Japan turns to Asia’s fountain of youth as Abe seeks trade ties

Japan’s Prime Minister Shinzo Abe begins a six-day tour of Asia Pacific nations on Thursday that includes the region’s youngest and fastest-growing economies, seeking to strengthen ties as growth at home lags.

The three Southeast Asian countries that Abe is visiting – the Philippines, Indonesia, and Vietnam – have economies expanding more than 5 percent, according to recent official data. He’ll also visit Australia, but is skipping the more sluggish and fasteraging countries in the region, such as Singapore and Thailand.

Here are three charts that show Japan’s relationship with Southeast Asia.

Trade When it comes to trade, Japan remains a laggard relative to its main regional rival, China. In the decade through 2015, Japanese trade with the six largest economies in the Association of Southeast Asian Nations, or ASEAN, increased by 27 percent, while China’s trade more than tripled.

That’s due to much faster growth in China than in Japan during the period, said Timothy Condon, head of Asian research at ING Groep NV in Singapore, by e-mail. Japan’s economy grew an annualized 1.3 percent in the third quarter from the previous three months, while China expanded 6.7 percent in the quarter compared with a year earlier.

Investment Southeast Asian economies have been the target of Japanese investment for some time, as corporate Japan looks to tap the region’s potential and low labor costs. While the pace has declined from a peak in 2013, foreign direct investment by Japanese companies in the six largest ASEAN economies has more than doubled since 2010.

Abe’s visit is “all about flying the flag,” Song Seng Wun, a regional economist at CIMB Private Bank in Singapore, said by phone. “This is about telling people: Even though China is making inroads, we are still one of the biggest investors. We’re still here.”

Aging Japan’s aging and declining population has been a drag on the economy, pushing companies to seek growing consumer markets elsewhere. In a population of 104 million in the Philippines, 31 percent is under the age of 15, while in Indonesia, the proportion is 23 percent. The Philippines’ favorable demographics are helping to sustain one of the fastest growing economies in Asia.

“There is a lot at stake, these are countries with relatively strong growth and from the Japanese standpoint they can provide another arrow of growth,” CIMB’s Song said. “Money is coming through. Japan has been a consistent provider of investment.”