Saturday, November 29, 2014

The Second Opening of Japan

TOKYO – US President Barack Obama is visiting Tokyo at a unique moment in my country’s history, with Japan’s economy moving onto a stable new growth path that will take full advantage of its geographic position. Japan no longer considers itself the “Far” East; rather, we are at the very center of the Pacific Rim, and a neighbor to the world’s growth center stretching from Southeast Asia to India.

There can be little doubt that this growth center will continue to propel Japan’s economy for the foreseeable future. Japanese direct investment is expanding in Vietnam and India, for example, which will boost demand for Japanese machine tools and capital goods.

But, to maximize its opportunities, Japan must open its economy further and become a country that actively incorporates capital, human resources, and wisdom from abroad. Japan must be a country capable of growing by channeling the vitality of a growing Asia.

To this end, we have sharply accelerated the pace of negotiations on economic partnership agreements, or EPAs, with various partners around the world. Earlier this month, Australian Prime Minister Tony Abbott and I reached agreement in principle on a Japan-Australia EPA. Next in line is the Trans-Pacific Partnership (TPP), which would unite 12 countries in the world’s largest trading area.

Both Japan and the United States attach great importance to rules, uphold the principles of freedom and democracy, and possess the most advanced technologies and industries. We intend to overcome our differences and together forge, in the form of the TPP, a twenty-first-century economic order for Asia and the Pacific that will serve as an unshakable foundation for growth.

My government is also pushing hard to realize an EPA with the European Union. Given that the US and the EU already are engaged in trade talks, an EPA between Japan and the EU, coupled with the TPP, will give rise to a truly immense market – a single enormous growth engine that will benefit the entire global economy.

But Japan’s economic frontiers extend well beyond Asia and the Pacific, to Latin America and Africa – more reason to abandon our long-held inward-looking perspective. A large number of highly motivated and ambitious young people have already come to Japan from around the world, especially from neighboring Asian countries, to study or work. Japan must remain their hope. We must not be disrespectful of them, and our arms must always be wide open towards them. Japan, I believe, is that kind of country.

In the near future, we will designate six National Strategic Economic Growth Areas – Tokyo, Kansai, Okinawa Prefecture, and the cities of Niigata, Yabu, and Fukuoka – to serve as models for the rest of the country. In health care, education, agriculture, and employment practices, we are identifying policies and practices that have fallen out of step with today’s needs, and we will move quickly to reform them. The National Strategic Economic Growth Areas will insert the probe of reform down into our regulatory system, which has hardened into bedrock.

Another habit that Japanese must change is our pervasive male-oriented thinking. We have already resolved to ensure that at least 30% of all personnel hired by the national government are women. I am also now urging publicly traded companies to add at least one woman as a board member. Once we reach the point at which it is no longer news to have a woman or a non-Japanese serving as a CEO, Japan will have reinvented itself and recovered its true spirit of risk-taking and innovation.

“Womenomics” tells us that a society in which women are dynamically engaged will also have a higher birth rate. My government intends to address, urgently, the need to expand day-care facilities and other such infrastructure as the foundation for a society that benefits from all of its members’ skills and talents.

We are fully capable of change; indeed, we relish it, as the world will see in the months and years to come. But some things about Japan are unchanging, and some must not be changed.

One of these is our track record, which supports our ambition to be a “proactive contributor to peace.” Japan has made more than its fair share of financial contributions to the United Nations and its organizations, both historically and today. And our embrace of our global responsibilities extends to Japan’s Self-Defense Forces. Members of the Self-Defense Forces displayed exemplary cooperation with the US and Australian armed forces in the wake of the Great East Japan Earthquake in 2011, and they have earned deep appreciation and respect everywhere they have been deployed, including Haiti, Indonesia, and most recently, the Philippines.

To make a proactive contribution to peace means that Japan will bear its own share of responsibility for assuring the security that supports global prosperity and stability. Working alongside countries with which we share common values and interests, we will safeguard and cultivate international public goods, ranging from space and cyberspace to the skies and the seas.

As the world will see during Obama’s visit, Japan is back and thriving. And its return is indispensable for global stability and prosperity.

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    1. CommentedDaryl stevens

      Lee, well written.....insightful,

      Lo, your post is confusing, and discontinous.

      Vion Hettlingen, is this all you do? You should see if P-S will let you write a piece so that you can put yourself out there, rather than doingas you do...but... Japan is trying to what?

      Japan has long invested globally and particularly in the SOuth China Sea region, this is by no means, a short term process, from the time of its vast growth, accelerated after the bubble pop, it has been off-shoring much of its low-tech industrial base for decades. It has not been a recent occurence to shore up its anything,vis a vis China, it pre-dates China, and perhaps some of the switching to China in the 1990's, as SEa rose, could have been a cause, altering investor sentiment, that contributed to the SEA currency Crisis of the 1990's, as momentum in invesmtent sentiment shifted toward China, while the expectations, of the movement, coupled to the previous periods of SEA growth were not realized. For that matter Japan has 800 billion in China, that may be value of FDI, rather than actual committed and spent FDI stock.

      Your notions always verge on the maniacal. But no this is no mere recent political occurrence.

      Neither China nor is South EAst Asia the worlds growth center, there is not a growth center, the inter-relations and inter-dependencies of growth are global and amorphous. China, which has exacerbated trends, has been a drag on real global growth, and is a near to medium term disruptive influence, that has altered investment trajectories, and created an overhang, and false sentiment, that will need to be worked out, as investment has been brought forward, in areas, and retarded in others, mere growth numbers do not reflect beneficial growth, but wasted investment, and globally because of the nature and character of Chinese growth, and how it has skewed global investment.

      BRIC gone away from US, uhmmmmm....what?
      Asia, will need to devise, mechanisms that defuse the very grave challenges they face, which the S doesn't face, and which many sane and rational observers will want the US's participation, but in no way does the US require this, rather than bears some burden while not benefiting of it. Others benefit of it, while being able to focus on development. BRIC is not a thing,they do not even share the same interests, it is merely an acronym created by a financial investment analyst.

      Patronize China, uhmmmm....what, it sounds as if you are a paranoid, chinese p[aid pundit, no Japan is a soverieng state with a history and interests that it, as China will naturally seek to progress, it is not necessarily geared at China, unless it feels China is impigning on its interests. It could have invested its 800 billion dollars elsewhere, if such was the consideration, after all there is a great abundance of development need globally, and the chinese market, if china makes the right choices will still be small in 20 years, where the mechanisms that have propelled its meagher consumption, SOE purchases of automobiles, and incentive subsidies for white goods can only go so far, especially considering that china will have an old age decedent population larger than the entire OECD old age dependent population in 20050 combined.

      LEE as to your polticial discussion of the SDF, it will do as others do, simply and of course and prerogative. Asia will develop in cooperation or will descend. Shoulds and shouldn'ts and musts are the playthings of simpleminded immature thinkers, nations will do what and as they perceive necessary and no mere manipulation of history, or victimization memes will bridge the gap toward peace and cooperation, action will. Nations are driven by the itnerests of interests within nations,a nd to the degree they maturee to hold common interests with others, morality in this, is an immature projection used to rationalize your preference, not the establish the truth of a matter in an affair of state.

      Japan. driver of geopolitical, I would seriously not see more than a couple, let alone many in that matter. I would imagine many nations, regional nations, are asking japan to re-write constitutional provisions; as Japan has the 2nd most technologically advanced military in the world..

      GUPTa, alterations in the US, will see no mere requirement, nor has past evolutions necessarily been any driver to glboal growth, outside of the global systemic relations that cause growth, globallyand more widely. In fact, in many ways the US isfar lessereliant on trade and global growth than most other regions of the world. You might want to review data;

      cross-border loans and portfolio numbers
      cross-border investment
      percentage of profits gained by american companies abroad
      etc, etc, etc....

      And then compare this to other regions of the world.

      A mistaken perspective.

      You people should see, rather than the prerogative of elites, the descending self-empowerment of man, that will drive globalization of trade, shortly.

    2. CommentedDonald Lee

      I get that many foreign banks are praising and incorporating sanguine views in their research notes about the “three arrows” or “thee-pronged” strategy that is being undertaken right now to win hefty fees from their prospective deals or something, but if it were that easy, Japan would not have experienced a decades-long recessionary period.

      I guess that policymakers and the administration might feel content with the recent inflation numbers reaching an all-time high, something not witnessed since the Heisei Bubble. But, if you really strip out the figures of producer-led passing on to the customers from the tax hike and heightened energy prices stemming from the weaker yen, consumer demand-led inflation is not evident. In other words, Japanese ordinary customers and citizens are not the beneficiaries of this policy. And even though the administration can exert clout on the Keiretsus to hike their employees’ salaries for all these to work, most of the SMEs would not respond to the demands made by the government. Furthermore, the government-induced raise in salaries has a high of chance exacerbating the already dire youth unemployment and contract employment problem, which can effectively crowd them out even further. And without any improvements on the unemployment and real income front, TPP and other economic free zone policies would only bring about deflationary pressures as it would fail to spur domestic demand.

      Without implementing expansionary fiscal policies and resorting solely to printing money has proved to be ineffective many times in modern financial history, and Japan’s struggling experiences from the ’90s to date exactly attests to this argument. Absent any government expenditures, newly printed money did not flow out to the real economy, and was left in the coffers of the banks. Understandably, due to the government’s staggering amount of debt overhang, it would not be easy for Japan to incur liabilities any further, but this would only make the BOJ’s arrow less potent.

      It would be more advisable for the government to devise ways to make organic growth so that the ordinary Japanese people can feel that they are better off, rather than throwing out all these grand plans that have little prospect of working.

    3. CommentedJackson Lo

      ...the most important aspects of democracy on Japan is, that it's island mentality and feudal roots still seamlessly fade into the background as the true prime movers of the political machine.

      There's no better refinement in decades of post-war industrialization, millennial economic decline and infrastructure that its fast-rising neighbors can't buy with fast money. To the rest of the world, Japanese standards are still the one that good money purchases--including the elite of China, Korea, Vietnam and so forth.

      The fact that they're routinely questioned is a vocal minority, as you can see participation of Japan globally. There's real human relationships--as well as establishing and cementing future ones. The rest are just contrarian voices to me.

    4. Commentedj. von Hettlingen

      Prime Minister Shinzo Abe is never short of grand visions and magnanimous gestures. To start with, he is trying to change his country's geography, by saying, "Japan no longer considers itself the “Far” East; rather, we are at the very center of the Pacific Rim".
      His recent efforts to strengthen ties with countries in the South China Sea, in an effort to shore them up in their territorial disputes with China, certainly aims at becoming "a neighbor to the world’s growth center stretching from Southeast Asia to India". When "Japanese direct investment is expanding in Vietnam and India", it serves no doubt to "propel Japan’s economy for the foreseeable future".
      Nevertheless Abe is ready to offer a win-win opportunity, by urging his country to "open its economy further and become a country that actively incorporates capital, human resources, and wisdom from abroad", like Singapore or Hong Kong, in order to capture "the vitality of a growing Asia". He sees Australia and the US as Japan's strong allies and had signed an "economic partnership agreement" with Australia. He hopes - together with the US - to get Trans-Pacific Partnership (TPP) started, which would be the "twenty-first-century economic order for Asia and the Pacific that will serve as an unshakable foundation for growth". Then he talks about extending Japan's "economic frontiers" to Europe, Latin America and Africa, claiming the the global economy would benefit from these markets.
      Apart from boosting domestic growth, Abe hasn't forgotten to involve women in this process, vowing it would not be "news to have a woman or a non-Japanese serving as a CEO". He seems to be ready to advocate for “Womenomics”, saying his country were prepared to improve "day-care facilities" to presuade women to have more children, while contributing to economic growth.
      Last and not least, peace in the region will only be tangible with "Japan’s Self-Defense Forces", made possible by a huge military budget, so that Japan could "bear its own share of responsibility for assuring the security that supports global prosperity and stability". Abe vows to work "alongside countries with which we share common values and interests". When he speaks of Japan's mission to "safeguard and cultivate international public goods, ranging from space and cyberspace to the skies and the seas", no doubt he is trying to patronise China.

    5. CommentedDonald Lee

      With NO track record of contributing to the peace in the region in the past and currently, please do not “proactively” engage in contributing to peace in the region as stated in this message. Your country’s Self Defence Force you should never leave the boundary of your Island except for sending “unarmed” forces to places that are under environmentally led calamitous situations; and this should be first approved by the country that needs support from other countries.
      Also, your country’s recent intent on revising the peace constitution states otherwise of your message stated in the article, and raises many questionable doubts on your genuineness. For example, doesn’t it serve as a pretext for annexing a country if the nearby country falls into a war mode or other disruptions?
      This endeavor alone is stirring up significant concerns and raising eyebrows not only in South Korea or in China, who were the major victims of massacre and comfort women during the 20th century, but also in other countries who are well aware of the cunning schemes behind this thing.
      Currently, many countries are accusing Japan as the main driver of causing geopolitical risks and uncertainty in the region. Rising military spending, revision of the peace law, uncertain Japan’s economic outlook (which in the historic past tended to trigger wars or invasion), right-wing politicians’ strong stance on unhealthy nationalism, continuous unwarranted claims on Islands that was never occupied by your country in the past, unwillingness of changing the outright lies written in the history textbook about the shameful crime that your country conducted in the 20th century are all serving as indications that your country is far beyond of pursuing any genuine efforts to foster meaningful peace in the region.
      Lobbying Washington, contributing many chunks of money to the poor and dilapidated countries will only get your country so far. At the end of the day, what really is important is actually pursuing to reduce any potential conflicts that can arise in the region from Japan’s newfound nationalism.
      Scrapping the pending amendment of the peace constitution and trimming down military spending can be considered as a good start of a “real” contribution.

    6. CommentedJay Stephens

      This is key. Unfortunately it may not be achievable in an era of massive youth underemployment. If Japan can square this circle quickly, 2-3 decades of prosperity should result... But I'll be amazed if policymakers find a way.