As
Prime Minister Junichiro Koizumi celebrates his
fifth anniversary in office, there is a general
feeling that Japan is finally recovering from more
than a decade of intermittent recession.
While Japan may indeed experience faster
economic growth over the coming years, the
country's myriad structural problems - especially
in economic and demographic terms - suggest that
its global influence will wane substantially over
the next few decades. None of this portends
disaster for Japan. Rather, the country will
gradually be eclipsed by other newly ascendant
nations, China
and
India among them. Moreover, it will be impossible
for Japanese politicians to reverse this decline,
since most of the solutions would be unacceptable
to the public and to Japan's neighbors.
When Koizumi, now the
third-longest-serving of Japan's 27 postwar
premiers, took power on April 26, 2001, the
country truly seemed to have lost its sense of
purpose in the world. Three recessions in the
1990s, at a time when the US economy boomed,
suggested that Japan's economic woes were
structural rather than cyclical, thereby
discrediting its long-cherished economic model of
close ties among government, banks and big
business.
Meanwhile the political system,
dominated for 50 years by the Liberal Democratic
Party (LDP), became increasingly ineffective,
producing nine revolving-door prime ministers,
each unable to reverse the stagnation. The LDP
only reluctantly turned to Koizumi because of a
lack of viable alternatives.
Surprisingly,
Koizumi has managed to make a difference, mainly
by using his personal popularity to weaken his
opponents within the LDP, and by presenting
himself as a champion of reform. Although his
rhetoric on reform has far surpassed his
achievements, the economy at long last seems to be
rebounding. Business and consumer confidence are
at their highest levels since 1990. Foreign
investors have also become more optimistic, which
explains the Nikkei Index's 45% gain in 2005,
making Tokyo's one of the best-performing stock
markets in Asia.
But the Koizumi era is
about to end, as he has said he will step down in
September. His pending departure has created some
uncertainty over what path his successor will take
despite the prime minister's apparently wanting
the next leader also to be reform-minded.
Nonetheless, a closer examination of the
five pillars supporting a country's ambitions for
global leadership - economics, diplomacy, military
force, culture, and demographics - suggests that
Japan's worldwide influence will decline over the
long term.
Economy reviving, but rivals
catching up Japan's global influence has
been derived almost entirely from its economic
power.
In the late 1980s, when times were
good, Western bookstores were flooded with titles
about how Japan would dominate the world. In 1992,
the year that Japan started sliding into its lost
decade, US author Michael Crichton published
Rising Sun, a novel about how Japanese
corporate interests were taking over the United
States. As late as 1995, some economists were
still predicting that Japan would overtake the US
to become the world's largest economy by 2000.
(Admittedly, this argument was bolstered by the
yen reaching a postwar high of 80 to the US
dollar, which made Japan's gross domestic product
85% the size of the United States'.)
Therefore, when the economy stalled in the
early 1990s after rapid postwar growth, the
Japanese public and the world started losing
confidence in Japan. The speed at which the
Japanese miracle came unstuck was remarkable. By
the time of the Asian financial crisis of 1997-98,
the US had moved from "Japan bashing" to "Japan
passing", in effect ignoring it as an economic
force and increasingly relying on China to support
economic stability in the region. Japan's economy
went from model to muddle, in the words of
political commentator Yoichi Funabashi.
Japan is still the second-largest economy
in the world in terms of absolute gross domestic
product (GDP) measured in US dollars. However,
even if Japan's economy performs well over the
next few years, its contribution to global growth
will be limited, in light of the rise of China and
India, which are growing at 10% and 8% annually.
Many investment banks are now expecting these two
giants to overtake the US by the late 2030s or
early 2040s. By 2050, Japan will still be the
fourth-biggest economy in the world after China,
the US and India, according to a Goldman Sachs
report, but its dynamism, significance and
contribution to global growth will almost
certainly have been surpassed by the newcomers.
Furthermore, Japan's aging and shrinking
population and crippling debt burden (now
estimated at 160% of GDP) point to more problems
down the line. A smaller population will mean
fewer workers, and the workers who do exist will
struggle to support an increasingly large pool of
retirees.
To maximize its economic
potential amid the rise of China and India and a
shrinking population, Japan would have to embark
on a wholesale restructuring of its economy, by
opening up the domestic market to greater
international competition, and by allowing
inefficient businesses to fail. However, this
could potentially cause millions of job losses,
thereby sapping the current recovery.
During the 1990s, Japan largely avoided
the "shock therapy" reforms pursued by Britain in
the early 1980s and by South Korea after its
economic collapse in 1997-98, instead opting for
small, gradual reforms that were little noticed.
However, many observers feel that not enough was
done. The absence of an outright collapse may have
reassured politicians that the old system could
still work.
Now that the economy is on the
mend, there is less motivation for Japan's leaders
to pursue economic reforms that may be beneficial
over the long term. Koizumi's pet project - the
privatization of the postal system (which is also
the country's largest financial institution) to
maximize the returns on its US$3 trillion assets
instead of channeling them into wasteful
public-works projects - is a worthy step, but
Japan looks set to continue being an economy
dominated by "big government", red tape and
regulations. All this will stifle innovation when
Japan most needs it.
Negligible
diplomatic influence Japan's quest for
greater geopolitical influence also looks set to
fail.
During the 1980s, many observers
believed that Japan would soon start to wield
diplomatic influence commensurate with its
economic power. In world history, geopolitical
dominance has traditionally accompanied economic
dominance, with hegemony passing from Spain and
Portugal to the Netherlands, Britain, and finally
to the US. Japan's own thirst for a bigger global
role has been evident in its campaign for a
permanent seat on the United Nations Security
Council. Yet while Japan has been a major provider
of aid to developing nations, its geopolitical
influence has been minimal. In virtually every
major international or civil conflict, whether
Israel-Palestine, India-Pakistan, the former
Yugoslavia, the Democratic Republic of Congo,
Sierra Leone, Ivory Coast, Sudan or Indonesia,
Japan has been noteworthy for its absence.
One of the reasons for Japan's limited
overseas role has been its weak political system,
which prevents a strong executive leadership from
making bold decisions at home, let alone abroad.
This is slowly changing, thanks to Koizumi's more
presidential style of government, and the
increasing assertiveness of his foreign and
defense ministers. However, if Japan returns to a
revolving-door series of premiers after Koizumi,
it will struggle to maintain a voice in world
affairs. After all, who can take Japanese premiers
seriously if they are here one day, and gone the
next?
The second reason behind Japan's
limited global influence is the fundamental
distrust and bitterness with which it is perceived
by its neighbors, as a result of Tokyo's
reluctance to atone more substantially and
apologize for atrocities committed by the Imperial
Army during its occupation of Asia in the 1930s
and 1940s. Koizumi's annual visits to the
controversial Yasukuni Shrine in Tokyo (where
several class A war criminals are honored
alongside Japan's war dead) have only exacerbated
relations with China and South Korea.
Consequently, it may take years, or even another
generation, before warmer relations can be
established.
In the meantime, China and
other emerging economies, unburdened by the shadow
of World War II, have a major opportunity to
expand their political influence. China has been
seeking allies in Latin America, the Middle East,
Africa and Southeast Asia, and India is likely to
follow suit. Other, mid-sized economic powers such
as Brazil, Mexico, South Africa and Indonesia may
end up wielding far more power on the world stage
than Japan in the years ahead.
Japan
lacks military projection capabilities The
third and perhaps most important reason Japan has
failed to wield global geopolitical influence is
its hamstrung military.
Although Japan has
modern Self-Defense Forces (SDF) of 239,900
personnel (about the same size as Britain's armed
forces), Article 9 of its constitution in effect
prevents the country from sending troops overseas.
The article renounces Japan's right to use war or
the threat of force to settle international
disputes, or even maintain land, sea and air
forces, for that matter. (The existence of the SDF
is therefore a paradox.) Koizumi managed to bend
the rules by sending 500 non-combat troops to
Iraq, but this caused considerable controversy at
home, which could have cost him his career had
there been mass casualties among the soldiers.
This will make future prime ministers cautious
about sending the SDF overseas.
In recent
years, the United States has been pressing Japan
to take a more active role on the world stage,
potentially becoming the Britain of the Far East,
in the words of former US deputy secretary of
state Richard Armitage. However, aside from the
Iraq controversy, Japan's falling birth rate
mitigates against this. Japanese couples, who now
have only one child if any, simply do not want
their child going off to fight in some country
they've never heard of. As Japan's population
declines, it will find it difficult to fill the
ranks of the SDF, let alone expand it into a large
globally deployed combat force along the lines of
the US military. As such, there is very little
chance of Japan sending thousands of combat troops
to major war zones in the Middle East, Africa and
elsewhere.
Even if Japan wanted to have a
global military, it lacks overseas bases from
which to project power. The distrust that Asian
countries feel toward Japan precludes Japanese
bases in the Philippines, for example.
In
theory, Japan's leaders could try to change all
this by abrogating the US-Japan Security Treaty
(the anchor of Tokyo's strategic policy for the
past 50 years), building its own nuclear weapons
and embarking on a full-scale remilitarization of
the country. However, this would be politically
impossible, triggering firm opposition from the
public and across Asia.
Japan's only hope
for playing a global military role lies in
developing a robot army. This may not be as
far-fetched as it sounds; the US is increasingly
experimenting with unmanned combat aerial vehicles
(UCAVs), which possess greater maneuverability
than manned aircraft, and carry no risk of the
loss of pilots' lives. However, as John J
Mearsheimer points out in The Tragedy of Great
Power Politics, Japan could certainly build an
army that is qualitatively superior to China's
(Japan's main rival in Asia), but not so much
better that it would offset the 10:1 advantage in
numbers that China could maintain because of its
huge population.
Soft power can quickly
be overtaken One area in which Japan
appears to be expanding its global influence is
soft power. Although Japanese culture has long
been popular in Asia, its real challenge is to
compete against that of the US-led West - the
world's dominant pop culture. On this front, there
has been progress.
During the 1990s, more
and more Japanese films, cartoons, computer games,
manga (comics), fashion and food have been
exported abroad. Major bookstores in the West now
have large sections devoted to manga, more
Japanese novels have been translated into English
and more Western authors are writing novels about
Japan. The number of Japanese-style eateries in
the West has risen substantially, to the point
where they are no longer staffed by Japanese.
Yet despite some impressive strides,
Japan's popular culture outside the country rests
on shaky foundations and may be ephemeral, given
the volatility of fads and fashions. It is true
that Hollywood - the West's main pop cultural
force - is increasingly looking to Japan (and
elsewhere in Asia) for ideas.
As far back
as the 1970s, Star Wars borrowed from
Eastern philosophy and Akira Kurosawa films in
particular, while more recently the Matrix
trilogy appears to have been influenced by
Japanese anime (animation). Much of Quentin
Tarantino's Kill Bill Volume One was in
Japanese, and Hollywood has already remade Hideo
Nakata's Ringu and Dark Water horror films,
and the romantic comedy Shall We Dance?
However, remakes mean that Japanese films still
need to be adapted to Western tastes, rather than
being able to compete on their own merit. Overall,
Japanese films generally fail to register in the
top 10 films by box-office receipts outside Japan.
On a global basis, Japanese entertainment
has also failed to match the spread of Latin
American telenovelas (soap operas), which
now entertain audiences well beyond Latin America.
Furthermore, the speed at which South Korean and
Chinese cinema has gained international prominence
in recent years shows that potential rivals can
quickly emerge from virtually nowhere.
Part of the problem for Japan's soft power
is that there is no Japanese dream or universal
Japanese values to pervade Japanese films, in the
way that there is the American dream or American
values visible in Hollywood movies. In the early
1990s, then-prime minister Kiichi Miyazawa spoke
of turning Japan into a lifestyle superpower.
While Japan indeed possesses a very high standard
of living, this goal will be difficult to achieve,
in view of the country's high population density.
Furthermore, US pop culture extols values
such as individualism and freedom, making it
attractive even to those who are politically
anti-US. By contrast, Japan's generally
conformist, anti-individualist culture has limited
appeal outside Northeast Asia, and even there
people are getting fed up with it.
Japan
has therefore failed to attract significant
numbers of foreigners to its shores, either on a
temporary or permanent basis. Indeed, Japan is the
only member of the Group of Eight rich nations to
rank outside the top 10 in tourism arrivals.
Visitors from outside the region instead go to
Thailand or Malaysia. And yet Japan, with its
2,600-year history and ancient culture, should be
attracting more visitors, which would also be a
boon for regional economies.
Unfortunately, Japan is notoriously closed
to foreigners, mainly because opinion polls show
that most Japanese associate foreigners with
crime. As of 2003, there were only 1.9 million
registered foreign residents in Japan, equivalent
to only 1.5% of the population. The real number of
foreigners is even lower, considering that 600,000
are ethnic Koreans mostly born and raised in Japan
and who speak only Japanese, and that most of the
270,000 registered Brazilians and 54,000 Peruvians
are ethnic Japanese from South America who have
returned to Japan.
Japan should not take
comfort from these low figures, for they suggest
that foreigners do not want to move to Japan, or
that Japanese society is not mature enough to
tolerate people of different backgrounds. Neither
possibility is flattering to Japan. And yet
ultimately Japan needs more foreigners, not just
to do dirty and dangerous jobs, but to introduce
new ideas and ways of doing things to the wider
culture, which in turn may make Japan a more
dynamic and vibrant place.
Demographic
outlook worrisome Japan's inability to
attract, or reluctance to welcome, more foreigners
will exacerbate its demographic weaknesses.
Indeed, all of Japan's deficiencies in the areas
of economy, military and soft power are
exacerbated by its demographic outlook.
As
of 2005, the population started shrinking.
According to the UN World Population Prospects,
Japan's population will decline from about 128
million in 2005 to just under 112.2 million by
2050, a loss of 12.4%. Some demographers are
forecasting even more dramatic declines, to fewer
than 100 million by mid-century. The main reason
is Japan's falling birth rate, as women marry
later and have fewer children. (In fact, Japan's
failure to make it easier for women to return to
work after having babies is in itself a failure of
the culture to adapt to a changing world.)
At the same time, Japan's population is
aging rapidly. In 2005, Japan had the world's
oldest population, with a median age of 42.9.
Although Japan will slide to fifth place by 2050,
the median age will rise to 52.9. A rising
proportion of the population aged 65 and older
will put increasing strains on Japan's public
finances, already burdened with a debt of 160% of
GDP. This will mean that there will be fewer
savings available for investment, and ultimately
economic growth.
The only way Japan can
avoid demography-induced economic decline is to
open the door to millions of immigrants, or to
raise productivity levels through technological
breakthroughs such as robot workers. The
immigration option would be too unpopular
politically, so the real hope lies in robotics - a
field in which Japan is a world leader. However,
it is questionable whether robots can ever advance
enough to replace human workers.
If
productivity can be maintained or raised, then
Japan can become even wealthier, as per capita GDP
continues to rise and the population shrinks. Ten
million fewer people in Japan by 2050 will also
make the country less crowded. However, an
increasingly aged Japan means that an already
conservative society will become even more
conservative, thereby limiting the country's
ability to be innovative and dynamic.
Conclusion: Mild decline rather than
disaster Given the above factors, Japan's
fate over the next 50 years looks set to be one of
mild, even comfortable relative decline, rather
than economic and financial disaster.
Indeed, many inside and outside Japan may
not even notice this, since the country will still
be very wealthy. Furthermore, Japan's problems
will by no means be unique. Many developed nations
such as Britain, France, Germany and Italy may
face even more severe problems than Japan over the
coming decades, for similar structural reasons.
(The US will avoid this fate, since its economy is
far more dynamic and flexible, and its aging
population continues to be offset by immigration.)
The difference is, none of the four
European powers mentioned were considered
potential world hegemons at the start of the
1990s. Britain and France had long since lost
world empires, and Germany was seen only as the
leader of Europe. Italy didn't even figure in any
geopolitical calculations. As such, Japan's
decline over the coming decades will be one of
unfulfilled promise rather than dramatic fall from
grace.
Overall, Japan will most probably
continue to be a very wealthy country for many
years to come. However, it will increasingly lack
a sense of mission, in Asia and the wider world.
Yoel Sano has worked for
publishing houses in London, providing political
and economic analysis, and has been following
Northeast Asia for many years.
(Copyright 2006 Asia Times Online Ltd.
All rights reserved. Please contact us about sales, syndication and republishing
.)
