Japanese officials downplay financial pressure on $2.3 trillion investment plan: AI and semiconductor investments will support the yen in the long term According to BlockBeats, on August 11th, Japanese Minister of Economic Revitalization, Minoru Castle, stated that the large-scale industrial investment plan launched by the Japanese government will not weaken fiscal stability, but will instead provide long-term support for the yen by enhancing economic growth potential and attracting investment. It is reported that the Japanese government released a 14 year key industry investment roadmap in June, with a total scale of 370 trillion yen (approximately 2.3 trillion US dollars), covering 17 key areas such as artificial intelligence, semiconductors, and gaming. The plan has raised concerns in the market about Japan's fiscal burden and debt risks. Cheng Naishi stated that supporting strategic industries such as AI and semiconductors is a necessary measure for Japan to improve productivity and enhance global competitiveness. As more funds flow into Japan and yen denominated assets, the demand for yen in the market will also increase. In response to concerns about fiscal expansion, Ichijima stated that Japan's fiscal policy is not as radical as the outside world believes, and the government will place more emphasis on internationally recognized indicators such as the debt to GDP ratio, rather than simply pursuing annual basic budget balance. In addition, Japanese Prime Minister Hayao Takashi plans to implement a two-year consumption tax reduction policy, with an estimated annual cost of about 5 trillion yen. Cheng Naishi stated that the government will raise funds through fiscal restructuring and cost saving measures, and "raising 5 trillion yen is not difficult". The market is simultaneously concerned about policy coordination between the Japanese government and the central bank. Previously, the government's fiscal plan sparked controversy due to being interpreted by the market as potentially affecting the independence of the Bank of Japan, ultimately leading to a statement emphasizing the independence of the central bank. Regarding the future path of interest rate hikes by the Bank of Japan, Minoru Uchida expressed support for the central bank's independent decision-making and stated that he respects the central bank's independence. Currently, market expectations for further interest rate hikes by the Bank of Japan in September or October are heating up. [Original link]