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But since his days managing currency affairs for the Finance Ministry, Kuroda has long argued that Japan, like other major industrial nations, needs an inflation benchmark to anchor its currency. What Japan needs, Kichikawa says, is a bit of luck in the form, for example, of a strong U.S. economic recovery. Abe also needs some tailwinds at home. If inflation pushes living costs higher without a matching increase in purchasing power through higher wages and employment, consumers will not boost the spending that drives Japan's economic growth. So far, workers are winning some modest concessions in the annual "shunto," or spring labor talks, with automakers and some other industries agreeing to slight increases in bonuses and base wages. Meanwhile, recent data reflect mixed trends. Corporate business confidence is higher, but spending has not yet recovered. Machinery orders last month were weaker than expected. Japan's changing of the monetary guard could be followed by one in China, where the governor of the People's Bank of China, Zhou Xiaochuan, might be replaced Friday in a once-in-a-decade changing of the Communist Party top leadership. At 65, Zhou is on the cusp of retirement after a decade as central bank governor. Earlier in the week he was elected a vice chairman of a top government advisory committee
-- a move that suggests he may be preparing to step down. But many in China are hoping Zhou might stay on, as the country struggles to balance a need to stimulate growth with the ever-present threat that stimulus might reignite inflation.
[Associated
Press;
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