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Post-quake Reconstruction Could Boost Japan's Economy

04-10 14:23 Caijing
Japan's post-earthquake reconstruction could offer an important opportunity to solve its economic woes and shake off more than a decade of stagnant growth, but this will require at least another decade.

By Japan correspondent Wang Yanchun and staff reporter Hu Weijia

The massive earthquake and subsequent tsunami and nuclear disaster that hit Japan in the spring of 2011 killed almost 16,000 people and displaced thousands more. Meanwhile, the path of destruction left behind by the disaster had made recovery and reconstruction a monumental task.

Japanese authorities stated that as of early February this year, 96 percent of the debris generated by the earthquake in disaster-stricken areas has been removed, but only a small portion of it has been processed. According to statistics from Japan's environmental ministry, 22.528 million tons of debris was generated in the three hardest-hit prefectures of Iwate, Miyagi, and Fukushima, including approximately 3.5 million tons of debris which must be processed in other regions.

Following the disaster, the Japanese government mobilized various departments to prepare a national reconstruction plan. It also reviewed local redevelopment plans and assigned specially-organized technical expert groups who were responsible for assessment and verification. The plans were then required to be coordinated with a third party disaster assessment organization.

Estimates of the damage caused by the disaster turned out to be greater than previously believed. As a result, proposed reconstruction funds and methods have gone through repeated assessment and scrutiny. At the same time, the process to solicit public opinion for the reconstruction program has been indispensable. Explanation sessions and problem-solving talks have been held frequently at all levels of government.

In addition to the national recovery plan, prefecture-level governments (equivalent to China's provincial governments) and municipal governments (equivalent to China's prefecture-level cities) also formulated their own reconstruction programs. The independent yet interactive plans from the national, prefectural and municipal governments offer a three-pronged strategy for Japan's overall recovery.

Japan's private property rights makes acquiring any land a difficult task, while finding land suitable for relocation borders on the impossible. In the past year, in the worst-affected prefectures of Miyagi, Fukushima, and Iwate, housing and land prices have soared in high elevation areas, while waterfront land prices have dropped significantly.

Facing the compound impact of the earthquake and subsequent tsunami and nuclear crisis, raising funds for reconstruction is high on the agenda of both the government and the public.

The Japanese government previously earmarked 23 trillion yen to be invested in reconstruction over a period of 10 years. Eighty percent of the funds, or 19 trillion yen, will be invested in the first five years of the 10-year plan. However, the Nikkei estimated that the cost of reconstruction in Iwate, Miyagi, and Fukushima over the next 10 years will be more than 30 trillion yen.

Each time funds for reconstruction are added, the burden and pressure on the Japanese government increases. The proportion of Japan's public debt to gross domestic product (GDP) is about 200 percent, the highest among developed countries and regions; meanwhile, the deterioration of Japan's international balance of payments position has further complicated the situation.

Restoring production and exports in disaster-affected areas is another extremely difficult task in addition to fund-raising. Agricultural exports from earthquake-stricken areas have been particularly affected by the Fukushima nuclear power plant accident. Fears of nuclear radiation have also severely impacted the travel and tourism industry, while unemployment in disaster-affected areas has become a nagging problem.

Facing the mammoth task of recovery and reconstruction, in its final redevelopment plan the Japanese government proposed the primary task of transforming the industrial structure of disaster-affected areas. After 10 years of economic downturn, the Japanese government hopes that post-quake reconstruction will be a turning point and the beginning of a new round of growth akin to the economic recovery the country experienced following the Great Hanshin earthquake in 1995. Japanese society recognizes that reconstruction involves not only infrastructure, but also the industrial chain, technology, and personnel. However, the path ahead will be long and arduous ― the Washington Post estimates it will be 10 years before Japan can usher in a full recovery.

Full article in Chinese: http://magazine.caijing.com.cn/2012-04-08/111803754.html

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