Japan OKs over $224b in fresh stimulus

TOKYO (AP) ― The Japanese Cabinet approved a fresh stimulus spending of more than 20 trillion yen ($224 billion) on Friday, rushing to fulfill campaign pledges to break the world’s third-biggest economy out of its deflationary slump.

Prime Minister Shinzo Abe announced the decision at a news conference where he said the new measures were intended to add 2 percent to Japan’s economic growth and contribute 600,000 new jobs.

Abe urged the central bank to move more aggressively to encourage lending and meet a clear inflation target.

Abe took office late last month after a parliamentary election victory by the Liberal Democratic Party, which is touting public works spending and subsidies to strategically important sectors as part of its plan to pull the economy out of recession.

The prime minister, who also served as prime minister in 2006-2007, has vowed to make reviving the economy his top priority, promising support both to small businesses and big industries such as the auto sector.

The stimulus deal required wrangling over tax reform and other issues with the Liberal Democrat’s coalition partner, the New Komeito.

Abe and his ministers also sought support for his program from big business in a whirlwind round of appearances at new year parties this week.

“We will work with you and appreciate your cooperation,” industry minister Toshimitsu Motegi told a gathering of Japanese auto executives, describing the car industry as the “main hitter” of the Japanese economy.

“Without a revival of the auto industry there will be no rebirth of Japan,” he declared.

The bulk of the spending package will go to supporting industrial revitalization and reconstruction from Japan’s March 2011 earthquake and tsunami disasters. It also includes plans a request to raise military spending by 100 billion yen ($1.1 billion) from the 4.6 trillion yen ($52.3 billion) budget last year, the first such increase in a decade.

The increase is partly aimed at beefing up monitoring and defenses around islands in the East China Sea, known as the Senkakus in Japan and the Diaoyu islands in China, that are the focus of a simmering territorial dispute.