Japan has long been renowned for its procession of bestselling products: cars and cameras, radios and record players, steel and semiconductors. In the future it will also be an important source of a more basic commodity: money. As Japan's trade surplus mushrooms, the country is raking in much more money than it spends at home. As a result, the Japanese are sending the funds back overseas by making loans, buying foreign stocks and bonds, and building factories in countries around the globe. Once merely a master manufacturer, Japan is on the way to becoming the world's premier investor and creditor. Its economic and financial clout could eventually rival the power held by Britain in the 19th century and the U.S. after World War II.
In 1984, Japan ran a trade surplus of about $44 billion, up from $20 billion in 1981. In trade with the U.S. alone last year, Japan had a $30 billion surplus. One reason for that startling imbalance is the lofty value of the U.S. dollar. Partly because of high American interest rates, the dollar has risen 30% against the yen since 1978. That has made Japanese imports cheaper for U.S. shoppers, and American exports more expensive in Japan. Economists think the dollar may decline a bit over the next year or two, but not nearly enough to erase Japan's surplus. In fact, some Japanese trade experts predict that their country's favorable balance of trade with the U.S. could balloon to $75 billion by 1990.
Japanese holdings overseas are now worth about $70 billion more than the investments that foreigners have made in Japan. That total should reach $100 billion this year, moving Japan past the U.S. ($95 billion) and Britain ($81 billion) into the top spot among international investors. Nobumitsu Kagami, chief economist of Nomura Investment Management in Tokyo, projects that Japan's overseas investment surplus will rise to $500 billion by 1992. Says Hiroshi Takeuchi, a managing director of Japan's Long-Term Credit Bank: "Our country could become a permanent capital exporter."
The U.S. is already hooked on Japanese capital. Enticed by steep American interest rates, Japanese investors poured about $25 billion last year into U.S. Government securities. That windfall financed a sizable chunk of the $175 billion federal budget deficit. Without Japanese money, interest rates on Treasury securities, which now range to 11.66% on a 30-year bond, would be even higher.
Japan also exports capital in the form of loans and grants to its neighbors in the Pacific region. The Philippines, staggering under a $26 billion foreign debt and deep in recession, received a grant of about $240 million from the Japanese government three months ago. Last July the Japanese government gave Thailand loans and grants worth about $300 million. Japan hopes that economic aid will strengthen its neighbors and increase trade and prosperity throughout the whole Pacific region.