Japan was what once made the whole world awe-struck at its success: in no more than five decades after the devastating aftermath the entire nation had to endure following the Second World War (excluding the two atomic bombs dropped in Hiroshima and Nagasaki as the amplifying by-products), the country again made its own conquest on a global scope, this time from its economic clouts. It became the world’s leading steel producer by the end of 1960s, dominated the planet’s automobile industry in 1970s, made bulk of the world’s children and teenagers addicted to its electronic products and game consoles in 1980s, and pioneered high-tech industries in 1990s. United States was once even apprehensive of its overwhelming influence – Japan had the world’s second largest GDP by the end of 1980s – that it repeatedly attempted to halt its growth through various trade barriers it is now applying to today’s potential superpower, China.
But that used to be a pastime story.
Entering the 21st century, Japan gradually lost its vigor it used to aggressively nurture. One-fourth of its 130-million population is already aged up to 60. Birth rates stagnate, while death rates increase. Social security funds ended up protuberant, and tax revenues congealed, as its working-age population steadily dropped. The country is further exacerbated by its debt-to-GDP ratio, one of the world’s highest in terms of percentage. As of 2013, the percentage has dramatically increased to nearly 230%, equivalent to nearly 10 trillion US$. Most of the debts are, in fact, not foreign-based; they are debts owed to the country’s major corporations in overlapping patterns. Deflation, on the other hand, has notoriously pushed down overall prices in Japan for nearly 2 decades. Experts have even warned that unless aggressive steps are taken, Japan’s debt percentage may, in the worst-case scenario, soar beyond 300%, forcing the country, once proud of its impressive economic feats and near-total efficiency, to declare ‘default’.
Out of the blue, in December 2012, the country once again gained its rare momentum when Shinzo Abe was sworn in as Prime Minister for the second time (firstly in 2006, but resigned immediately in 2007 after political scandals engulfed some of his ministers). Abe, known for his aggressive nationalist stance, boldly launched his own economic experiment now known as ‘Abenomics’: a string of economic policies which pushes the government to jack up public spending on ‘unlimited’ level to push out inflation, mainly through infrastructure projects either inside or outside Japan. He even took it to a further level after the appointment of Haruhiko Kuroda, ex-president of Asian Development Bank (ADB), as governor of the country’s central bank. In no more than two days, Kuroda took a courageous, yet perilous, step: he allowed unlimited quantitative easing in order to achieve 2% inflation. Momentarily, Abenomics resulted in great success: the country scored a 4% economic growth and steadily increasing industrial output last quarter, the first time ever achieved in the last 20 years or so.
Nevertheless, the experiment carries its own double-edged sword: in case it fails to achieve economic growth, the country’s already deteriorating debt ratio may spiral out of control, and worse, it may be forced to declare bankruptcy, and in the worst case, the whole world’s economy may be severely affected by possible depressions that follow after.
That is not the only problem Abe now faces.
His political idealism, reminiscent of pre-World War II ultra-nationalist sentiment, has greatly angered its Asian neighbors, notably China and South Korea, and even United States. Ever since his appointment, one of Abe’s utmost priorities was to possibly revise its 1947 constitution, a dangerous blow to the already deteriorating relationship between Japan and its neighbors. Abe, meanwhile, also stresses out the urgency of strengthening the country’s already stagnating armaments (after the Second World War, Japan does not have any army; indeed, as an alternative, they form their own ‘Self-Defense Forces’), and possibly, to again take hold of its right to ‘declare war’.
For this moment, Abe may now enjoy the overwhelming support he garners from the majority of the nation for his populism, but in the future, everything is getting up more uncertain. While Japanese companies do not expect that his ideology may severely devastate the country’s festering relations with its Asian neighbors, his nationalist sentiment may instead trigger a larger sense among the country’s youth, most of whom have never been told about the truth regarding what the regime had ever conducted throughout the past war.
And this is a difficult choice.
Foreign Policy has a series of articles, from as early as December 2012, specially reporting about Japan in the time of Shinzo Abe’s leadership.
1. Japan’s Own Worst Enemy? – this article questions Abe’s right-wing politics and its implication to the entire nation.
2. The Wild Card – Abe’s ambitious, and also highly risky, attempt to revise the constitution and possibly replace it with a more radical version.
3. The Land of the Sinking Sun – the uneasy towing in Japan’s military, and its implication to both Asia and United States.
4. Saying UnSorry – Abe’s reluctance in apologizing for the country’s military crimes throughout Second World War.
5. Tokyo Hawks – this article was published shortly before Abe won the parliamentary election.