28/05/2025

BIZ & FINANCE WEDNESDAY | MAY 28, 2025

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Tokyo unveils ¥2.2 tril package to shield SMEs from US tariff fallout TOKYO: Japan yesterday announced a bundle of measures aimed at shielding SMEs from the impact of US tariffs. The key Washington ally is subject to the same 10% baseline tariffs imposed by President Donald Trump on most nations plus steeper levies on cars, steel and aluminium. The ¥2.2 trillion (RM65 billion) package will include help with corporate financing and easing of loan conditions at a government-backed lending insti tution, said Chief Cabinet Secretary Yoshimasa Hayashi. “We will provide full support for small and medium-sized enterprises affected by the US tariffs,” Hayashi told a news conference. Trump also announced 24%“reciprocal” tariffs on Japan in early April, but later paused them along with similar measures on other countries until early July. Japan wants all Trump’s levies on its exports to the United States lifted, with the government’s tariffs envoy expected to return to Washington this week for a fourth round of talks. The government also said yesterday that it will spend ¥288 billion to help families deal with surging electricity and gas prices in the three months to September, when air conditioning de mand will surge to fight sweltering heat. The planned assistance should mean utility bills will be cut by ¥3,000 per family over the quarter, Hayashi said, adding that it was also part of efforts to deal with the US tariffs and inflation. –AFP CREDITOR, DATA SHOWS TOKYO: Japan has lost its position as the world’s top creditor after 34 years, falling behind Germany, even as its net external assets last year hit a record high, officials said yester day. Japan’s net external assets as of the end of last year stood at ¥533.05 trillion (RM15.75 trillion), up 12.9% from a year earlier, according to data released by the finance ministry. That, however, was below Ger many’s ¥569.65 trillion, meaning Japan lost the top spot it has held since 1991, the finance ministry said. Mainland China remained in third place with ¥516.28 trillion, followed by Hong Kong’s ¥320.26 trillion and Norway’s ¥271.83 trillion according to the ministry’s data. – AFP TESLA SALES IN EU SLUMP 52% IN APRIL: TRADE GROUP PARIS: Sales of cars made by Elon Musk’s Tesla slumped by more than half in April as Chinese electric carmakers saw their share surge, the continent’s manufacturing association said yesterday. While sales of electric cars rose overall in the 27 European Union nations, Tesla’s share fell dramatically amid the spotlight on Musk’s work with US President Donald Trump and the US com pany’s ageing range. The European Automobile Manufacturers’ Asso ciation said Tesla sales in April fell to 5,475 cars, down 52.6% from the same month last year. In the first four months of 2025, Tesla sales have fallen 46.1% against the same period last year to 41,677 cars. – AFP JAPAN LOSES STATUS AS WORLD’S TOP

BIS urges governments to curb ‘relentless’ rise in debt

BR I E F S

TOKYO: Governments across the globe must curb their “relentless” rise in public debt as higher interest rates make fiscal paths for some countries unsustainable, Agustin Carstens, general manager of the Bank for International Settlements (BIS) said yesterday. Large deficits and high debt appeared sustainable when interest rates were kept low after the global financial crisis, allowing fiscal authorities to avoid making hard choices such as cutting spending or raising tax, he said. “But the days of ultra-low rates are over. Fiscal authorities have a narrow window to put their house in order before the public’s trust in their commitments starts to fray,” Carstens said in a speech delivered at a conference hosted by the Bank of Japanhere. “Markets are already waking up to the fact that some paths are not sustainable,” he said, warning that financial markets could suddenly destabilise in the face of large imbalances. “That is why fiscal consolidation in many economies needs to start now. Muddling

shown, inflation will partly depend on factors that are not under central banks’ control,” he said. In a separate development, an Australian think tank warned in a report yesterday that the world’s poorest nations face a “tidal wave of debt” as repayments to China hit record highs in 2025, China’s Belt and Road Initiative lending spree of the 2010s has paid for shipping ports, railways, roads and more from the deserts of Africa to the tropical South Pacific. But new lending is drying up, according to Australia’s Lowy Institute, and is now outweighed by the debts that developing countries must pay back. “Developing countries are grappling with a tidal wave of debt repayments and interest costs to China,“ researcher Riley Duke said. “Now, and for the rest of this decade, China will be more debt collector than banker to the developing world.” The Lowy Institute sifted through World Bank data to calculate developing nations’ repayment obligations. – Reuters, AFP unease over tensions with major trade partners could have a lasting impact on its credit profile, but acknow-ledged that government policy had addressed the credit ratings agency’s previous concerns about the health of state-owned firms and local government debt, which prompted a downgrade in late 2023. Profits at state-owned enter prises fell 4.4% over the first four months, the NBS data showed, while private sector companies and foreign firms enjoyed growth of 4.3% and 2.5%, respectively. Industrial profit numbers cover firms with annual revenue of at least 20 million yuan from their main operations. “The foundation for stable profit growth still needs to be streng thened,” Yu Weining, an NBS statistician, said in a note accom panying the data. “Challenges remain: global uncertainties, insufficient demand and falling prices continue to weigh on the recovery.” Separate data released over the course of April - as the US and China ramped up tit-for-tat tariffs – painted a mixed picture for the economy, with better-than-expected exports offset by slowing growth in factory output and retail sales and a slump in bank lending. While the world’s top two economies reached a truce during talks in Geneva earlier this month – with the US and China unwinding most of the tariffs imposed on each other’s goods since early April – analysts warn the arrangement may not hold and could still derail the Chinese economy. – Reuters

o Authorities have narrow window to put fiscal house in order, Bank for International Settlements says

national monetary and fiscal co operation among central banks and to serve as a bank for central banks. Carstens said many countries will face pressure for more public spending due to population ageing, climate change and higher defence spending. “Fiscal authorities must provide a transparent and credible path to safeguard fiscal solvency, ideally underpinned by stronger fiscal frameworks. They must then follow through on their commitments,“ he said. “Central banks cannot be the only game in town.” For monetary policy, Carstens said central banks should not be expected to stabilise inflation “at very short horizons and within narrow ranges”. “This is particularly important because, as recent events have

through is not enough.” The warnings came in the wake of recent steady rises in bond yields in the United States, Japan and Europe, driven in part by market expectations that their govern ments will ramp up spending funded by increased debt. Defaults on public debt can destabilise the global financial system and threaten monetary stability as central banks may be compelled to finance government debt, leading to fiscal dominance over monetary policy, Carstens said. “The result would be rising inflation and sharp exchange rate depreciations,” he said. “In light of these considerations, it is essential for fiscal authorities to curb the relentless rise in public debt.” The BIS aims to foster inter

Stimulus helps drive China’s industrial profits BEIJING: China’s industrial profits picked up pace in April, official data showed yesterday, giving policy makers cause for optimism that recent stimulus efforts are helping to keep the economy afloat despite trade tensions with the United States. US President Donald Trump’s decision to single China out in his global trade war has stirred significant worries about an economy that has been reliant on an export-led recovery to drive momentum in the face of weak domestic demand and deflationary pressures. Industrial profits rose 1.4% year on-year in the January-April period, according to data released by the National Bureau of Statistics (NBS). This compared with 0.8% growth over the first quarter. In April alone, profits rose 3.0%, versus a 2.6% rise a month prior. “China’s industrial policy prio rities look to be working well,” said Dan Wang, Eurasia Group’s China director. “Commodities involved in new energy and new materials supply chains are doing well, as are those in high-end manufacturing.” Policymakers have since Sep tember been drip-feeding stimulus measures in a bid to boost domestic demand and investor confidence, with the latest round in early May including interest rate cuts and a major liquidity injection. Moody’s on Monday maintained its negative outlook on China, citing

An employee works on a tractor assembly line at a factory in Qingzhou, in eastern China's Shandong province yesterday. China’s industrial profits rose 1.4% year-on-year in the January-April period, official data showed. – AFPPIC