The government Monday gave a tacit nod to a new economic growth strategy containing numerical goals for 2020, including one to make environmentally friendly vehicles account for 50 percent of new car sales by that time, and one to make free-trade pacts with other countries account for 80 percent of trade.
The “revitalization strategy” focuses on the environmental, medical and primary sectors for enhanced investment over the next three years, targeting average annual gross domestic product growth of 3 percent in nominal terms and 2 percent in real terms through fiscal 2020, which ends in March 2021.
The plan, released by the Council on the Realization of New Growth Strategies, part of the National Policy Unit, will be formally approved Tuesday by the Cabinet of Prime Minister Yoshihiko Noda, who has faced an uphill battle in halting the nation’s chronic deflation.
The focus is on how Tokyo will finance the new strategy at a time when its poor fiscal health is drawing international concern.
“We will continue to devote our utmost efforts to recovery from the Great East Japan Earthquake and the revitalization of Fukushima as priority issues,” Noda told the panel.
He said Japan will simultaneously address key challenges on various fronts, including the environment, agriculture, and small and medium-size enterprises, under the Japan Revitalization Strategy.
The strategy estimates the government could create new markets with a total value of over ¥100 trillion in such areas as the environment, energy, medicine and health care and tourism, as well as more than 4.8 million jobs.
As a main pillar, Japan will promote the public use of hybrid, electric and other environmentally friendly vehicles, aiming to boost their share of new car sales to 50 percent by 2020.
How to improve the capacity of storage batteries used in such cars is a sticking point, officials said, and the government will encourage Japanese firms to introduce new technologies and hold half the global market share in the storage battery sector,worth about ¥10 trillion.
Also on the environmental front, the country will try to raise the percentage of newly built homes that meet state-set energy-savings standards to 100 percent from 40 percent now.
In medicine, the state is looking to secure a presence abroad. In cooperation with the private sector, it hopes to expand Japanese services and products overseas to a level of about ¥20 trillion.
On international trade, the government plans to sign more free-trade agreements with other countries, aiming to boost the ratio of trade with them to 80 percent from 18.6 percent in 2011.
Some of the measures pledged under the strategy will be financed by the initial fiscal 2013 budget. Work to compile that is expected to start soon and a draft will be endorsed by the Cabinet at year’s end. The new fiscal year will start in April.
But the plan does not clearly mention how specific goals will be financed, while the government’s capacity to issue new debt is limited, given that Japan’s fiscal health is the worst of the major developed countries.
Noda’s team plans to raise the sales tax, but this is almost completely aimed at covering swelling social security costs stemming from the graying population.
Given Noda’s precarious political situation, due largely to opposition to the tax hike, it is uncertain that his administration will be able to press ahead with the new growth measures.
To prevent ineffective budget allocations, the government said it will check progress on the strategy’s numerical targets each May and disclose the results to the public.