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Japan OKs $135B Stimulus Package       11/21 06:06

   Japan's Cabinet approved a 21.3 trillion yen ($135.4 billion) stimulus 
package Friday to help spur the economy through expansionary government 
spending and to relieve the impact of higher prices.

   TOKYO (AP) -- Japan's Cabinet approved a 21.3 trillion yen ($135.4 billion) 
stimulus package Friday to help spur the economy through expansionary 
government spending and to relieve the impact of higher prices.

   After taking office last month, Prime Minister Sanae Takaichi promised to 
boost government spending despite concerns that such moves will delay progress 
on trimming Japan's national debt, which is about triple the size of its 
economy.

   Takaichi told reporters that the package aims to quickly deliver on her 
promises.

   "Through wise spending, we will change worries into hope and achieve a 
strong economy," she said.

   "What we should do now is to strengthen the national power through 
expansionary spending, through wise spending, and not to cause harm through 
excessively contractionary policies," she said.

   The spending package far exceeds those of the pre-COVID-19 pandemic years 
and is also meant partly to blunt the impact of higher U.S. tariffs on Japanese 
exports to America under President Donald Trump.

   Exports to the U.S. fell in October for the seventh straight month, the 
government said Friday, though shipments to the rest of the world rose 3.7%, 
thanks partly to higher exports to the rest of Asia.

   In recent days, investors have sold off Japanese government bonds, pushing 
yields higher, while the yen has fallen to nearly its lowest level this year.

   Share prices have also taken a hit from renewed friction with China after 
Takaichi made comments that angered Beijing, provoking retaliatory moves 
including an advisory warning Chinese tourists and students against going to 
Japan.

   The benchmark Nikkei 225 index fell 2.4% on Friday, mainly due to heavy 
selling of technology shares.

   The lavish spending package approved Friday includes subsidies for energy 
costs, a cut in the gasoline tax and other measures to help consumers 
struggling with the rising cost of living. The government reported Friday that 
core inflation excluding volatile food costs was 3% in October, higher than the 
central bank's target of around 2%.

   Specific subsidies include one-time cash handouts of 20,000 yen (about $130) 
per child, which would require about 400 billion yen ($2.6 billion) in 
government funding and issuing rice vouchers or other coupons worth 3,000 yen 
(about $20) per person, to be distributed by local authorities.

   Takaichi's government must compile a supplementary budget and gain approval 
by the parliament by the end of this year to fund the package. That's a major 
challenge for her ruling coalition, which lacks a majority in both the Upper 
and Lower houses of the Diet.

   Takaichi succeeded former Prime Minister Shigeru Ishiba, who was virtually 
ousted by his rivals in the ruling party after losing major elections due to 
voter dissatisfaction over his minority government's slow response to soaring 
prices and lagging wages.

   As Japan's first female prime minister, Takaichi has so far enjoyed high 
levels of public support largely because of expectations she might shake up 
Japan's gerontocratic politics. But since she has a minority government, she 
needs cooperation with opposition parties to get her supplementary budget and 
spending package passed.

   Opposition lawmakers and experts have questioned whether the package will be 
effective in attaining its aims. One of which is to slightly lower consumer 
prices by cutting energy costs. Any impact on inflation is expected to be 
transient since increased demand from other stimulus would tend to push prices 
higher.

   The package also is meant to raise Japan's gross domestic product by 24 
trillion yen ($155 billion), or an annualized rate of 1.4%, according to the 
Cabinet Office.

   Japan's economy, the world's fourth largest, contracted at a 1.8% annual 
pace in July-September.