VZCZCXRO8356
RR RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #2331/01 2390116
ZNR UUUUU ZZH
R 260116Z AUG 08
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 6793
INFO RUCPDOC/USDOC WASHDC
RUEHBJ/AMEMBASSY BEIJING 5034
RUEHFK/AMCONSUL FUKUOKA 9531
RUEHNAG/AMCONSUL NAGOYA 7676
RUEHNH/AMCONSUL NAHA 1893
RUEHOK/AMCONSUL OSAKA KOBE 3271
RUEHKSO/AMCONSUL SAPPORO 0111

UNCLAS SECTION 01 OF 02 TOKYO 002331 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/J 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EFIN PREL JA
SUBJECT: JAPAN ECONOMIC SCOPE FOR AUGUST 22, 2008 
 
SENSITIVE BUT UNCLASSIFIED, PLEASE PROTECT ACCORDINGLY 
 
¶1.  (U) This cable contains the Japan Economic Scope from 
August 22, 2008. 
 
Business 
-------- 
 
¶2.  (U) Honeywell International Files Patent Case with ITC against 
Four Japanese Companies 
 
Japanese media (and Reuters) report that U.S. technology 
manufacturer Honeywell International filed a case with the 
International Trade Commission (ITC) against four Japanese companies 
and their U.S. subsidiaries (eight companies in total) on August 19, 
2008 for possible patent infringements of its automotive multimedia 
display and car navigation system.  The four Japanese companies are 
Alpine Electronics Inc., Denso Corporation, Pioneer Corporation, and 
Kenwood Corporation.  The media reports that ITC is still 
considering whether to investigate the case. 
 
¶3.  (U) Japan's New Housing Starts Continue to Drop 
 
Supply of new condominimus in the Tokyo region fell for the eleventh 
straight month in July as increased prices dealt a further blow to 
the housing market, according to the Real Estate Economic Institute 
as reported by Jiji Press August 19.  While the article noted 
Tokyo's new condo supply fell 44.5 percent, Tokyo accounts for only 
10 percent of total housing in Japan.  The Tokyo metropolitan area 
includes Tokyo, Saitama, Chiba and Kanagawa prefectures 
 
Environment and Energy 
---------------------- 
 
¶4.  (SBU) Automakers, GOJ Struggle to Bring Electric Cars into 
Mainstream 
 
Ministry of Land, Infrastructure, Transportation and Tourism (MLIT) 
officials and auto industry representatives report they have joined 
forces to make electric cars more of a mainstream option for 
ordinary consumers. 
 
GOJ officials recently detailed for econoffs incentives to spur an 
environmentally friendly transportation industry.  MLIT's annual 
budget for development and promotion of low pollution cars includes 
2,233 million yen ($204 million) to introduce large eco-vehicles 
like buses and trucks.  They have also budgeted 482 million yen to 
promote R&D for next generation low emission vehicles, 64 million 
yen for promoting practical application of fuel cell/battery, and 31 
million yen for the evaluation of safety and ecology of new fuels. 
The GOJ provides tax breaks for car owners based on specified fuel 
efficiency targets.  For all electric and CNG cars, the automobile 
tax is reduced 50 percent.  The GOJ makes available modest interest 
rate loans (1.4 percent) for acquisition of low emission electric, 
hybrid, and CNG cars. 
 
¶5.  (U) Retail Gasoline Prices Continue to Fall 
 
The nationwide retail price of regular gasoline averaged 183.2 
yen/liter (around $6.31/gallon) on August 18, the second straight 
week of decline from a peak of 185.1 on August 4, Nikkei reported 
based on data from the Oil Information Center.  The paper reported 
that many gas stations lowered prices during the mid-August Obon 
holiday period, citing decreasing demand, and quoted an oil company 
official's prediction that "August sales will likely plunge to a 
record low."  Nikkei previously reported that July retail gasoline 
sales by volume were down 8.9 percent from the year prior.  (Note: 
Tokyo 2292 reports on GOJ officials' and energy economists' 
near-term forecast and factors contributing to the decline in 
gasoline prices.  End note.) 
 
Insurance and Investment 
------------------------ 
 
¶6.  (U) Tokio Marine to Acquire Midsize U.S. Insurer 
 
Tokio Marine Holdings, Inc. (TMHD) announced recently it will buy 
mid-size U.S. non-life insurer Philadelphia Consolidated Holding 
Corp. for about 500 billion yen ($4.7 billion) by the end of this 
year.  According to THMD, the acquisition is designed to gain a 
solid foothold in the U.S. insurance market, to expand the size and 
profitability of its overseas operations, and to better balance the 
overall business portfolio.  This is the largest foreign acquisition 
 
TOKYO 00002331  002 OF 002 
 
 
by a Japanese financial institution, according to media reports. 
Philadelphia Consolidated is listed on the Nasdaq Stock Market and 
offers commercial property and casualty products and services and 
professional liability insurance products for targeted markets. 
 
Foreign Relations 
----------------- 
 
¶7.  (SBU) GOJ Pledges $1 Million in Emergency Humanitarian Aid to 
Georgia 
 
Japan will provide up to $1 million in emergency humanitarian aid to 
Georgia, MOFA announced August 15.  The GOJ made the announcement to 
signal its willingness to provide assistance in anticipation of 
flash appeals from international organizations, though the 
International Committee for the Red Cross is so far the only 
organization to make such an appeal, according to the MOFA contacts. 
 
MOFA will decide soon how the GOJ will distribute the assistance. 
While media reports indicate Japan is to provide food, medicine, 
blankets and tents, MOFA reports that it has not yet determined the 
exact nature of the humanitarian assistance to be provided. 
 
Trade 
------ 
 
¶8. (U) Japanese Exports to China Surpass Those to the United States 
 
China surpassed the United States for the first time in the post-war 
period as Japan's largest export destination in July 2008, according 
to figures released August 22 by the Ministry of Finance.  Japanese 
exports to China grew 16.8 percent year-on-year to 1.28 trillion yen 
in July, while those destined for the United States dipped 11.5 
percent to 1.27 trillion yen, the second straight month of 
double-digit decline.  Exports to China rose for the 38th 
consecutive month through July, led by demand for light oil, 
semiconductors and other electronic parts.  Meanwhile, exports 
destined for the United States declined for the eleventh straight 
month, a reflection of the U.S. economic slowdown.  Shipments of 
auto parts and automobiles were among those listed as especially 
weak.  While exports to Greater China, including Hong Kong and 
Macao, have outstripped those to the United States since May 2007, 
it is the first time that shipments to China itself, excluding the 
country's two administrative regions, have exceeded those to the 
United States. 
 
¶9. (U) This SENSITIVE BUT UNCLASSIFIED e-newsletter from U.S. 
Embassy Tokyo's Economic Section, with contributions from the 
consulates, is for internal USG use only.  Please do not forward in 
whole or in part outside of the USG. 
 
ZUMWALT