(Bloomberg) -- Japan’s top government spokesman still hopes that Nippon Steel’s $14.1 billion takeover bid for US Steel Corp will be resolved in a mutually beneficial way for both companies in comments following news that US President Joe Biden intends to block the deal.
“We really hope that even in this political year, both sides will agree with mutual benefit,” said Japan’s chief government spokesman and ruling party leadership contender Yoshimasa Hayashi in an interview with Bloomberg. “It’s still going on and we don’t know the result yet.”
While Hayashi declined to comment further on the deal, his remark indicates that the upper echelons of Prime Minister Fumio Kishida’s administration are still not resigned to the deal failing.
Japanese government officials have repeatedly said the deal is a matter for the private companies to decide. Digital Transformation Minister Kono Taro, another candidate hoping to replace Kishida as premier, broke ranks Thursday saying that government intervention in the deal would be inappropriate.
The proposed deal has been subject to a review by the Committee on Foreign Investment in the United States, and Biden plans to kill it as soon as the CFIUS referral lands on his desk, Bloomberg reported earlier this week, citing people familiar with the matter. Both US presidential candidates have already expressed opposition to the takeover.
Former defense and foreign minister Hayashi made the comments as he gets ready to take on a crowded field of candidates to replace Kishida as prime minister when he steps down as ruling party leader later this month.
Hayashi also touched on US efforts to get its allies to comply with technology export restrictions. Washington is looking to limit China’s access to advanced semiconductor equipment as part of efforts to reduce overreliance on individual countries and to limit the spread of high-end dual-use technology.
Japan and the US should agree on “de-risking” to ensure they address economic security concerns effectively, he said.
“The US, Japan and other countries should work along the same lines rather than handling individually,” Hayashi said. “It would be very powerful if countries could agree on the line” on what to protect and what not to, he said.
Intensified export curbs would likely hit chip-gear producers such as Tokyo Electron Ltd. while risking an adverse response from Beijing.
China has already threatened severe economic retaliation against Japan if Tokyo further restricts sales and servicing of chipmaking equipment to Chinese firms, according to people familiar with the matter.
Hayashi’s comments suggest more discussion is needed to bring allies onto the same page on de-risking measures. He acknowledged that reaching a consensus on common regulations can be challenging due to differing national interests. He emphasized the need to maintain a platform where like-minded nations can continue talking about these issues together.
South Korea, an even bigger player in global chip supply chains, has called for the US to offer more “carrots” to incentivize its allies to go along with tighter curbs on chip technology.
On domestic economic policy, Hayashi stressed the need for Japan to focus on sustained wage growth. He pointed to the nation’s real wages gained for two consecutive months in July as a sign of progress that reflects the strong wage deals achieved in annual pay negotiations.
“I want to instill the mindset in the public that wages should grow faster than prices,” Hayashi said.
Hayashi also highlighted that fiscal health will be crucial as the Bank of Japan continues its path toward normalization and interest rates go up.
He suggested that after achieving a long-hold primary balance target, the next goal should be a steady reduction in the nation’s debt-to-gross domestic product ratio.
In July, the government indicated that Japan is expected to achieve its primary balance goal in the next fiscal year after a stronger-than-expected uptick in tax revenue. Controlling its budget deficit after years of spending beyond its means may help Japan rein in a debt load estimated at 255% of GDP by the International Monetary Fund.
Hayashi added that maintaining confidence in Japanese government bonds will be increasingly important, especially as the BOJ reduces its purchases.
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