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Archives : No.4

December 2010–January 2011

No.4
No.4 ,Discussions  Jan 31, 2011

REVIVING THE SPIRIT OF THE XINHAI REVOLUTION

Speaking to a Chinese diplomat at a symposium on Japan-China relations about six months ago, I remarked on the fact that 2011 was the centennial of the Xinhai Revolution that toppled the Qing dynasty. “Yes, that’s right,” he replied. “But I don’t suppose that has much to do with Japan.” Astonished, I spoke of the many Japanese who had cooperated and participated in the revolution, in some cases at the cost of their lives. I mentioned Kita Ikki, who traveled to China and ate, slept, and fought alongside Song Jiaoren, founder of the Kuomintang (Nationalist Party), as well as such figures as Miyazaki Tōten, Inukai Tsuyoshi, Tōyama Mitsuru, the brothers Yamada Yoshimasa and Junzaburō, and Umeya Shōkichi. Now it was the diplomat’s turn to be astonished. “I had no idea,” he confessed. Pulling out a memo pad, he asked me to write down the ... ... [Read more]

No.4 ,Politics
Jan 30, 2011

OVERCOMING JAPAN’S CRISIS WITH POLITICAL REFORM

Japan is in a very difficult position, both domestically and internationally. On the external front we have seen a string of recent developments, notably the confrontation with China over the Senkaku Islands, the visit by Russian President Dmitry Medvedev to Kunashiri (one of the islands in the Northern Territories claimed by Japan), and the shelling of South Korea’s Yeonpyeong Island by North Korea, along with the March 2010 sinking of the South Korean corvette Cheonan, all representing profound challenges to Japan’s foreign policy and national security. Domestically, we have accumulated a huge national debt, and taxes now account for only about 40% of the government’s total general revenues. Social security expenditures are rising by ¥1 trillion a year. To make ends meet, the government has been cutting back on spending in areas like science, culture, and education–money invested in... [Read more]

No.4 ,Politics
Jan 29, 2011

THE SWEEPING CHANGES IN JAPANESE POLITICS SINCE THE 1990S

In countries with well-established democratic political systems, major political reforms are unusual, and drastic reforms of a comprehensive or multifaceted nature are rare indeed.[1. James G. March and Johan P. Olsen, Rediscovering Institutions (New York: Free Press, 1989), pp. 166-172.] But during the 1990s, under governments led for the most part by the long-ruling Liberal Democratic Party, Japan experienced a series of substantial changes in its political system, changes that together add up to what we may call a comprehensive overhaul. The most important change that has taken place in Japanese politics recently is the change of government that took place in 2009, when the Democratic Party of Japan took over from the LDP. In this article, however, I will attempt to make the case that the decisive changes in laws and rules, norms, and practices in postwar Japanese politics happened in the 1990s ... ... [Read more]

No.4 ,Economy
Jan 28, 2011

EASY MONEY WON’T END JAPAN’S STAGNATION

In August 2010 the Federal Reserve Bank of Kansas City hosted its regular symposium on monetary policy in Jackson Hole, Wyoming. Attention centered on the paper “After the Fall” by Carmen and Vincent Reinhart, presenting an analysis of how global shocks and financial crises have affected economies since the start of the twentieth century. Their study makes the following points: •Growth rates of real per capita gross domestic product decline by about 1 percentage point during the decade after financial crises. (This means that if the US economy were growing at an annual 3% rate, a crisis would slow growth to 2% for the next 10 years.)•Unemployment rates rise significantly above their level prior to a financial crisis during the decade following it. This is particularly true of the advanced economies, where post-crisis median unemployment rates have been about 5 percentage points higher than ... ... [Read more]

No.4 ,Politics
Jan 27, 2011

THE LAUGHINGSTOCK OF EAST ASIA

North Korea launches an artillery bombardment against Yeonpyeong Island in South Korea, while a Chinese fishing trawler rams a Japanese Coast Guard patrol vessel in the seas off Japan’s Senkaku Islands. As if to mock the ineffectual blunderings of the Democratic Party of Japan government, the Russian president then visits the Northern Territories. Countries around the region are free to act with impunity in this way because Japan is powerless to react. The reason for this impotence is the rift that the DPJ government opened up in the Japan-US alliance by its behavior regarding the US Marine Corps Futenma Air Station in Okinawa. Japan’s position in East Asia is likely to become even more unstable. Utterly lacking in strategy and expertise, the DPJ government can no longer be trusted with responsibility for Japan and Japanese diplomacy. North Korea Reads the Signs On November... [Read more]

No.4 ,Politics
Jan 26, 2011

FREE TRADE AGREEMENTS: AN URGENT PART OF JAPAN’S AGENDA

Emerging countries are enjoying robust growth that contrasts sharply with the increasingly uncertain outlook among advanced countries. In relation to this, we need to remind ourselves that Japan occupies a very favorable geopolitical position, given its location on the eastern edge of the East Asian region, which is at the center of the global growth among emerging nations. Today Japan requires a strategy that will allow it to incorporate the demand arising from the enormous population of the Asian market, which numbers around 3.5 billion, as well as the broader Asia-Pacific market, with some 4 billion people, as one part of what might be called its own domestic demand. During its modern history, Japan has faced two great moments of opening up to the rest of the world: the period beginning with the Meiji Restoration in 1868 and the period following World War II. ... ... [Read more]

No.4 ,Politics
Jan 25, 2011

TOKYO’S CHINA PROBLEM: CLAIMING THE HIGH GROUND

In 2010, China overtook Japan in gross domestic product to become the world’s second-largest economy–a distinction Japan had held for nearly 50 years. But this ballyhooed “reversal” is a purely economic phenomenon. There is no reason why it should mean any fundamental change in the role that Japan plays to bring about peace and prosperity as a member of the international community. The real question for Japan today is whether the country can adopt a global perspective on the changes that are already underway, as symbolized by this latest “reversal,” and whether it can succeed in rebuilding an effective and viable international role for itself in the years ahead. The basic focus of that role should be the preservation of a liberal, open international order. After a Chinese fishing trawler rammed two Japanese coast guard vessels in the waters around the Senkaku Islands last ... ... [Read more]

No.4 ,Economy
Dec 06, 2010

THE LINGERING SPECTER OF A CURRENCY WAR

Two years have passed since the bankruptcy of Lehman Brothers in September 2008 triggered the worst economic crisis in half a century. The aftereffects of the “Lehman shock” are now fading, but so, it seems, is the spirit of coordination among governments. The world appears to be entering a phase of currency confrontation, with countries competing to devalue their currencies and boost exports. The Group of 20 meeting of finance ministers and central bank governors in October 2010 produced a communiqué vowing to “refrain from competitive devaluation of currencies,” and the G20 summit the following month reiterated this sentiment. Yet fears of a “currency war” have not abated. Finance Minister Guido Mantega of Brazil–a G20 member–publicly used the term currency war to describe the devaluation efforts of various countries in a speech he delivered in São Paulo on September 27: “We’re in the midst ... ... [Read more]

No.4 ,Politics
Dec 05, 2010

A PRINCIPLED STANCE IN RELATIONS WITH CHINA

TAHARA SŌICHIRŌ In mid-October, when the Sino-Japanese diplomatic situation finally seemed to be calming down after the September 7 collision of a Chinese trawler into two Japan Coast Guard vessels, large-scale anti-Japanese demonstrations broke out in cities around China. Why do you think these protests took place at that time? MAEHARA SEIJI Reports said that most of the protestors were young people responding to calls on the Internet to take part in the demonstrations, but I can’t really see how that could be the case. I should note that Japan received credible assurances through diplomatic channels that the Chinese government was working to cool off these protests as soon as they began cropping up. TAHARA Ties between Japan and China seemed recently to be heading toward normalcy. Is there any chance that they could worsen once again?... [Read more]

No.4 ,Politics
Dec 04, 2010

PROTECTING THE SEAS

INTERVIEWER What is your view of the recent flap over the Senkaku Islands from your perspective as an expert on international maritime law? A problem also emerged in 2005 involving a dispute between Japan and China over development of gas fields in the East China Sea. What sort of legal framework exists for settling disputes over territory and resources? KURIBAYASHI TADAO International law recognizes the right of each sovereign state to protect the territory to which it can assert a legitimate claim and the surrounding waters so as to assure its existence and the survival of its people. When it comes to sovereignty over the Senkakus, though there is room for dispute on a number of points under international law, I believe that most international legal scholars in Japan currently support the Japanese claim. But it’s extremely difficult to rely on judicial procedures for ... ... [Read more]

No.4 ,Economy
Dec 03, 2010

POPULATION TRENDS AND THE REGIONAL ECONOMY

In June this year, I published a book with the title Defure no shōtai: Keizai wa jinkō no nami de ugoku (The True Character of Deflation: How Population Trends Shape the Economy). A major factor behind Japan’s stagnant economy and the crunch in the country’s public finances in recent years has been the decline in absolute terms of the working-age population and the increase in the population of elderly retirees. Drawing on figures from several comprehensive studies, my book highlighted this fact and discussed the serious impact it was having. I have written this article for a readership of people working in finance who are interested in the vicissitudes of Japan’s domestic economy. As well as sketching out the main points of the argument in my book, I also look at the present and future effects of recent population trends on the economy and ... ... [Read more]

No.4 ,Economy
Dec 02, 2010

AN OPPOSITION LAWMAKER RATES THE DPJ’S PERFORMANCE

The ruling Democratic Party of Japan is compiling a supplementary budget in excess of ¥4 trillion to head off the growing risk of a slowdown in the recovery. The plan is, however, a prime example of “too little, too late.” If the DPJ had had its act together, it would have had the supplementary budget ready by July, before it began preparing for the September 2010 election of the party’s president. That would have enabled the administration to get the measure passed by the National Diet in August, and implementation of the required stimulus would already have begun by now. As a result of its overly rosy view of the economy’s prospects, the DPJ has laid itself open to the charge that it allowed the contest for party president to get in the way of action it should have taken on the economic front. ... ... [Read more]

No.4 ,Economy
Dec 01, 2010

REVIVING JAPANESE CORPORATE VITALITY

ENDŌ ISAO Talking to executives at major Japanese corporations these days, you get a clear sense of their concern over how to position their companies in the marketplace. Ajinomoto, for example, is a leading food producer in Japan, but globally it is up against mega-corporations like Nestlé with overwhelming market shares in many product lines. Japanese companies in other sectors as well are facing off against global giants, as in the case of Kao versus Proctor & Gamble and Takeda Pharmaceutical versus Pfizer. Given the differences in corporate scale, Japanese companies may well feel that they are simply too small to compete successfully. In my view, however, the quality of Japanese companies is such that they should be fully capable of holding their own despite their smaller size, although they seem to be in a process of trial and error figuring out how to ... ... [Read more]

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