A Question for Asia: Is Japan Back?

A Question for Asia: Is Japan Back?

05/28/14

Richard J. Samuels

Security, Japan

"Japan’s return to 'normalcy' has been long awaited and welcomed by those of us who have hoped for Japan to step up in the security realm and punch at its real weight. No one, however, is cheering for Japan to throw the first punch."

The title of this article evokes a 2012 campaign promise by Prime Minister Abe Shinzō who declared that he would “take back Japan” (nippon wo torimodosu). Since his election and the triumphant return of the Liberal Democratic Party (LDP), the idea that “Japan is back” has become a standard part of discussion about Japan. But the campaign promise and the discussion it engendered beg two important questions: First, where did Japan go? And, second, which Japan are we talking about?

Strictly speaking, Japan did not go anywhere—it stagnated in place. Between 1992 and 2013, Japan’s GDP growth averaged less than a lackluster 1 percent annually. Shockingly, GDP declined in per capita terms in nearly half these twenty-two years despite a falling population. Japan was enmeshed in a vicious circle of contagion—stock and real-estate prices plunged; banks found themselves loaded with bad debt; and deflation gripped the economy. Public debt soared to the highest level in the world. Risk-averse Japanese investors responded by setting up shop abroad, “hollowing” domestic manufacturing. In 2013, after a decade in which Japanese firms abroad tripled their sales and doubled their employees, one third of Japanese industrial production—including more than half of all automobile manufacturing—was done elsewhere. Income inequality at home rose above the OECD average, and the number of Japanese citizens receiving public assistance has approached early postwar levels. Meanwhile, after three decades of remarkable growth, China accelerated past Japan in 2010 to become the world’s second largest economy.

Read full articlehttp://nationalinterest.org/feature/question-asia-japan-back-10546