Japan’s Aso Targets Myanmar Markets Amid China Rivalry: Economy

Japan’s Finance Minister Taro Aso met with Myanmar’s president and senior officials today in a sign the nation plans to tap a market of 64 million people that has been dominated by China.

The visit is the first overseas trip by a member of Prime Minister Shinzo Abe’s cabinet that took office last month. It coincides with the U.S. and the United Nations expressing concern over government strikes against ethnic rebels in Myanmar’s north.

“It sends a message that Myanmar was chosen as the first overseas country to be visited by officials of the new government,” Aso told reporters outside the parliament building in Naypyidaw, the nation’s capital. “We’ll help build an environment in which economic growth can flourish in Myanmar,” he said, adding that help depends on democratic reforms.

Japan’s push into the nation bordering India and China may produce trade opportunities for its stagnating economy while helping Myanmar President Thein Sein meet a pledge to attract labor-intensive industries to create jobs. Competing Chinese and Japanese efforts risk further straining relations between Asia’s two biggest economies, already at odds over islands in the East China Sea.

“China considers Myanmar as its turf, and China is very sensitive of the U.S. and Japan making headway,” said Takuji Okubo, Tokyo-based chief economist at Japan Macro Advisors. “Myanmar could be another source of conflict.”

Why Japan Can't Compete With China

As China keeps extending its interests abroad, some predict that neighboring countries will form a coalition to counter it. Any of three states could take the lead on building such an alliance: India, South Korea, or Japan. Each has a different mix of technological, economic, and diplomatic power that -- when combined with the resources of other states -- might keep Beijing hemmed in, or so the theory goes.

But if there's one leading state that could be eliminated from this possibilities matrix soon, it's Japan. That's because it lacks another kind of capital -- human capital.

Japan has a population of 128 million, not even a tenth the size of China. This wouldn't be a huge problem, except that the Japanese are also a lot older: the median age there is 44.6 to China's 35.2. Even the median South Korean is much closer in age to the median Chinese than to her Japanese counterpart. 

Technology can help shore up people deficits -- automation and complex electronics beget efficiency. But only to a point. Beyond that, the need for more manpower begins to eat away at Japan's technological and industrial advantages.

And it isn't as though Japan's got the shiniest infrastructure, either. Take the country's coast guard, which offers a good example of the country's limits. For the past year, Japan has been embroiled in a major territorial dispute with China over a set of islands in the East China Sea. It's the coast guard that's shouldered much of the responsibility for standing up to China in these waters. The forces arranged on either side are tenuously balanced -- for now. But looking ahead, Tokyo officials worry they won't have enough ships to defend what they know as the Senkaku islands (or what the Chinese call the Diaoyu islands):

Boom in Mongolia Deflates After Deal That Started It Is Threatened

Ubecome almost a cliché in presentations about Mongolia, the world's fastest-growing economy last year. The phrase, which evokes the Montana-like landscape of the steppe, paints a picture of sunny investment horizons in this frontier democracy rich in coal, copper and gold.

But visitors to this city, the capital of Mongolia, seldom find a blue sky today. It is smoggy, and soot rains down from the hills, as the poorest residents burn cheap brown coal to stay alive through the winter.

The investment prospects of Mongolia, a darling of the emerging markets, are similarly shifting.

In May, the Parliament passed a law that restricted foreign investment in the country's most attractive asset, its mineral deposits. The government is also taking aim at a crucial deal with the multinational mining giant Rio Tinto, a pact that many see as the foundation of the country's recent economic growth.

Now, the underlying fundamentals of the country look increasingly shaky. Mongolia faces a financing crunch, as investment dollars flowing from abroad have fallen. And revenue from coal, the country's main export, has dropped along with Chinese demand.

"There are a series of elements that have built up less-than-welcoming attitudes to Mongolia at a time when the macroeconomic situation is deteriorating," said John P. Finigan, the chief executive of Golomt Bank, the country's second-biggest bank.

Mongolia's star rose - and is now falling - with the fortunes of one company: Rio Tinto, the country's largest investor.

Liberal Democrats Win Landslide Victory in Japan Elections

TOKYO — Japan’s voters handed a landslide victory to the Liberal Democratic Party in parliamentary elections on Sunday, giving power back to the conservative party that had governed Japan for decades until a historic defeat three years ago.

In a chaotic election crowded with new parties making sweeping promises, from abolishing nuclear power after the disaster at Fukushima to creating an American-style federal system, the Liberal Democrats prevailed with their less radical vision of reviving the recession-bound economy and standing up to an increasingly assertive China. The win was a dramatic comeback for the party that built postwar Japan, but was ejected from power in 2009 after failing to end two decades of social and economic stagnation.

A victory all but ensures that the Liberal Democratic leader, Shinzo Abe, a former prime minister who is one Japan’s most outspoken nationalists, will be able to form a government with himself as prime minister.

However, many Japanese saw Sunday’s vote not as a weakening of Japan’s desire for change, or a swing to the anti-Chinese right, but as a rebuke of the incumbent Democrats, who had swept aside the Liberal Democrats with bold vows to overhaul Japan’s sclerotic postwar order, only to disappoint voters by failing to deliver. Mr. Abe acknowledged as much, saying that his party had simply ridden a wave of public disgust in the failures of his opponents.

“We recognize that this was not a restoration of confidence in the Liberal Democratic Party, but a rejection of three years of incompetent rule by the Democratic Party,” Mr. Abe told reporters on Sunday.

In the powerful lower house, the Liberal Democrats held a commanding lead, winning 266 of the 400 seats that had been decided. NHK, Japan’s national broadcaster, was forecasting that the Liberal Democrats could win more than 300 of the 480 seats up for grabs, which would almost mirror the results in 2009, when the Democrats won 308 seats. The Democrats won only 44 of the seats that had been decided, putting them in a dead heat for a distant second place with the news Japan Restoration Party, which was started by Osaka’s popular mayor. It was a crushing defeat for a party whose victory three years ago was heralded as the start of a vigorous two-party democracy.

China Sends Strong Signal on Economic Reforms

BEIJING—China's new leaders sent their strongest signal yet that their top economic priority is to remake the economy so it relies more on domestic demand and less on exports and investment in capital-intensive state-owned companies, even if that reduces short-term growth.

In a statement issued after the annual Central Work Economic Conference, a weekend meeting of senior officials to assess economic and international challenges, Beijing's leadership said it wanted to boost imports and speed the integration of rural migrants into cities as ways to boost domestic consumption, according to reports in China's state-owned news agency, Xinhua. China needed to show "more courage to reform," the statement said.

The conference was chaired by the incoming premier, Li Keqiang, and focused on one of Mr. Li's top economic priorities, urbanization, which the group's statement called an "historic task" and "the biggest potential driver of domestic demand." Rural migrants can earn far more money working in China's cities than they can in their home villages, giving them a lot more cash to spend.

China's State Council, the government's top body, now is looking at a land reform plan that would increase the payments to farmers whose land is seized by local governments and later used in real-estate development. Such payments would make it easier for farmers to move to China's cities. China's population became more than 50% urban last year.

The work conference set out a policy agenda, but didn't fill in specifics, such as a target for either growth or inflation in 2013. Those specifics will be revealed in March 2013 as Mr. Li formally takes his new government position and new Communist Party chief Xi Jinping becomes China's president.

The statement, though, comes on top of a recent trip Mr. Xi made to Guangdong province, across the border from Hong Kong, which recalled a 1992 swing through southern China by then paramount leader Deng Xiaoping to relaunch economic reforms that were stalled by hard-liners after the Tiananmen Square killings. The new stress on reform is bound to raise expectations that the new team will press for economic changes that Mr. Xi's and Li's predecessors talked about but failed to deliver.

22 Chinese schoolchildren hurt in stabbing spree

A man wielding a knife stabbed an elderly woman and then 22 children outside an elementary school in China on Friday before being subdued by security guards.

The attack happened in the village of Chengping in Henan, a landlocked province about halfway between Beijing and Shanghai. A 36-year-old named Min Yingjun from Guangshan county is accused of bursting into the home of a 85-year-old woman before stabbing her with a kitchen knife and then moving on to children as they were arriving for school after 8 a.m. local time.

On Saturday, the Chinese government's Xinhua News Agency quoted police who said that Min was possibly "mentally ill" and is now in custody.

A doctor at Guangshan's hospital of traditional Chinese medicine said that nine students had been admitted, two of which were subsequently transferred to better-equipped hospitals elsewhere in the country. None of the children have died.

Some of the children had their fingers or ears cut off.

It's not clear how old the children were, but the primary school in China covers children between six and 11 years old.

The man attacked almost two dozen children before being subdued by security guards who have been posted across China following a spate of school attacks in recent years.

China Calls for ‘No Delay’ on Gun Controls in U.S.

HONG KONG - The state news agency in China, the official voice of the government, has called for the United States to quickly adopt stricter gun controls in the aftermath of the shooting rampage in Connecticut that left 28 people dead, including 20 schoolchildren.

According to the state medical examiner who was overseeing autopsies of the children, all of them had been hit multiple times. At least one child had been shot 11 times.

All of the children were in the first grade.

"Their blood and tears demand no delay for U.S. gun control," said the news agency, Xinhua, which listed a series of shootings this year in the United States.

"However, this time, the public feels somewhat tired and helpless," the commentary said. "The past six months have seen enough shooting rampages in the United States."

China suffered its own school tragedy on Friday - a man stabbed 22 children at a village elementary school in Henan Province. An 85-year-old woman also was stabbed.

There were no fatalities, although Xinhua reported that some of the children had had their fingers and ears cut off. The attacker, a 36-year-old man, was reportedly in custody. There was no immediate explanation for his possible motives.

On Sunday, the Web site China Smack compiled a range of comments on Sina Weibo, the Twitter-like service in China. One said: "They should issue a bulletproof vest to every American elementary school student as their school uniform."

EU and Singapore agree free trade deal

The European Union and Singapore agreed terms of a free trade deal on Sunday, a move that should further open the Asian country's markets for financial services and make it easier for European automakers to export there.

"We have finalized the negotiations, and I'm very pleased with the result," EU Trade Commissioner Karel De Gucht told Reuters by telephone from Singapore.

After the completion of negotiations by the European Commission, the EU executive, member states and the European Parliament need to sign off for the agreement to come into force.

Though EU countries have in the past sometimes rejected such deals for political reasons, this is unlikely to happen with Singapore, as EU leaders in October called for a swift conclusion of negotiations.

"I don't expect that many problems," De Gucht said, adding he hoped for finalization by the end of 2013.

The bloc hopes the agreement will give it better access to Singapore, one of Asia's richest countries per head of population, where currently the United States enjoys preferential access.

Singapore has a population of only 5 million, but it is also a gateway to the 600 million people in the fast-growing economies of the 10-member Association of South East Asian Nations (ASEAN).

U.S. Intel Report: China to Overtake U.S. Economy by 2030

By 2030 China will blow past America as the world’s largest economy and global power will shift decidedly in favor of Asia, a new report from the U.S. intelligence community forecasted on Monday.

The prediction comes as the U.S. and Europe struggle to recover from the Great Recession but some emerging economies continue to grow at a far healthier pace.

The National Intelligence Council’s Global Trends report concluded that by 2030 Asia will surpass North America and Europe combined in terms of

global power, based on gross domestic product growth, population size, military spending and technological investment.

Further, the report forecasted that China alone will “probably” have the world’s largest economy, surpassing the U.S. “a few years” before 2030.

Chinese police plan to board vessels in disputed seas

BEIJING/MANILA (Reuters) - Police in the southern Chinese island province of Hainan will board and search ships which illegally enter what China considers its territory in the disputed South China Sea, state media said on Thursday, a move likely to add to tensions.

The South China Sea is Asia's biggest potential military trouble spot with several Asian countries claiming sovereignty over waters believed to be rich in oil and gas.

The shortest route between the Pacific and Indian Oceans, it has some of the world's busiest shipping lanes. More than half the globe's oil tanker traffic passes through it.

New rules, which come into effect on January 1, will allow Hainan police to board and seize control of foreign ships which "illegally enter" Chinese waters and order them to change course or stop sailing, the official China Daily reported.
"Activities such as entering the island province's waters without permission, damaging coastal defence facilities and engaging in publicity that threatens national security are illegal," the English-language newspaper said.
"If foreign ships or crew members violate regulations, Hainan police have the right to take over the ships or their communication systems, under the revised regulations," it added.
Hainan, which likes to style itself as China's answer to Hawaii or Bali with its resorts and beaches, is the province responsible for administering the country's extensive claims to the myriad islets and atolls in the South China Sea.
The Philippines, which also has claims to parts of the South China Sea, said the move could violate international maritime laws allowing the right of passage and accused Beijing of trying to escalate tension in the area.

Japan unveils $11bn stimulus package

(Financial Times) -- Japan's government has approved its second round of stimulus in a little more than a month, as prime minister Yoshihiko Noda tries to pep up a flagging economy in the run-up to December's elections.

On Friday the cabinet announced that it would tap reserve funds to spend Y880bn ($10.7bn) on a variety of measures, including rebuilding areas hit by the March 2011 earthquake, employment support and aid to cash-strapped small businesses. The plan is roughly double the size of a package announced in late October, which was also drawn mostly from reserves and aimed at reconstruction efforts.

The stimulus comes as Japan hovers on the brink of a technical recession, its fifth of the past 15 years, as manufacturers cut production amid a steady worsening in their sales and profit outlook. Falling exports were the main contributor to a 0.9 per cent contraction in gross domestic product between July and September, and economists are braced for another in the three months to December. Last week the government slashed its quarterly assessment of business sentiment in all 11 regions of the country -- the first clean sweep since February 2009 -- blaming sluggish output and consumption.

Economic data released on Friday were a little more encouraging, showing an unexpected rise of 1.8 per cent in industrial production from September to October. The nationwide consumer price index (excluding fresh food) was unchanged from a year ago, improving from five months of year-on-year declines to September.

China Moves Forward in Opening Gold Market

China will allow over-the-counter gold trading between banks for the first time Monday, a significant financial reform for the world’s second-largest buyer of the precious metal.

The move reflects the Chinese government’s latest effort to develop Shanghai into a major gold trading center, and mirrors similar developments in the country’s currency and oil markets.

The introduction of interbank trading is intended to develop China into a liquid and market such as London, and demonstrates the government’s readiness to open the market to greater participation by international banks, said Jeremy East, global head of metals trading at Standard Chartered PLC (STAN.LN).

“From a government perspective, gold is seen as currency, and the government is slowly releasing the controls on currency. We expect the [gold] market will be opened up to more foreign banks,” he said.

Given their trading volumes, Chinese banks already play a significant role in determining international gold prices, so the move will have a limited impact on prices, Mr. East said.

China offers a massive gold market, albeit one that is tightly controlled. The country is the world’s biggest gold producer and ranked as the No. 2 gold consumer in the third quarter of this year. It has official gold reserves of 1,054 metric tons, the world’s sixth-largest, World Gold Council data show. But gold exports are banned and only a handful of banks hold import licenses.

Until now, member banks have been able to trade physical gold between themselves on the Shanghai Gold Exchange, but the absence of an over-the-counter market restricted them from becoming market makers in gold. In an over-the-counter market, transactions are quoted and conducted between parties on a principal-to-principal basis rather than being traded through a broker on an exchange.

Mongolia: Filling energy deficit

In September, a group of foreign energy firms revealed plans to invest $1.3bn in a power plant near the capital. France-based GDF Suez, South Korea-based Posco Energy, Japan-based Sojitz and local firm Newcom developed the deal with the government under a 25-year power purchase agreement.

The facility, which is expected to be complete by 2016, will become the country’s fifth thermal power plant (TPP) and supply roughly half of Ulaanbaatar’s energy needs.

The coal-fired, combined heat and power plant will have an electricity capacity of 415 MW and a steam output for heating of 587 MW. The plant will have three circulating fluidised bed boilers that use efficient pollutant control measures. Construction is expected to begin in 2013, according to Sojitz officials.

The news is timely for the city: in October the Ministry of Energy warned the capital’s citizens of an impending electricity shortage that may require the electricity to be stopped in certain areas of the city in December. To make matters more difficult, the country’s freezing winters increase demand on the heating system by up to 18%, adding stress to the current supply.

The new power plant follows the Mongolian government’s granting a licence for a new 600-MW TPP in November 2011 to Canada-based Prophecy Coal, which plans to use coal from the Chandgana Tal deposit, located some 60 km from Underkhann city. The plant will be operated by Prophecy Coal’s Mongolian subsidiary, East Energy Development. “There is an understanding among all stakeholders that Mongolia, being one of world’s fastest-growing economies, needs additional power. With the IMF projecting a deficit of over 600 MW by 2016, this need has become critically urgent and can no longer be delayed,” said John Lee, the chairman and CEO of Prophecy Coal, in November 2011. As of 2011, the current installed power capacity for coal-fired power plants in Mongolia was 814 MW, but only 646 MW was available due to ageing power plants, with most being over 30 years old. At present, just 67% of the population has access to power and 35% to water.

Other power projects are also under development, including a 60-MW power plant for the Mogoin Gol coal deposit, a 12-MW power plant for the Khushuut coal deposit, an 800-MW power plant for the Sainshand industrial cluster, and two 50-MW wind farms, including the Salkhit wind farm.

Inside Japan's Election

Of all the headwinds plaguing Japan's economy in recent years, one of the biggest is political uncertainty. Japan's had seven prime ministers in as many years, making it difficult for leadership to enact meaningful economic reform—something Japan could use in spades. And with the lower house of Parliament dissolved November 15 and a snap election now scheduled for December 16, the revolving doors may soon turn again.
The contest will pit incumbent Yoshihiko Noda of the Democratic Party of Japan (DJP) against Shinzo Abe, new leader of the Liberal Democratic Party (LDP). If the LDP takes control, it'll be Abe's second turn at the helm—he succeeded Junichiro Koizumi in 2006 but stepped down less than a year later citing health reasons (more on this in a bit).
The campaign should be … interesting. Noda, who was forced to call early elections after 50 DPJ members left the party to protest his sales tax increase, has put free trade at the center of his manifesto. He's pledged to complete Trans-Pacific Partnership trade talks and a trilateral free trade agreement with China and South Korea. These agreements would no doubt benefit Japan over time, broadening end-markets for domestic exporters and providing consumers more choices and cheaper goods. But they'll likely prove a tough sell in historically protectionist Japan, and Abe's stance against lowering agricultural tariffs may win more support.
Of course, tariffs are but a small piece of Abe's campaign platform, which features a nationalist agenda—likely to win big points with voters amid territorial disputes with China and South Korea, which have raised nationalist fervor to a fever pitch. In recent weeks, Abe has visited the infamous Yasukuni Shrine—the memorial to Japan's war dead whose honorees include Class A war criminals—pressed China on human rights, advocated removing Japan's constitutional ban on waging war and suggested establishing a military presence around the contested Senkaku/Diaoyu islets. All have helped him curry favor amid rising anti-Chinese sentiment: He and the LDP lead current polling, while support for Noda and the DPJ is below 20%.
Compounding matters, however, are two nationalist fringe candidates, former Tokyo governor Shintaro Ishihara and Osaka mayor Toru Hashimoto, who recently created the Sunrise and Japan Restoration parties, respectively. Eighty-year-old Ishihara's long been considered a loose cannon—his threats to use Tokyo money to purchase three of the Senkaku/Diaoyu islets from their private owners are what forced Noda to nationalize the islands (an attempt to preempt tensions with Beijing that backfired), and he's regularly denied the Nanjing atrocities ever occurred. Hashimoto also denies Nanjing and other WWII-era Japanese brutality (particularly aimed at Korean women) and, like Ishihara, has pushed for Japan to acquire nuclear weapons.

China's challenge with corruption

Beijing
Just two years after he founded Communist China, in December 1951, Mao Zedong issued one of his characteristically forthright directives. "We must probably execute 10,000 to tens of thousands of these embezzlers before we solve the problem," he wrote.
The “problem” was corruption, and 60 years later it has not gone away. As he takes the reins, the newest leader of China’s ruling Communist Party, Xi Jinping, is himself making the issue his number one talking point.
Corruption – perhaps the ordinary Chinese citizen’s single biggest complaint against his rulers – “will inevitably doom the party and the state” unless it is curbed, Mr. Xi warned the first meeting of the newly chosen 25 member Politburo last weekend. “All behavior that violates party discipline or the law should be punished without mercy.”
Turning that talk into action, however, will be a tall order in a country where gift-giving is a pillar of traditional culture, a single political party has a stranglehold on power, and bribery is pervasive from top to bottom of society. Some 668,000 party members have been punished for corruption in the past five years, according to official figures that represent only the tip of the iceberg, experts say.
“Controlling corruption will be a huge challenge for any regime,” says Lu Xiaobo, a professor at Barnard, Columbia, who has written a book about official corruption in China. “Realizing that it’s a problem and making it a priority does not necessarily mean they will be successful” in fighting it.

Reason for hope?

China’s citizenry could be forgiven for being skeptical. Their leaders have been decrying corruption – and doing very little about it – for decades. But some corruption experts here say there may be reason for a little more hope this time.

At least 18 dead in China coal mine explosion

Eighteen people were killed and five others are still trapped after an explosion Saturday at a coal mine in the southern Chinese province of Guizhou, state-run media reported.

The accident occurred around 11:00 a.m. at the Xiangshui coal mine in the town of Liupanshui.

Emergency personnel have rescued five miners and were working to pull out the other five who remain trapped.

Chinese coal mines are the most dangerous in the world, with around 3,000 deaths occurring annually due to lack of safety measures and cave-ins caused by overexploitation.

Coal supplies between 60 percent and 70 percent of the energy needs of the world's second-largest economy.

Posted by: Shawn Huyck 

Japan, North Korea begin new talks in Mongolia; Tokyo seeks details on decades-old abductions

TOKYO — Japan and North Korea began talks Thursday in Mongolia that Tokyo hopes will shed light on decades-old abductions.
The meetings in the Mongolian capital of Ulan Bator are scheduled to last through Friday. In August, lower-level negotiators from Japan and North Korea held the countries’ first bilateral talks in four years, but made little progress.
Japan wants information on the abductions of Japanese citizens by North Korean agents in the 1970s and ‘80s. Japan believes at least one abductee may still be alive in the North, though North Korea denies this. Five abductees were returned to Japan in 2002.
Japan and North Korea do not have formal diplomatic relations. The abduction issue and concerns over North Korea’s nuclear and missile programs have long strained ties.
Japanese officials indicated before the start of the talks that they expected them to be tough and not likely to lead to any immediate breakthroughs. North Korea’s official media provided few details, reporting only that they were intended to deal with issues of mutual interest.
Japan has imposed strict sanctions against the North and cut off most economic and cultural exchanges in 2006 after a missile launch. Tensions heightened again earlier this year when the North launched a rocket that it said carried a satellite, but that Japan and other countries criticized as a thinly disguised test of long-range missile technology. The launch failed just after takeoff.

Posted by: Shawn Huyck 

US must clearly back Japan in islands dispute with China

The United States might prefer that the territorial dispute between China and Japan over uninhabited islands simply go away. America, after all, has enough of its own problems to fix. And it’s loathe to meddle in a fight between two of its most important trading partners – countries still grappling with their war-time history.

While the recent flare-ups over their rival claims to islands in the East China Sea may temporarily die down, the underlying causes will not be resolved anytime soon. The dispute also has the potential to escalate into a tempest that threatens the region – and in turn, America’s security.

America rightly wants good relations with both Japan and China. However, sometimes one has to take sides. Intentional ambiguity can be useful in foreign affairs, but not here.

The US, then, should take this moment to ensure its position avoids any ambiguity toward the islands, called Senkaku in Japan and Diaoyu in China. It should stand far more publicly with its democratic ally, Japan, and against the bullying tactics being applied by China. Asian countries are closely watching.

True, Japan has ongoing territorial disputes with South Korea and Russia. But Japan has not used or threatened force, or applied economic pressure to retrieve what it considers Japanese territory.

Chinese behavior in the last two years starkly differs. Chinese patrol boats continue a cat-and-mouse game of harassment near the Senkakus. Beijing has encouraged and apparently fomented rioting against Japanese interests in China. And it has threatened and carried out economic retaliation against Japan. Chinese officials and media have made crudely aggressive and derogatory statements toward Japan and Japanese people.

Japanese economy contracts; economists, officials predict a recession

TOKYO — Japan’s economy contracted 0.9 percent in the late summer, according to government data released Monday, as officials and economists here warned that the country appears headed toward a recession.

At an annualized rate, Japan’s gross domestic product shrank 3.5 percent, a reversal after two quarters of growth. The drop-off signals the major obstacles facing the world’s third-largest economy as it deals with weakened demand in Europe and a simmering diplomatic spat with China, both of which have hurt Japanese exports.

Japan’s exports for the quarter — a period between July and September — plummeted 5 percent, the steepest drop since immediately after the March 2011 earthquake and tsunami.

“In part, this may have been due to the anti-Japan demonstrations in China and the subsequent boycott of Japanese goods,” Barclays Economics Research wrote in a note after the data were released.

Economists predict that Japan’s economy will shrink again in the next quarter, leading to a technical recession. If Japan goes into recession, it would be its third since 2008, according to Bloomberg News.

“Judging from recent economic indicators, the possibility cannot be ruled out that the Japanese economy is already in a recessionary phase,” Seiji Maehara, Japan’s minister of state for economic and fiscal policy, told reporters.

A potential but modest recovery in 2013 could come if the world’s biggest economies — the United States and China — continue to rebound. “Going forward, developments in Japan’s economy will basically depend on those in overseas economies,” said Masaaki Shirakawa, the governor of Japan’s central bank.

Both U.S. and China Will Appoint New Trade Negotiators

BEIJING — The rare congruence of the U.S. and Chinese political calendars this month, with both countries choosing leaders for the coming years, is about to produce an equally rare replacement of most of each side’s senior trade negotiators, with unpredictable results for bilateral economic relations.

One of the few surprises in the carefully scripted party congress that ended Wednesday was that Commerce Minister Chen Deming lost his seat when delegates chose the members of the Communist Party’s Central Committee for the next five years.

Under party rules, that means he will have to step down as minister at the National People’s Congress next spring. His loss of membership in the Central Committee also meant that he was ineligible to join the Politburo last Thursday and become one of the four vice prime ministers, as some analysts had expected.

Some Chinese analysts say that the broad direction of the country’s international economic policy is clear and consistent and that changes of individuals will not make much of a difference.

“The fundamental policy on international trade is adherence to opening and reform,” said He Weiwen, co-director of the China-U.S.-E.U. Study Center at the China Association of International Trade in Beijing. “It will certainly continue and develop to a new height, including China’s trade policy on the U.S.”

But the significance of Mr. Chen’s departure from the Central Committee has produced a divided reaction among Western experts on China’s policymaking process on international economics. He had a reputation within China for being a gentlemanly figure who chooses his words with care and has not indulged in outspoken denunciations of the West during trade disputes, even as the tone of social media in China has become increasingly nationalistic on economic policy.