
"lifted transport" (note: JAL calls it a"transport"). This one is envisioned to
serve as hypersonic transport which runs at about 300 km/h between the center of a
city and a suburban air port, for example, Tokyo-Narita airport and Sapporo-Chitose
airport. According to the blueprint, it is designed to run a distance of 70km from
Tokyo to Narita in 15 minutes and 45km from Sappori to Chitose in 9 minutes. Up to
_ the present time, however, an unmanned transport recorded a speed of 380km/h and
_ 100km/h with men aboard.
As already reported in newspapers and magazines, the Ministry of Transportation has
= expressed "objection" to this project. This is accountable for slimmed government
budget and the difficulty in setting up a separate company. "Abortion of Developmen~"
was at one time considered even among the insiders. Nonetheless, JAL continues to
develop it, aiming, for the time being, to demonstrate the transport at the Science
and Technology Fair to be held at Tsukuba science and academical community 5 years
' later.
Well, is it really necessary to have these hypersonic cars? If so, why waste money
and efforts by permitting both JNR and JAL to develop bilaterally pxactically the same
- object? How about the technological and environmental problems that lay on top of
those moral questions2
First of all, commenting on 500 km/h surface transportation, man's endless desire for
"faster speed" should be admitted, which inevitably created super-express railways and
lOQ
FOR OFF[CIAY. USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007/02108: CIA-RDP82-00850R000300090049-6
FOR OFFIC[AL USE ONLY
endorsed the flight of jet passenger liners. Now, if the linear car is really "fas~er,
- cheaper, s afer, pollution free, noise-free and useful for energy saving practice,"
isn't it much better than the jet planes that gozzle enormous amounts of oil or the
= auper-express trains that unabashedly emit noise and vibration?
. Next, what about the technological aspect of the car? The lift type linear motor
car "can make the 500 km/h mark without sErious difficulties," since nothing but air
resists its movement because it does not have wheels, In fact, JNR achieved the
SOU km/h mark although the test run was operated using only one car without men aboard.
_ However, many unsolved problems still remain before it can be actually used, for in-
stance, running on curves, pressure in tunnels and cross-wind stability. To cope with
these prob lems, they say, "We will comgletely remodel the present test course for a
new model car (U-shap~ed) and conduct the tests using a train of cars and manned cars."
_ Yet, the road to the practicalization is still far away. When all thQSe problems
are resolved, the hardest obstacle of securing land for use is awaiting.
_ How about the Linear car of JAL (HSST)? This one, different from the so-called
JNR's "repulsion lift type" (note: applying the principle of N to N and S to S re-
pulsion in magnets, the body of the car is repulsed from the guideway and lifted),
- is called "absorption lift type." The magnets on the edges of the car body, which
is curved as if to embrace the guideway from both sides, are drawn into the back side r
of the guideway, but the secret of this car is that the car, at this time, will not
stick fas t to the guideway but "be lifted in space by magnets." It will run lifted,
maintaining clearance of approximately 1 cm. =
~ The technical team of the JAL contends, "All problems are solved," and they assure
that "600 km/h is also OK." "It's no big deal, we can install tracks along the
highways b etween a city and an airport,' commented the team referring to the land
- for use.... -
Anyway, it doesn't seem possible to couabine these two linear motor car projects, since -
the purpos e and the systems are differen.t. It may even be meaningful to appropriate
, a budget for the deve.lopment of a pollution free, energy saving transportation
system sought after by competitive rivals, at least more meaningful than rescuing
the nuclear ship "Mutsu" and the like....
COPYRIGHT: Shinchosa 19II1
JNR's Plan of Operations
Tokyo NIHON KEIZAI SHIMBUN in Japanese 28 Jan 81 p 11
[Text] JNR's Council for Promotion of Lift Z`ype Railways (Chairman, chief engineer -
Koji Takahashi), which has been promoting the development of "Hypersonic Railways"
linear motor cars, tias now compiled a performance calculation regarding construction
cost, pass enger demand and energy consumption on the assumption that the linear motor
car track will be created between Tokyo and Osaka, the route most demanded by the
passengers, sometime in the early half of the 1990's. The technological development
is in progress, with problems few enough to start manned tests within this year.
Now, the JNR has started to engage in research on operational methods from the stand-
~ point of b usiness strategy. This gives a realistic tone to the linear motor cars,
which have previously been only something of a"dream."
101
FOR OFFIC[AL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6

APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850ROOQ3QOQ9Q049-6
FOR OFF[C[AL USE ONLY
According to the performance calculation compiled so far by the promotion council,
construction expenses for the basic part of the track, such as tunnels and bridges,
will amount to the same as the super-express railways, but the tutal const:ruction _
expenses will be about 6 billion yen/km at the current price, an appro~cimate 20
percent increase cou~pared to the super-express rail.ways because the propulsion guide
coil~ (magnets) caill be installed in line formation instead of using rails even if
- the coil is assumed mass-producable. The cost o� construction work between Tokyo and
Osaka is estimated to be on the scale of approximately 3 trillion yen. However, due
to the absence of rails, wheels, wiring and pantographs, the increase of the con-
struction work expenses will be balanced oi~t by the decrease of the operational ex-
penses. All in all, the linear cars can be managed by expending just about as much -
as appropriated for the super-express railways.
Additionally, on the matter of energy consumption, the "superconductive magnets" ~
installed in the body of the car serve as an "energy saving power" which does not -
require a supply of electricity in its service life once the electricity is initially
charged after it is cooled close to absolute zero (minus 273�C) in a freezer and its -
electric resistance is reduced to zero. Nonetheless, the electricity must be con- _
stantly supplied to the coils on the ground, and the el2ctric consumption shoots up
with the acceleration of speed. With a speed two times faster than the super-express
railways, the energy consumption is estimated to become about 3-fold. Also, in this
case, if the linear car is operated at a conservati~e speed of around 300 km/h, the -
energy expenses will be balanced out fairly well by the reduction of the maintenance
expenses.
- On the other hand, if this linear car line is opened and operated at300 km/h, the _
� distance between Tokyo and Osaka will be only 90-100 minutes. Adding to the passen-
gers of the super-express train "hikari," which currently amounts to little less than _
_ 35 million people a year, many of the air line passengers, over 3 million people a
year, will be expected *.o switch over to the linear line. The promotion council
predicts an annual passenger demand of about 40 million people. To cope with this
passenger increase, the capacity of the linear car, they say, shall be slightly under
100 people/car and the train shall be composed of several cars.
The JNR's linear car development project has been undertalcen at the JNR Nliyazaki
Lift Type Railway Experiment Center in Hyuga, Miyazaki prefecture. Since the 4km _
utility type U-shaped running track was completed at the end of last year, they have
started to lift test run using a new model "MLU 001" test car with passenger space.
It is projected that a 7 km running track will be made within fiscal 1981 to conduct
= manned tests. In fiscal 1982, a 3-car txain will be tested. Finally, in fiscal 1983
and thereafter, they will speed up for the establishment of undeveloped technologies
such at test runs on sections with sloges, sections under tunnels and sections be-
tween points.
Takagi, the president of the JNR, announced ambitiously at the Diet: "Hope for ~
giving practical effects to the linear car is elevated more than ever. From now on, _
we shall devote ourselves more intensely and continue the tests. We may yet need
another decade before we can achieve our goal, but we would also like to study con-
cretely the feasibility of the practical use of the linear car.
COPYRIGHT: Nihon Keizai Shimbunsha 1981
8940 END
CSO: 4105 ~02
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000300090049-6