Tokyo Kuroda, president of the Bank of Japan, warned Tuesday that the escalation of trade tensions between China and the United States could undermine business confidence and have a widespread negative impact on the economy.
Japan's policymakers, who are already worried about the impact of Japan's export-oriented economy, are even more distressed by the prolonged and costly fears of a Sino-US trade war that will crush financial markets.
"If trade tensions continue, they will have a widespread impact on the global and Japanese economies through business confidence and market dynamics," Toshihiko Kuroda told Congress.
"We want constructive discussions between the United States and China," he said.
Other BOJ policymakers also expressed concern about the possible damage caused by the trade war, but they maintained their original view that Japan's economy was stable. This implies that the Japanese government plans to continue to push for an increase in consumption tax in October.
"We are now seeing some manufacturers postponing capital expenditure plans," Taro Aso, Japan's finance minister, told Congress on Tuesday. "But corporate profits are still at a high level, and the fundamentals supporting domestic demand remain robust."
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