Japan's Finance Minister: The government's reliance on debt in the budget is decreasing, planning to invest over $33 billion in AI and chips

The Japanese government is promoting a transformation of its economic growth model, shifting from reliance on debt financing to investment-driven development, and has invested over $330 billion in artificial intelligence and chip sectors. On January 20, Japanese Finance Minister Shunichi Suzuki stated at the World Economic Forum in Davos that the government's dependence on debt is decreasing, and domestic optimism regarding structural reforms is growing, with the economy shifting towards a "focus on growth." She emphasized the need to significantly pivot towards investment-driven economic growth while striving to maintain fiscal sustainability. In response to the recent rise in Japan's government bond yields, she stated that Japan will expand fiscal spending while adhering to fiscal sustainability, and has clearly communicated to the financial community and investors the government's commitment to achieving long-term stability in public finances. Meanwhile, she indicated that Japan plans to invest over $330 billion, focusing on artificial intelligence and chip sectors. Following these remarks, the yen strengthened briefly, trading at 157.65 against the dollar. "Ending Excessive Tightening of Fiscal Policy" Triggers Bond Sell-off Earlier, Shunichi Suzuki announced a clear signal to end tight fiscal policies and shift towards expansionary fiscal measures, triggering a massive sell-off in the bond market, with yields soaring across the board. The yield on 10-year government bonds rose by 8 basis points to 2.350%, reaching its highest level since 1999; the yield on 30-year government bonds increased by 26.5 basis points to 3.875%. According to Xinhua News Agency, Japanese Prime Minister Shunichi Suzuki stated at a press conference on the 19th that the House of Representatives will be dissolved on January 23, seeking voter authorization to continue governing, with elections scheduled for February 8. The current term for members of the Japanese House of Representatives was originally set to expire in October 2028. Shunichi Suzuki candidly stated at the press conference: "We will end excessive tightening of fiscal policy... We must break free from the constraints of excessive tightening and boldly invest in risk management." Shunichi Suzuki also revealed that a series of "far-reaching" bills will be discussed at the upcoming meeting, hinting that subsequent policy agendas may involve significant structural reforms or economic adjustments. She pointed out that the Japanese government will end excessive tightening of fiscal policy, and strategic fiscal spending will increase employment and household income, leading to higher tax revenues. We must boldly invest in risk management and break free from the constraints of excessive tightening. Preparations will be made to eliminate the consumption tax on food for two years, although funding issues related to the tax reduction are still under consideration There may be a reduction in subsidies, and the overall budget will be modified. Japan will ensure the sustainability of its fiscal situation by lowering the debt-to-GDP ratio. Focus on AI and Chip Industry Japan is prioritizing artificial intelligence and the chip sector as strategic investment areas. On January 16, Japan held a meeting with ASEAN digital sector ministers in Hanoi, where both sides confirmed that they would deepen cooperation in areas such as talent development and technology research and development, jointly promoting the development of "artificial intelligence." The participants jointly drafted a joint statement aimed at collaborating on the development of artificial intelligence models that reflect the cultural, linguistic, and national characteristics of each country, and strengthening the training of young developers. Japan's Minister of Internal Affairs and Communications, Yoshifumi Matsumoto, stated that Japan hopes to further strengthen its cooperative relationship with ASEAN to assist in addressing regional challenges and promoting economic growth. He also pointed out that Japan will use this opportunity to enhance its credibility and influence in the global artificial intelligence field.