Category Archives: Japan

(ZH) Global Chip Supply In Jeopardy As New Trade Feud Erupts Between Japan And South Korea

(ZH)

The US trade war with China may have entered a tentative truce period, but a brand new, emerging trade feud threatens to jeopardize an entirely new universe of technological supply chains.

On Tuesday, Japan unexpectedly announced that it was considering imposing stricter export controls on more items bound for South Korea, in an apparent effort to raise pressure on Seoul to help resolve a bilateral dispute over compensation for wartime labor. The envisaged plan comes in response to what Tokyo views as Seoul’s failure to address the months-long dispute properly and prevent it from hurting mutual trust between the two neighbors.

Expanding the list of items, possibly to include electronic parts and related materials that can be diverted to military use, will likely exacerbate bilateral tensions, according to the Japan Times, and some within the government remain cautious about taking further steps, even though Japan has already announced that effective today, it will require manufacturers to file applications when they export to South Korea three materials used in the production of semiconductors and displays for smartphones and TVs.

Prime Minister Shinzo Abe on Wednesday defended the government’s export controls.

“We cannot give the preferential treatment that has been afforded until now, as the other country has not kept its promise,” he said during a nationally televised debate with leaders of other political parties, a day before official campaigning begins for the July 21 Upper House election. “This does not go against WTO agreements at all.”

Meanwhile, Seoul, which regards the move as conflicting with the spirit of free trade, has threatened to launch a complaint against Japan at the World Trade Organization.

Commenting on the latest trade feud, the Nikkei warned that Japan’s new export controls on South Korea, a country that produces the bulk of the world’s memory chips, threaten a ripple effect that spreads beyond the two wary neighbors to electronics manufacturing globally, and could result in another semiconductor shockwave across the globe.

The restrictions mark the latest setback in a bilateral relationship between the two Pacific Rim nations, fraught with colonial-era grievances. The move prompted Seoul to say it was considering retaliatory measures and left chipmakers to confront an immediate supply challenge.

Adding to the complications, Japan’s government expects export reviews to take about three months. But South Korean chipmakers typically keep only one to two months’ worth of parts and materials in stock.

A source at chipmaker SK Hynix told Nikkei the company does not have three months of inventory. The chipmaker would have to halt production if it cannot procure necessary materials from Japan for that long, the source said. Top memory chip maker Samsung Electronics said it was assessing the situation, without elaborating.

The impact could spread worldwide.

South Korean players control 70% of the global market for dynamic random access memory and 50% for NAND flash memory. Samsung leads the global chip market by revenue, with SK Hynix in third. These chips go into devices such as Apple’s iPhone, rival models from Huawei Technologies, personal computers made by HP and Lenovo Group as well as televisions from Sony and Panasonic.

A representative at a major Japanese electrical equipment maker expressed concern that the new controls could backfire.

“If supplies of things like memory from South Korea are delayed and production of Apple’s iPhone falls [as a result], there could be an impact on our provision of parts,” the representative said.

Lesser-known Japanese companies hold leading market shares in the three restricted materials. Polyimides are used to make flexible organic light-emitting diode displays. The others are used in forming circuit patterns: resist – a coating substance – and etching gas. These companies include JSR, Showa Denko and Shin-Etsu Chemical – all of which are a third or more owned by foreign investors.

Japan also plans to remove South Korea by August from an export “whitelist” of 27 friendly countries that includes the U.S., Germany and France, meaning that shipments of products with potential military applications will require government approval. No country has ever been dropped from the list.

* * *

Tokyo cited a deteriorating relationship with Seoul as the reason for the controls, seemingly referring to a long-running dispute over compensation from Japanese companies to South Koreans for wartime labor.

The move follows Tokyo’s increase in inspections of some South Korean seafood that began last month, reportedly in retaliation for continued curbs on imports of food from areas affected by Japan’s 2011 Fukushima Daiichi nuclear disaster.

“It’s become difficult to manage exports based on a relationship of trust with South Korea,” Japanese Deputy Chief Cabinet Secretary Yasutoshi Nishimura told reporters Monday.

* * *

In response to the sudden trade aggression, South Korean Vice Foreign Minister Cho Sei-young summoned Japanese Ambassador Yasumasa Nakamine to demand that the export controls be removed. He expressed concern about the impact on South Korean industry and bilateral relations, and argued that the restrictions directly contradict Japan’s advocacy for “free and fair trade” at the Group of 20 summit in Osaka last week.

Cho said that the government would work with businesses to prepare countermeasures. South Korea’s Ministry of Trade, Industry and Energy also said it would respond with “appropriate measures,” including filing a complaint with the World Trade Organization.

“We’ll make this an opportunity to enhance South Korea’s technological capabilities,” industry Minister Sung Yun-mo said.

Experts differed on whether the new regulations are valid under WTO rules. “This is an area where Japan can make decisions on its own, so it’s probably not a violation,” said Keisuke Hanyuda, partner at Japan-based Deloitte Tohmatsu Consulting. But Yuka Fukunaga, a professor at Waseda University in Tokyo, argued that the curbs may violate WTO agreements, as they fall into a “gray area.”

Whether a quick ceasefire follows in the coming weeks, and whether the US trade war with China ends up in a deal, remains unclear, but should trade relations collapse between Japan and South Korea, two nations at the cutting edge of global semi and tech manufacturing, the consequences not only for global trade but for corporate profitability would be disastrous. And case in point, this just hit:

Yonhap News Agency@YonhapNews

(URGENT) Samsung Electronics Q2 operating profit dips 56.3 pct to W6.5tln http://yna.kr/AEN20190705000800320 …912:41 AM – Jul 5, 2019Twitter Ads info and privacy(URGENT) Samsung Electronics Q2 operating profit dips 56.3 pct to W6.5tln | Yonhap News Agencyen.yna.co.kr

(LePoint) Un ordinateur libanais serait à l’origine de la chute de Carlos Ghosn

(LePoint) Nissan aurait obtenu un portable contenant les preuves d’une partie des malversations financières dont l’ancien PDG du constructeur automobile est accusé.

L’histoire a des airs de scénario de thriller. Selon le Financial Times, la chute de Carlos Ghosn aurait été en partie provoquée par un ordinateur portable contenant les informations nécessaires pour faire tomber l’industriel. Le constructeur automobile aurait redoublé d’efforts pour mettre la main sur cet élément-clé de l’enquête afin de le transmettre aux autorités japonaises. Le quotidien britannique affirme que les données récoltées sur la machine ont permis de prouver que Carlos Ghosn avait détourné des millions de dollars de Nissan. Ghosn a été inculpé le 22 avril dernier pour la quatrième fois par la justice japonaise. Trois jours plus tard, il a été libéré. Mais il reste assigné à résidence au Japon.

Cette « pièce maîtresse » aurait été récupérée grâce à l’aide d’une assistante de Fadi Gebran, un proche de l’ancien patron de Renault, quelques semaines avant sa dernière arrestation début avril. Cet ami de longue date et avocat de l’industriel franco-libano-brésilien est décédé d’un cancer en 2017. Son assistante a ensuite travaillé pour Carlos Ghosn directement. Elle apparaît également sur une liste d’actionnaires d’une compagnie libanaise spécialisée dans l’investissement immobilier et créée par Fadi Gebran.

35 millions de dollars détournés

Cette même société serait impliquée dans le détournement d’environ 35 millions de dollars à l’aide d’un distributeur de véhicules de Nissan dans le sultanat d’Oman. L’argent aurait transité via plusieurs sociétés, dont celle de Fadi Gebran. D’après le Financial Times, les enquêteurs ont ensuite pu poursuivre leurs investigations à Beyrouth, là où l’ancien PDG de Nissan est vu comme un héros national et où des pancartes postées affichaient même le message : « Nous sommes tous Carlos Ghosn. »

Ni Nissan ni les avocats de Ghosn n’ont souhaité commenter ces allégations.

(JapanTimes) In first, Japan to develop computer virus to defend against cyberattacks

(JapanTimes)

Japan will develop its first-ever computer virus by next March as a defense measure against cyberattacks, sources have said.

The Defense Ministry is considering malware that can break into a computer system, hoping such a computer virus could work as a deterrent against cyberattacks, the sources said Monday.

The government has said it is looking to enhance its defense capabilities beyond the ground, marine and air domains to address security challenges in new areas such as cyberspace and outer space amid technological advances in recent years.

Japan lags behind other countries in addressing the threat of cyberattacks. It plans to increase the number of personnel in its cyberspace unit to 220 from 150, compared with 6,200 in the United States, 7,000 in North Korea and 130,000 in China, according to the ministry.

The ministry has been considering specific measures against cyberattacks since it pledged to bolster its cyberspace defense under its latest national defense guidelines launched last December.

Some defense experts say the ability to obstruct an enemy’s use of cyberspace could exceed the limits of the country’s exclusively defense-oriented policy.

The virus, to be developed by private companies, will be used only for defense purposes — not for pre-emptive attack — a ministry source said. Government policy allows cyberattacks only against a country or an organization considered equivalent to a country.

(AFP) Ex-Nissan chief Ghosn rearrested in Tokyo

(AFP)

Ex-Nissan chief Ghosn rearrested in Tokyo

Former Nissan chairman Carlos Ghosn leaves his lawyers’ offices after he was released earlier in the day from a detention centre after posting bail in Tokyo on March 6, 2019. Ghosn posted bail of 1 billion yen (9 million USD) in cash on March 6, paving the way for his release from the Tokyo detention centre after more than three months in custody. Kazuhiro NOGI (AFP/Kazuhiro Nogi)

Former Nissan chief Carlos Ghosn was rearrested early Thursday in Tokyo on fresh financial misconduct allegations, with the auto tycoon slamming his detention as “outrageous and arbitrary”.

Authorities arrested the 65-year-old less than a month after he was dramatically freed on bail following more than 100 days in detention.

Local media said prosecutors had entered Ghosn’s temporary accommodation in central Tokyo early Thursday morning and that he left with them by car shortly afterwards.

An AFP reporter outside the home saw three men in dark suits guarding the entrance to the building’s car park and a police officer patrolling, as dozens of journalists gathered.

Ghosn issued a statement through his representatives after the arrest calling it as “outrageous and arbitrary”.

“It is part of another attempt by some individuals at Nissan to silence me by misleading the prosecutors. Why arrest me except to try to break me? I will not be broken,” he said, insisting that he is innocent of the claims against him.

Reports emerged Wednesday that prosecutors were weighing rearresting Ghosn as they investigate claims related to at least $32 million in Nissan funds transferred to a distributor in Oman.

According to a source familiar with the matter, some of this money is believed to have been used to buy a luxury boat for Ghosn and his family.

The former high-flying executive already faces three charges of financial misconduct related to allegations he under-reported his compensation and sought to transfer losses to Nissan’s books.

He has denied any wrongdoing and took to Twitter for the first time Wednesday, using a newly created account that his spokespeople confirmed was authentic, to announce plans for a press conference.

“I’m getting ready to tell the truth about what’s happening. Press conference on Thursday, April 11,” said the tweet, sent in English and then Japanese.

 The ‘Razor’ 

Ghosn currently faces two separate charges of deferring his salary to the tune of nine billion yen ($81 million) and not revealing this in official documents to shareholders.

The Brazil-born auto sector pioneer, widely credited with saving Nissan from the brink of bankruptcy, also faces a charge of seeking to shift personal investment losses onto Nissan’s books and then using company funds to pay a Saudi associate who stumped up collateral for him.

The case has been a rollercoaster ride of unexpected twists and turns from the moment Ghosn was first arrested at a Tokyo airport out of the blue on November 19.

He has since been re-arrested on multiple occasions over a series of allegations, employed a little-used article of Japanese law to force a day in court and emerged on bail dressed in a workman’s uniform and cap in a bizarre attempt to avoid the media.

Since his release on bail on March 6, he has kept scrupulously quiet despite daily attempts by local and international media to interview him.

His lawyer Junichiro Hironaka, known as the “razor” for his mental sharpness, has done the talking for him, appearing twice in front of the foreign media to plead his client’s innocence.

In his latest appearance on Tuesday, Hironaka announced he had filed a petition with the Tokyo District Court so that Ghosn’s case would be heard separately from that of Nissan and his former right-hand man Greg Kelly. 

Nissan has been indicted alongside Ghosn, as they filed the shareholders’ documents that allegedly mis-stated the then chairman’s income.

Hironaka said this would not be a fair trial as Nissan has effectively sided with the prosecutors by providing them with documents they say show further malpractice.

‘Trap’, ‘plot’ 

Under Ghosn’s management, Nissan recovered and formed a three-way alliance with Renault and Mitsubishi Motors that has become one of the world’s top-selling auto groups.

In an interview with AFP from his detention centre in January, Ghosn denounced a “trap” and a “plot” by Nissan prompted by opposition to his plans to bring the companies closer together.

He was removed as chairman by Nissan and Mitsubishi Motors almost immediately after his arrest. Renault was slower to react but Ghosn eventually himself resigned from the head of the French firm.

Ghosn’s arrest and a string of alleged financial misconduct has sparked questions over Nissan’s own corporate governance and the company established an independent body to propose changes to prevent a recurrence.

The advisory group suggested doing away with the vacant role of chairman and laid the blame for the lapse in governance at the feet of Ghosn.

The main cause of the misconduct was “the concentration of authority in Ghosn”, the group concluded.

“He created a situation in which it would be difficult to detect his pursuit of personal gain.”

(JN) Ghosn libertado após pagar fiança de quase oito milhões de euros

(JN)

Carlos Goshn foi libertado da prisão, depois de ter pago cerca de oito milhões de euros de caução. O ex-líder da Renault e da Nissan garante que vai lutar contra as acusações sem mérito que lhe são dirigidas.

Carlos Ghosn foi libertado depois de ter pago uma fiança de mil milhões de ienes, o que corresponde a cerca de oito milhões de euros. O gestor estava detido desde 19 de novembro e conseguiu sair sob caução, depois de garantir que iria permanecer em Tóquio e que ficaria sob vigilância apertada.

Ghosn está acusado de quebra de confiança e de ter reportado ganhos inferiores auferidos na Nissan na última década em cerca de 82 milhões de dólares. Se for condenado, o ex-líder da Nissan enfrenta uma pena máxima de 15 anos de prisão.

“Estou inocente e totalmente comprometido em me defender vigorosamente num julgamento justo contra estas acusações sem mérito e infundadas”, afirmou Ghosn, através de um comunicado, citado pela Reuters.

As notícias sobre a libertação de Ghosn já circulavam desde ontem, mas a sua libertação foi travada por um recurso dos procuradores. Entretanto, esta quarta-feira o juiz pronunciou-se e rejeitou esse recurso, o que permitiu que o gestor fosse libertado.

Ghosn foi o responsável por unir a francesa Renault com a japonesa Nissan, criando com esta parceria o maior fabricante automóvel a nível mundial, o qual liderava antes de ter sido detido.

(BBC) The truth about Japanese tempura

(BBC)

When 16th-Century Portuguese came to Japan, they brought a special dish with them. Today, in Japan, it’s called tempura and has been a staple of the country’s cuisine ever since.

In 1543, a Chinese ship with three Portuguese sailors on board was headed to Macau, but was swept off course and ended up on the Japanese island of Tanegashima. Antonio da Mota, Francisco Zeimoto and Antonio Peixoto – the first Europeans to ever step on Japanese soil – were deemed ‘southern barbarians’ by the locals because of the direction from which they came and their ‘unusual’, non-Japanese features. The Japanese were in the middle of a civil war and eventually began trading with the Portuguese, in general, for guns. And thus began a Portuguese trading post in Japan, starting with firearms and then other items such as soap, tobacco, wool and even recipes.

The Portuguese remained in Japan until 1639, when they were banished because the ruling shogun Iemitsu believed Christianity was a threat to Japanese society. As their ships sailed away for the final time, the Portuguese left an indelible mark on the island: a battered and fried green bean recipe called peixinhos da horta. Today, in Japan, it’s called tempura and has been a staple of the country’s cuisine ever since.Y

No-one knows the exact origins of peixinhos da horta. “We know it existed in 1543,” said Michelin-starred chef Jose Avillez when I met up with him at Cantinho de Avillez, one of his acclaimed Lisbon restaurants. “But before that, it’s anyone’s guess.”

Green beans, it turns out, changed food history.

However, peixinhos da horta was only one of many dishes the Portuguese inspired around the world. In fact, Portuguese cuisine, still heavily overshadowed by the cuisines of Italy, Spain and France, may be the most influential cuisine on the planet.

Portuguese cuisine may be the most influential cuisine on the planet

When the Portuguese turned up in Goa, India, where they stayed until 1961, they cooked a garlicky, wine-spiked pork dish called carne de vinha d’alhos, which was adopted by locals to become vindaloo, one of the most popular Indian dishes today. In Malaysia, several staples, including the spicy stew debal, hail from Portuguese traders of centuries past. Egg tarts in Macao and southern China are direct descendants to the egg tarts found in Lisbon bakeries. And Brazil’s national dish, feijoada, a stew with beans and pork, has its origins in the northern Portuguese region of Minho; today, you can find variations of it everywhere the Portuguese have sailed, including Goa, Mozambique, Angola, Macau and Cape Verde.

Peixinhos da horta were often eaten during Lent or Ember days (the word ‘tempura’ comes from the Latin word tempora, a term referring to these times of fasting), when the church dictated that Catholics go meatless. “So the way around that,” Avillez said, “[was] to batter and fry a vegetable, like the green bean. And just to add to it, we called it peixinhos do horta, little fish of the garden. If you can’t eat meat for that period of time, this was a good replacement.”

The word ‘tempura’ comes from the Latin word tempora

And it had other functions too. “When the poor couldn’t afford fish, they would eat these fried green beans as a substitute,” Avillez said. And sailors would fry the beans to preserve them during long journeys, much in the way humans have been curing and salting meat for preservation purposes for centuries.

Perhaps not constricted by tradition, the Japanese lightened the batter and changed up the fillings. Today, everything from shrimp to sweet potatoes to shitake mushrooms is turned into tempura.

“The Japanese inherited the dish from us and they made it better,” Avillez said.

Avillez said Japanese people sometimes turn up at his restaurants and see the fried bean dish and say, “Hey, Portuguese cuisine is influenced by Japanese cuisine.” He added, “And that’s when I say, ‘No, in this case it’s the other way around’.” A Japanese-born sous chef at Avillez’s two-Michelin-starred Lisbon restaurant, Belcanto, even chose to train in Portugal instead of France because he recognised the influence on his home cuisine, particularly in peixinhos da horta.

Avillez said his one complaint about the dish, in general, has always been that the beans are often fried in the morning and so they go cold and limp by the time they get to the table later that day. He remedies this by not only cooking them on demand, but by adding a starch called nutrios that keeps them crispy. After the bean is blanched, it gets rolled in the batter of wheat flour, egg, milk, and nutrios and then flash fried.

Other chefs I talked to in Portugal had their own recipes for the fried green beans, but they didn’t deviate much. “It’s a very simple dish,” said chef Olivier da Costa, when I met up with him at his Lisbon restaurant Olivier Avenida, located in the Avani Avenida Liberdade hotel. “I use a batter of flour, milk, eggs, salt, pepper and beer,” he said. “Beer?” I asked. “Yes! It ferments the batter and the beer foam gives it a better taste.” He didn’t have the dish on his menu at the time so I had to take his word for it.

One reason why Portuguese love peixinhos da horta so much, da Costa said, was nostalgia. “We all eat it as children and thus have fond memories of it. These days it’s been making a comeback, not just because people are eating more vegetarian food, but because a younger generation are taking more interest in our local cuisine and because they want to be taken back to that simpler time.”

Avillez is taking this newfound interest in super traditional Portuguese cuisine to a new level. Along with his Japanese-born sous chef, he plans to temporarily offer a tasting menu called ‘1543’, the year the Portuguese first showed up in Japan, offering peixinhos da horta and other Portuguese dishes that have inspired Japanese cuisine. Alongside the Portuguese dishes, he plans to serve the Japanese versions that evolved from the Portuguese presence in Japan four-and-a-half centuries ago.

Each bite was like taking a first bite

Back at Cantinho de Avillez, an order of peixinhos da horta appeared in front of me. They were rigid like pencils with a lumpy texture and a yellow-ish hue. Each bite was like taking a first bite: crisp, light and super flavourful, the crunchy texture of the batter complimenting the sturdy feel of the bean. The dish has been one of the only consistent items on the menu at Cantinho de Avillez, which opened in 2012.

“I can’t take it off,” Avillez said. “My regulars would be enraged.”

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(NYT) The Japanese Man Who Saved 6,000 Jews With His Handwriting

(NYT) What the astonishing Chiune Sugihara teaches us about moral heroism.

Foreign Minister Fumio Kishida of Japan at a tree planted in memory of Chiune Sugihara in the garden of the Yad Vashem Holocaust Museum in Jerusalem.CreditCreditGali Tibbon/Agence France-Presse — Getty Images

NAGOYA, Japan — “Even a hunter cannot kill a bird that flies to him for refuge.” This Samurai maxim inspired one gifted and courageous man to save thousands of people in defiance of his government and at the cost of his career. On Friday I came to Nagoya at the invitation of the Japanese government to speak in honor of his memory.

The astonishing Chiune Sugihara raises again the questions: What shapes a moral hero? And how does someone choose to save people that others turn away?

Research on those who rescued Jews during the Holocaust shows that many exhibited a streak of independence from an early age. Sugihara was unconventional in a society known for prizing conformity. His father insisted that his son, a top student, become a doctor. But Sugihara wanted to study languages and travel and immerse himself in literature. Forced to sit for the medical exam, he left the entire answer sheet blank. The same willfulness was on display when he entered the diplomatic corps and, as vice minister of the Foreign Affairs Department for Japan in Manchuria in 1934, resigned in protest of the Japanese treatment of the Chinese.

A second characteristic of such heroes and heroines, as the psychologist Philip Zimbardo writes, is “that the very same situations that inflame the hostile imagination in some people, making them villains, can also instill the heroic imagination in other people, prompting them to perform heroic deeds.” While the world around him disregarded the plight of the Jews, Sugihara was unable to ignore their desperation.

In 1939 Sugihara was sent to Lithuania, where he ran the consulate. There he was soon confronted with Jews fleeing from German-occupied Poland.

Three times Sugihara cabled his embassy asking for permission to issue visas to the refugees. The cable from K. Tanaka at the foreign ministry read: “Concerning transit visas requested previously stop advise absolutely not to be issued any traveler not holding firm end visa with guaranteed departure ex japan stop no exceptions stop no further inquires expected stop.”

Sugihara talked about the refusal with his wife, Yukiko, and his children and decided that despite the inevitable damage to his career, he would defy his government.

Mr. Zimbardo calls the capacity to act differently the “heroic imagination,” a focus on one’s duty to help and protect others. This ability is exceptional, but the people who have it are often understated. Years after the war, Sugihara spoke about his actions as natural: “We had thousands of people hanging around the windows of our residence,” he said in a 1977 interview. “There was no other way.”

On Friday I spoke at Sugihara’s old high school in Nagoya, during a ceremony unveiling a bronze statue of him handing visas to a refugee family. After the ceremony, in front of some 1,200 students, I spoke with his one remaining child, his son Nobuki, who arrived from Belgium to honor his father’s memory. He told me his father was “a very simple man. He was kind, loved reading, gardening and most of all children. He never thought what he did was notable or unusual.”

Most of the world saw throngs of desperate foreigners. Sugihara saw human beings and he knew he could save them through prosaic but essential action: “A lot of it was handwriting work,” he said.

Image
Chiune Sugihara, in an undated photograph.CreditThe Asahi Shimbun, via Getty Images

Day and night he wrote visas. He issued as many visas in a day as would normally be issued in a month. His wife, Yukiko, massaged his hands at night, aching from the constant effort. When Japan finally closed down the embassy in September 1940, he took the stationery with him and continued to write visas that had no legal standing but worked because of the seal of the government and his name. At least 6,000 visas were issued for people to travel through Japan to other destinations, and in many cases entire families traveled on a single visa. It has been estimated that over 40,000 people are alive today because of this one man.

With the consulate closed, Sugihara had to leave. He gave the consulate stamp to a refugee to forge more visas, and he literally threw visas out of the train window to refugees on the platform.

After the war, Sugihara was dismissed from the foreign office. He and his wife lost a 7-year-old child and he worked at menial jobs. It was not until 1968 when a survivor, Yehoshua Nishri, found him that his contribution was recognized. Nishri had been a teenager in Poland saved by a Sugihara visa and was now at the Israeli embassy in Tokyo.

In the intervening years Sugihara never spoke about his wartime activities. Even many close to him had no idea that he was a hero.

Sugihara died in 1986. Nine years earlier he gave an interview and was asked why he did it: “I told the Ministry of Foreign Affairs it was a matter of humanity. I did not care if I lost my job. Anyone else would have done the same thing if they were in my place.”

Of course many were in his place — and very few acted like Sugihara. Moral courage is rare and moral greatness even rarer. It requires a mysterious and potent combination of empathy, will and deep conviction that social norms cannot shake.

How would Sugihara have responded to the refugee crisis we face today, and the response of so many leaders to bolt the gates of entry? There is no simple response adequate to the enormity of the situation. But we have to keep before us the image of a single man, overtaxed, isolated and inundated, who refused to close his eyes to the chaos outside his window. He understood the obligations common to us all and heard in the pleadings of an alien tongue the universal message of pain.

On Friday, I told the students that one day in each of their lives there would be a moment when they would have to decide whether to close the door or open their hearts. When that moment arrives, I implored them, remember that they came from the same school as a great man who when the birds flew to him for refuge, did not turn them away.

(CNBC) Nissan accuses Chairman Carlos Ghosn of serious misconduct and plans to oust him

(CNBC)

  • The auto giant said in a statement Monday that “over many years” Ghosn and board director, Greg Kelly, had been under-reporting compensation amounts to the Tokyo Stock Exchange securities report.
  • Nissan added that, in regards to Ghosn, “numerous other significant acts of misconduct have been uncovered, such as personal use of company assets.”
Nissan chairman Ghosn has been arrested: Report

Nissan accuses Chairman Carlos Ghosn of serious misconduct and plan to oust  

Nissan said its Chairman Carlos Ghosn is under investigation after he allegedly violated Japanese financial law.

The auto giant said in a statement Monday that “over many years” Ghosn and board director, Greg Kelly, had been under-reporting compensation amounts to the Tokyo Stock Exchange securities report.

Nissan added that, in regards to Ghosn, “numerous other significant acts of misconduct have been uncovered, such as personal use of company assets.”

Nissan said its Chief Executive Officer Hiroto Saikawa will now propose to the Nissan Board of Directors to remove both Ghosn and Kelly from their roles.

The Japanese auto firm added it been providing information to the Japanese Public Prosecutor’s Office. One Japanese media outlet, Yomiuri, reported Monday that Ghosn had been been arrested, but CNBC wasn’t able to independently verify that report.

Investors need more information as stocks plunge over Carlos Ghosn scandal

Investors seek more information as stocks plunge over Carlos Ghosn allegations  

Nissan shares had already ceased trading on Monday when the news broke but Renault shares — with Ghosn also being the CEO and chair of the French automaker — hit their lowest level in three years. Renault stock was more than 13 percent lower, shortly before 12:00 p.m. Paris time.

Ghosn is considered a hugely influential executive within the global automotive industry. The cross-ownership alliance of Renault, Nissan, and Mitsubishi have all enjoyed an upswing in fortunes under his leadership. After successfully restructuring Renault in the late 1990s, Ghosn earned the nickname “Le Cost Killer.”

Born in Brazil, Ghosn became the world’s first person to run two companies on the Fortune Global 500 simultaneously when he assumed the CEO roles at both Renault and Nissan in 2005. He stepped down as Nissan CEO in 2017.

In June this year, Renault shareholders voted by a slim majority to approve a 7.4 million euro ($8.4 mn) pay package for Ghosn’s work in fiscal 2017. According to other securities filings, Ghosn earned 735 million yen ($6.52 million) from Nissan and 227 million yen from Mitsubishi for the same period.

(WSJ) Japan’s Biggest Bitcoin Exchange Suspends New Business

(WSJRegulator orders bitFlyer and other cryptocurrency exchange operators to review business practices.

Japan is one of the more friendly environments for bitcoin.
Japan is one of the more friendly environments for bitcoin. PHOTO:ROBICHO/EPA/SHUTTERSTOCK

TOKYO—Japan’s biggest bitcoin exchange said it would halt taking new business after regulators said it wasn’t doing enough to stop money laundering and terrorist financing.

The move by Tokyo-based bitFlyer Inc. led to a drop in the price of the cryptocurrency and highlighted how regulators in Japan, one of the hot spots of cryptocurrency trading, are shifting their stance toward tighter controls.

The Financial Services Agency said it found problems in bitFlyer’s security system including its measures to prevent money laundering and unauthorized access. An agency official said its inspections found problematic accounts such as one registered using a post-office box as a mailing address.

It also said bitFlyer board members who were supposed to monitor management were mostly friends of the chief executive, Yuzo Kano, a former trader at Goldman Sachs who co-founded the company. And the agency said that when bitFlyer registered with the government last year, it provided some false information about its plans to prevent “antisocial forces”—a Japanese euphemism for organized crime—from using the exchange.

BitFlyer apologized to its customers and said it would halt taking new customers until it addressed the regulators’ findings.

“Our management and all employees are united in our understanding of how serious these issues are,” bitFlyer said. Its statement didn’t address the corporate governance issues or the alleged false information, and company representatives didn’t answer calls seeking comment.

A tweet on Mr. Kano’s verified Twitter account didn’t address specific allegations but said, “I take this action seriously and will exert every effort to improve.”

The statement said bitFlyer planned to recheck the identities of existing customers after it found flaws in its earlier processes. It is set to submit its plan for improving its operations to the Financial Services Agency by July 23.

The agency on Friday also issued business-improvement orders to five other cryptocurrency exchange operators.

Japan is one of the more friendly environments for bitcoin. Rules put in place last year established bitcoin as a legitimate payment method in Japan, helping the digital currency flourish in the country. Typically between two-thirds and three-fourths of bitcoin trading is yen-denominated, according to Coinhills.

The FSA, however, has stepped up its warnings against many cryptocurrency exchanges after Japanese exchange Coincheck Inc. was hacked and lost cryptocurrency worth some $530 million in January.

The price of bitcoin fell sharply minutes after the FSA announced its order and the cryptocurrency was trading below $6,400, according to research site CoinDesk. Its low for the year came in early February at just under $6,000. After surging nearly 1,400% last year, bitcoin has lost more than half its value in 2018.

Masanori Kusunoki, chief technology officer at Japan Digital Design Inc. and a member of a Financial Services Agency study group on cryptocurrency exchanges, said the agency was shifting to a tighter stance after initially seeing the new rules as a way to foster innovation in payment systems.

“There’s a trend for regulators around the world to see [cryptocurrencies] increasingly as a method of speculation. And if it is a tool of speculation, they need to respond firmly from the perspective of investor protection,” said Mr. Kusunoki, whose company is part ofMitsubishi UFJ Financial Group Inc.

He said that if exchanges address the problems, there was still room for Japan to be a cryptocurrency leader. “It could actually spur the maturation of the market and ultimately lead to greater competitiveness.”

(Nikkei) Japan shifts course to tighten grip on cryptocurrency exchanges

(Nikkei) FSA focuses on consumer protection as sloppy management comes to light

Nikkei staff writers

Cryptocurrencies such as bitcoin require global regulation, a member of Germany’s central bank argues. © Reuters

TOKYO — Japan’s financial watchdog is stepping up its oversight of cryptocurrency businesses following inspections that revealed their inadequate internal controls, shifting its focus from nurturing financial technology to consumer protection.

The Financial Services Agency on Thursday ordered two cryptocurrency exchange operators, BitStation and FSHO, to suspend operations through April 7. A senior executive at the former was found to have misappropriated customer cryptocurrencies, while the latter failed to appropriately monitor large transactions.

Neither exchange was formally registered with the authorities, as both predate enforcement of the law requiring registration and so are allowed to continue operating while they apply for official recognition. Another five operators, including two registered exchanges, were ordered to improve their operations.

Since February, the FSA has conducted on-site inspections at all 16 of Japan’s unregistered exchange operators and some of its 16 registered exchanges. While these inspections are in progress, the probe so far has shown that systems meant to protect customer assets and data, as well as measures to prevent crimes such as money laundering, are utterly inadequate in most cases.

More reprimands are likely as raids on the exchanges continue. Three unregistered exchanges, including BitStation, have retracted their applications for registration and are expected to shut down.

Japan’s Financial Services Agency reprimanded seven cryptocurrency exchange operators Thursday over security issues.

Japan became the first country requiring exchange operators to register with regulators when a revised fund settlement law took effect last April. The registration process is a good deal less rigorous than the permitting process that upstart banks and insurers must go through, letting new players enter the industry fairly easily.

Yet while the FSA was trying to nurture cryptocurrencies into a means of payment, the market saw them as prime targets for speculation. Traders seeking a quick profit sprang into action, flooding Japan’s exchange operators with more funds than they were equipped to handle.

In principle, exchange operators are expected to possess the knowledge and corporate ethics of both the technology and financial sectors. But in practice, many put profit first amid the cryptocurrency boom, neglecting to put in place the business infrastructure required of a robust financial company.

The FSA said Thursday that it would establish a research group to study how cryptocurrency businesses should be regulated. Likely questions include whether to impose a limit on how long unregistered exchanges may operate or to limit leverage used when trading cryptocurrencies on the margin. The group will also consider regulation of so-called initial coin offerings.

“We’re going to crack down for a bit to rein the industry in,” a senior FSA official said.

(BBG) Japan’s second-largest bank leases new HQ in London

(BBGMove comes despite Brexit decision.

The City of London. Demand for office space still strong despite Brexit.

The City of London. Demand for office space still strong despite Brexit.

Sumitomo Mitsui Financial Group’’s European banking unit has agreed to lease a new European headquarters from British Land and GIC Pte at London’s Broadgate complex.

Japan’s second-largest bank by market value will rent 161,000 sq ft at 100 Liverpool Street, British Land said in a statement on Tuesday.

The company will occupy the first three floors of the building on a 20-year lease. SMBC is the latest bank to confound expectations that Britain’s decision to leave the European Union would dramatically dampen demand for London offices.

Wells Fargo and Deutsche Bank are among those that have secured new premises in the City of London financial district since the Brexit vote. Sumitomo’s decision is a “strong endorsement of London as a global city,” Tim Roberts, British Land’s head of offices, said in the statement. The bank is currently based in two City offices.

(BBG) Coincheck to Repay Users Who Lost Money in $400 Million Hack

(BBG) Japanese cryptocurrency exchange Coincheck Inc. said it will use its own capital to reimburse customers who lost money in Friday’s $400 million theft.

The Tokyo-based company will repay all 260,000 users impacted by the theft of NEM coins, at a rate of 88.549 yen (82 U.S. cents) for each coin, according to a statementposted on its website after midnight local time on Sunday. A total of 523 million coins were stolen, it said.

“The timing of the reimbursement and the application process are currently under consideration,” Coincheck said in the statement. “The source of the refunded money is being carried out using our own capital.”

NEM prices surged 21 percent to $1.03 as of 12:31 p.m. Tokyo time, according to prices on coinmarketcap.com. Other cryptocurrencies including Bitcoin, Ether and Litecoin also gained.

Rising Scrutiny

The announcement came less than 48 hours after the hack was discovered on Friday. The attack shocked Japanese policy makers, who introduced legislation last April precisely to prevent such disasters, and piled pressure on global crypto markets wary of rising scrutiny from regulators.

It was not clear how Coincheck secured the funds necessary to repay customers. Late on Friday, the exchange disclosed that co-founders Koichiro Wada and Yusuke Otsuka owned the majority of shares in the company. Other investors include Tokyo-based venture firm Anri and California-based WiL LLC, according to Otsuka. The startup has about 80 employees and began cryptocurrency operations in 2014, it said.

Coincheck didn’t respond to an email requesting more information and verification of the authenticity of the statement. Multiple phone calls placed to two different numbers went straight to voice mail.

Past Deadline

Coincheck was four months past its deadline for receiving a license necessary to operate, as part of Japan’s new legislature to vet and audit cryptocurrency exchanges. It was allowed to continue operating while awaiting a decision from the Financial Services Agency.

The agency is getting ready to penalize Coincheck in relation to the hack, the Yomiuri newspaper reported on Sunday without saying where it obtained the information. Media reports also said the FSA will ask company officials Sunday about the circumstances leading to the loss, and the security measures in place.

If Coincheck successfully navigates the theft, the turnaround wouldn’t be the first in the cryptocurrency world. Bitcoin exchange Bitfinex also overcame a $69 million heist and last year repaid most customers who lost money in the August 2016 attack.

(ZH) Japan’s Largest Bank Is Preparing For A Bitcoin Exchange Collapse

(ZH) The February 2014 collapse of Tokyo-based bitcoin exchange Mt. Gox was, for more than 24,000 investors around the world, a traumatic event. It also ushered in a two-year crypto bear market that saw the price of a single bitcoin plunge from a peak of $1,200 to a low of around $200 before the torrid bull market of the present day began. And as the bankruptcy and legal issues surrounding the collapse continue to wend through the Japanese legal system, none of these investors have received a single crypto cent of remuneration – despite the ballooning valuation of the exchange’s remaining assets.

Many market observers believe that one of the biggest risks to the current rally would be a similar incident unfolding across another major exchange like Bitfinex or CoinBase’s GDAX.

So in a move that could go a long way toward legitimizing the burgeoning crypto market, Japanese banking behemoth Mitsubishi UFJ Financial Group which is  Japan’s largest financial group and the world’s second largest bank holding company – through its trust and banking unit – is preparing to launch a service that will allow individual investors to secure their bitcoins in the event an exchange should fail again, according to Nikkei Asia Review.

MUFG isn’t the only major global bank seeking to build up its cryptocurrency franchise: Goldman Sachs is reportedly in the process of launching a crypto trading desk. Of course, as observed recerntly, Japan is one of bitcoin’s biggest markets, and its largest exchange, Bitflyer, accounts for nearly 40% of global exchange-based trading.

MFUG’s new trust service would help mitigate what has, in the past, proven to be one of the biggest threats to the crypto market. It will also help Japanese regulators cement their position at the vanguard of crypto’s integration with traditional markets.

Mitsubishi UFJ Trust and Banking is preparing a scheme for protecting holders of cryptocurrencies if the exchanges they use fail – a risk that veteran fans here know all too well.

 

This highlights how Japan’s finance industry seeks to make the most of the opportunities associated with virtual currencies, which the country has taken to in a big way, accounting for around 40% of global bitcoin trading.

 

Japan was also the epicenter of one of the digital currency’s biggest shocks — the 2014 collapse of Mt. Gox, the largest bitcoin exchange at the time.

 

Mitsubishi UFJ Trust will offer a way to keep exchange customers’ cryptocurrency holdings separate from the entrusting exchange’s assets. This will make it the first trust arrangement of its kind in the world, according to the Mitsubishi UFJ Financial Group member, which recently applied for patent protection.

Per Nikkei, the service could launch as early as April, when Japan’s Financial Services Agency is expected to recognize cryptocurrencies as an asset that can be placed in trust, like real estate or securities.

While the market value of major cryptocurrencies has ballooned to $300 billion, bitcoin and its peers have remained remain decentralized creations without an oversight body like a central bank – a core component of their appeal. But as the usage and valuation of digital currencies grows, these exchanges, which are often overwhelmed and under-staffed by the flurry of new accounts, they’re increasingly becoming targets for state-sponsored hackers like the North Korea linked Lazarus Group.

As Nikkei explains, Mitsubishi UFJ Trust will maintain the same records as its exchange clients. In the event that the exchange operator fails to safeguard its customers’ assets, Mitsubishi UFJ will use these records to compensate investors for their losses.

Of course, this service won’t protect customers from violent plunges in the valuation of bitcoin, like the selloff that occurred over the weekend during the runup to the Christmas holiday.

Using an arrangement like Mitsubishi UFJ Trust’s would entail a fee that would be shouldered by individual investors. But “customers will feel peace of mind knowing that a trust bank is managing their assets,” said CEO Noriyuki Hirosue of Tokyo-based exchange Bitbank. After all, the big banks have never violated their fiduciary duty to their clients – therefore, they’re implicitly more trustworthy than crypto startups with few resources and little to no track records.

To use the service, exchange customers will opt in when they start trading. Mitsubishi UFJ Trust will monitor the accounts of those who do for suspicious activity and examine pending transactions in detail as needed. A late-night sale of a huge amount of bitcoins, for instance, would get flagged for inspection instead of being processed immediately.

While regulators in the US have expressed skepticism about digital currencies, Japan established itself as a leader in building a regulatory framework when nearly two years ago, it passed a law clearing the way for financial institutions to become involved in the crypto market.

The Japanese recognize the adoption of cryptocurrencies and blockchain technologies as a competitive advantage, and they’re right. The FSA began registering cryptocurrency exchanges in earnest this past autumn.

Offering this service will help establish one of Japan’s largest financial institutions as a key player in an increasingly contested global market, which has seen a surge of institutional interest in the trading of cryptocurrencies in recent months.

(P-S) Japan’s Demographic Lessons for Europe – DANIEL GROS

(P-S) Contrary to popular belief, Japan has been extraordinarily successful in achieving economic growth, given its rapidly aging population and lack of inflation. For Europe, where the demographic future looks a lot like Japan’s past, there is much to be learned from this experience.

BRUSSELS – Demography is not destiny, at least not entirely. Over centuries, policy can affect fertility decisions, and migration can transform a country, as the experience of the United States shows. Over shorter time horizons, however, demographic trends must be taken as given, and can have a profound impact on growth. Yet demographic factors are often neglected in economic reporting, leading to significant distortions in assessments of countries’ performance. Nowhere is this more apparent than in Japan.

With real output – the key measure of economic performance – having risen by only about 15% since 2000, or less than 1% per year, Japan easily seems the least dynamic of the worlds’ major economies. But given Japan’s demographics – the country’s working-age population has been shrinking by almost 1% per year since the start of this century – this result is remarkable.

In fact, Japan’s growth rate per working-age person was close to 2% – much higher than in the US or in Europe. Though the US economy grew more than 35% since 2000, its working-age population also grew markedly, leaving the annual growth rate per working-age person at only about 1%.

That indicator – growth rate per working-age person – is not widely used by economists, who instead focus on GDP per capita. By that measure, Japan is doing about as well as Europe and the US. But, while per capita indicators are useful for assessing a country’s consumption potential, they do not provide an adequate picture of growth potential, because they include the elderly and the young, who do not contribute to production. Even in Japan, with its high life expectancy, those over the age of 70 do not contribute much to output.

So, given its rapidly declining potential, Japan has been extraordinarily successful. A key reason is that it has put a growing proportion of its working-age population to work: unemployment is today at a record low of less than 3%, and almost 80% of those who could work have a job, compared to about 70% for Europe and the US.

Japan’s achievement of full employment and high job growth over the last two decades is all the more noteworthy in view of near-permanent deflation during this period (most prices are still lower today than they were 15-20 years ago). This should give food for thought to those who maintain that deflation imposes unbearable economic costs.

The Japanese experience holds important lessons for Europe, where the demographic future looks a lot like Japan’s past. The eurozone’s working-age population has not grown at all in recent years, and will soon start to decline at a rate similar to Japan’s over the last generation. It seems unlikely that immigration will alter the trend. In recent years, Europeans, like Japanese, have proven to be highly resistant to large-scale immigration, which is what would be required to offset demographic decline.

Moreover, the eurozone has now settled on a current-account surplus of around 3% of GDP. That is similar to the level long seen in Japan (except for the short period in the aftermath of the 2011 Fukushima Daiichi nuclear meltdown).

A first lesson of Japan’s experience is that, despite the eurozone’s difficulty generating inflation in an aging society characterized by excess savings, growth is not necessarily out of reach. Rather, given Japan’s record of growth without inflation, the European Central Bank should recognize that its target of “close to 2%” inflation might not be so important after all. In any case, the particularities of the eurozone’s structure mean that the ECB will have no choice but to halt its bond-buying operations in a year or so. This means that the ECB will not be able to follow in the footsteps of the Bank of Japan, which continues to purchase large volumes of government bonds, without any visible pick-up in inflation.

Another lesson from Japan is that a country with a large savings surplus can handle a large public debt, because it can be financed internally. That does not necessarily mean that it is desirable to run up the debt. Japan’s debt-to-GDP ratio now exceeds 150% of GDP (taking into account the large financial assets of the government-owned savings institutions), and continues to rise, owing to large fiscal deficits.

This brings us to a final key lesson from Japan: in a low-growth economy, the debt-to-GDP ratio can quickly spin of out control. Fortunately, it seems that this lesson already has been learned, with the average deficit in the eurozone now amounting to only around 2% of GDP. The deficit cap imposed by the Stability and Growth Pact (3% of GDP) seems to have had at least some impact in terms of stabilizing the debt ratio.

The structure of the eurozone imposes limits on the use of both fiscal and monetary policy. This should prevent the excessive build-up of debt, ultimately making it easier for the eurozone to manage a future in which the only way to sustain growth is to capitalize fully on the economy’s declining demographic potential.

(BBG) Abe Calls Snap Election in Japan, Readies $18 Billion Package

(BBG) Japan’s Prime Minister Shinzo Abe said he’ll dissolve the lower house of parliament on Sept. 28 for a general election as he announced an $18 billion economic package.

At a press conference Monday, Abe unveiled a slew of economic measures including more education spending. He said he’d pay for them with funds from a consumption tax increase originally intended to rein in the nation’s swollen debt. He also spoke about the need to keep up pressure on North Korea after Kim Jong Un’s regime fired two missiles over Japan in recent weeks.

Shinzo Abe speaks on September 25.

Photographer: Akio Kon/Bloomberg

“To increase investment in future generations, I decided today to change the way we had promised to use the sales tax,” Abe said. “I am changing a pledge that was made to the public, and one that affects people’s livelihoods, so I must swiftly seek the will of the people.”

Election Date

Voting will be set for Oct. 22, according to three people with knowledge of his ruling coalition’s plans. Heightened tensions with North Korea have boosted Abe’s approval rating after a series of scandals, and may help him retain his coalition’s two-thirds majority in the lower house of parliament.

“An election in these circumstances will also be a test of confidence in me,” Abe said, adding that he’d resign if his ruling coalition failed to get a simple majority.

The yen pared a drop as Abe unveiled the stimulus package and called the election.

Ahead of Abe’s remarks, Tokyo Governor Yuriko Koike announced that she would form a new national party to challenge him. Koike, a former member of Abe’s Liberal Democratic Party, said Monday that her “Party of Hope” would run candidates across the nation.

Abe announced Monday he had ordered a 2 trillion yen ($18 billion) economic package, including spending on preschool and higher education, as well as improving conditions for people working in elderly care. The premier said he would make use of revenues from a planned increase in the nation’s consumption tax in October 2019 to 10 percent from 8 percent now.

He reiterated his strong line on North Korea, saying the current situation on the Korean peninsula was among his reasons for calling the election.

“Elections, which are the foundation of democracy, must not be affected by North Korea’s threats,” he said. “By holding an election at this time, I want to ask the people’s view on how we are dealing with North Korea.”

Following the announcement, public broadcaster NHK said LDP Vice President Masahiko Komura wouldn’t stand in the election., without providing a reason.

Opinion Polls

poll published in the Nikkei newspaper on Monday said Abe’s LDP received 44 percent of support, compared to 8 percent for both Koike’s group and the main opposition Democratic Party. Another survey by Kyodo News published on Sunday showed the LDP with a more than three-to-one margin against its closest rival, with 42 percent still undecided.

While the Democratic Party is splintering, Koike has a history of local election victories over the premier’s party. After defecting from the LDP, she crushed it in a July election for the metropolitan assembly. Komeito’s Yamaguchi said he hoped she would concentrate on her post in Tokyo.

Abe has served a total of almost six years as prime minister: he had a truncated term a decade ago, and came back to power in a landslide in 2012. He could serve until 2021 if re-elected as party leader next year, making him the longest-serving prime minister in Japanese history, though recent polls have shown a majority of voters against this idea.

The Nikkei poll showed that 20 percent were undecided, and a majority said it was inappropriate for Abe to dissolve the lower house this month — more than a year before his government’s term is set to expire. Nikkei Research Inc. surveyed 1,044 people aged 18 or older by phone.

Kyodo reported that its survey conducted over the weekend showed 27 percent of respondents saying they would vote for Abe’s LDP, compared with 8 percent for the Democratic Party. Sixty-four percent said they don’t support his drive for a fresh mandate, the report said, without giving details on the number of respondents or margin of error.

Abe’s support is likely to be buoyed by the economy, which has grown for six straight quarters. While unemployment is less than 3 percent, the premier has said wage rises haven’t met his expectations.

Koike’s Concerns

Tokyo Governor Koike said Monday people did not have a real sense that the economy was improving, and warned that raising the sales tax would pose a risk. She also said debate on constitutional reform should not be avoided.

“We need a real force for reform,” Koike told reporters in Tokyo. “By making my position clear, I hope to add energy to the movement,” she added. The new party’s policies will include cutting the number of lawmakers and their pay, improving transparency in government and female empowerment.

The ruling coalition currently controls 68 percent of seats in the 475-member lower house, including 288 for the LDP and 35 for its coalition partner Komeito, according to the parliamentary website. The total number of seats is set to be cut to 465 in the next election as part of a reform aimed at reducing the excessive weight given to rural votes under the current system.

(BBG) North Korea Puts Guam in Range With Missile Test Over Japan

(BBG) North Korea’s second missile launch over Japan in as many months flew far enough to put the U.S. territory of Guam in range, a provocation that comes days after the United Nations approved harsher sanctions against Kim Jong Un’s regime.

The intermediate-range missile fired from Pyongyang at 6:57 a.m. on Friday flew over the northern island of Hokkaido, reaching an altitude of 770 kilometers (478 miles) before landing in the Pacific Ocean. It traveled 3,700 kilometers (2,300 miles) — further than the 3,400 kilometers (2,100 miles) from Pyongyang to Guam, which North Korea has repeatedly threatened.

“The range of this test was significant since North Korea demonstrated that it could reach Guam with this missile, although the payload the missile was carrying is not known,” David Wright, a co-director of the Union of Concerned Scientists, wrote in a blog post.

North Korea, which has fired more than a dozen missiles this year, had pledged to retaliate after the UN Security Council punished the country for its sixth and most powerful nuclear test on Sept. 3. Investors largely shrugged it off on Friday, showing that financial markets are growing accustomed to North Korea’s provocations and the responses of the U.S. and its allies.

North Korean foreign ministry official told reporters at Beijing’s international airport that Friday’s launch was a “normal part of strengthening our nuclear deterrent,” according to NHK.

The Japanese public broadcaster cited Choe Kang Il, deputy director general for North American affairs, as saying North Korea wouldn’t enter dialogue unless the U.S. stops antagonizing his nation. Choe was on his way back from Switzerland, where he attended a meeting on Northeast Asian security.

U.S. President Donald Trump was briefed on the missile launch but made no mention of North Korea in remarks at a White House dinner on Thursday night. The president has said all options — including military — are on the table to stop North Korea from obtaining the ability to strike the U.S. with a nuclear weapon, and has questioned the usefulness of talks.

“These continued provocations only deepen North Korea’s diplomatic and economic isolation,” U.S. Secretary Rex Tillerson said in a statement. He reiterated a call for China and Russia to take action against the rogue state, saying: “China supplies North Korea with most of its oil. Russia is the largest employer of North Korean forced labor.”

Here Are the Options for Dealing With North Korea: QuickTake Q&A

On Monday, the UN Security Council approved new sanctions after the U.S. dropped key demands such as an oil embargo to win support from Russia and China, both of which can veto any proposals. The resolution seeks to limit oil imports, ban textile exports and increase inspections of ships suspected of carrying cargo in breach of sanctions.

The council plans to convene on Friday in New York at 3 p.m. local time. China’s foreign ministry spokeswoman Hua Chunying said her nation was not at the core of the North Korea problem.

China would continue to strictly implement UN resolutions on North Korea, she said. “It’s irresponsible and unhelpful to unjustly blame others and shirk responsibilities in any form.”

On Thursday, North Korea had threatened to sink Japan “into the sea” with a nuclear strike and turn the U.S. into “ashes and darkness” for agreeing to the latest UN sanctions.

“We are in an ever worsening cycle of escalation and time is on North Korea’s side,” said Daryl Kimball, executive director of the Washington-based Arms Control Association, who said the country’s technicians are getting better. “So long as the war of words continues and the lack of communications continues, there is an increasing risk that one side or another miscalculates and we have a situation that can lead to military conflict.”

South Korean President Moon Jae-in used his strongest language yet to condemn the latest test. “We have the power to smash North Korea into powder and put it beyond recovery if it provokes us or our alliance,” he said before chairing a National Security Council meeting.

Read More: Smugglers on China-North Korea Border Undercut Sanctions

South Korea’s military said it simultaneously conducted a drill in which it fired a ballistic missile into the East Sea, also known as the Sea of Japan.

Moon suggested to Japanese Prime Minister Shinzo Abe that the two countries refrain from overreacting to North Korea’s provocations to avoid any accidental conflict, Moon’s office said in a text message Friday. Moon said he “completely agrees” with Abe to firmly respond to the threats but the two countries should cooperate to manage the situation in a stable way to avoid “a possible accidental conflict,” his office said.

Moon also told Abe that South Korea will consider the timing of humanitarian aid it plans to provide for pregnant women and children in North Korea through international organizations, given the continued provocations, and will ensure goods will be used as intended.

Japan didn’t try to shoot down the North Korean missile on Friday, and the situation was similar to when a missile was fired over the country on Aug. 29, government spokesman Yoshihide Suga told reporters. North Korea had called that test a “meaningful prelude” to containing Guam, and threatened to launch more missiles over Japan into the ocean.

In July, North Korea fired two intercontinental ballistic missiles on steep trajectories into the sea between the Korean peninsula and Japan. The regime said those launches put the entire U.S. in its range.

Abe said a unified international response against North Korea was needed now more than ever, reiterating that the isolated nation had “no bright future” if it continues on its current path.

Market Reaction

Japan’s benchmark Topix index rose 0.4 at the close in Tokyo, while the yen flat-lined after an initial jump before heading lower.

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“I wouldn’t necessarily say this is an escalation,” said James Soutter, a portfolio manager at K2 Asset Management in Melbourne. “This is more of a continuance of provocation. Hence markets won’t like it, but I don’t think it’s necessarily the precursor to a sustained market pullback.”

North Korea’s first nuclear test since Trump took office was a “perfect success” and confirmed the precision and technology of the bomb, according to the Korean Central News Agency. Kim claimed that his regime could mount a hydrogen bomb onto an ICBM.

While North Korea’s ICBM threat is growing, the U.S. military says it’s not yet imminent. Kim’s regime has yet to demonstrate that it can accurately guide a long-range missile to a target with a nuclear warhead that survives the trip, General Paul Selva, the No. 2 U.S. military official said in a statement to Bloomberg last month.