Japanese Finance Minister Hirohisa Fujii spoke Tuesday with Wall Street Journal reporter Alison Tudor at the Ministry of Finance in Tokyo. Read excerpts from the interview.On the Japanese economy:
"I'm not sure if the numbers are going to get worse but up until now we had an export-led economy. In the month of August exports had a 36% decline. I think the economic situation is reflecting the fact that we were heavily dependent on exports, so we believe we have to steer our economy into a domestic demand-led economy, so we are now working on a major economic policy shift.
"I think this policy change has only become possible with the change of government. In the past it was very difficult because it meant a major policy change to change this export-led economic management."
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On U.S. Treasury Secretary Timothy Geithner:
"The other day I met with [Timothy] Geithner, the United States Secretary of the Treasury, and I told him about our intended policy change and he said this policy direction matches well the course that American economic policy is pursuing, and indeed that world economic policy is pursuing.
"As you know, in the U.S., Geithner is trying to revert the U.S. economy into a savings-led economy, and he wants to see a strengthened dollar."
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On structural changes:
"By fiscal means, we would like to implement the reallocation of resources to as many people as possible directly.
"We shouldn't be overly dependent on export growth. Recently 60% of Japanese GDP growth came from exports. That is quite abnormal, and something we have to correct.
"However, I'm not saying that exports altogether are wrong. Japan has an outstanding state-of-the-art technology. So through our state-of-the-art technology we can make a contribution to the international community."
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On currency intervention:
"I for one do not believe that authorities should intervene in foreign-exchange markets in an excessive way. However, if forex market movements are outrageously reckless, or acting without any order, then I think some kind of measures are needed and I think that is the way it always is all over the world regarding foreign exchange policies."
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On the yen:
"Looking at the current situation, I don't regard it as being extremely abnormal."
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On the U.S. dollar:
"Looking at the economic competence and the economic prowess of the countries of the world, I see the United States by far exceeding other countries in terms of economic capability. I think currency is something that reflects the real economic prowess of any given country and therefore I have no doubt whatsoever that for the time being the key currency will be the U.S. dollar.
"The current situation stems from the fact that the dollar is weakened. The reason is that the U.S. is sticking to the consistent policy of low-interest rates. I respect the consistency of policy.
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On China's advantages from a weakened dollar, because its currency is tied to the dollar and a weaker currency makes its exports attractive:
"This issue is not an issue of China alone. The U.S. dollar is involved. So saying something strong to China alone would not resolve the situation. This should be dealt with as part of the international currency problem."
