How Japan Is Riding China In A Desperate Escape From Deflation

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Photo: AF.Mil

After 800 years of discouraging foreigners, Japan is opening the floodgates to tourists — especially the Chinese. The government relaxed visa requirements for Chinese nationals last summer and now plans to give out 10 times as many visas to China.What deflationary Japan wants is more of this:

(AP) Foreign tourists, especially from China, have boosted sales at major department stores across Japan amid their dwindling overall sales after the collapse of Lehman Brothers in the fall of 2008, the Japan Department Stores Association said Saturday. 

The combined sales of each department store was 2.2 times higher in February, the month embracing the Chinese New Year holidays, compared with the same period last year. The figure in April rose 37.3 per cent to 2.4 billion yen as well.

But is it a healthy relationship like the good old days of Chimerica?

The China Bubble inflated prices enough to drive Chinese shoppers to Japan. Chinese money may inflate Japanese prices and skewer Japanese consumer spending. Chinese inflation promotes Japanese deflation, and a crash in either country brings them both down. This is what psychologists call codependency.

Scary when you read Hugh Hendry says the major collapse that spurs global hyperinflation will be Japan or China.

Don’t miss: China’s 14 Dominoes Of Destruction

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