(This article appeared in Newsweek Japan on August 18.)
On August 8, news broke that both South Korea and Taiwan had surpassed Japan in exports during the first half of this year.
Since the mid-1990s, I had already grown weary of hearing the world sneer that “Japan is finished—even in Asia.” This latest news felt almost like the final blow.
.
Some 160 years ago, Japan opened itself to the outside world, absorbed Western civilization and technology, broke free of the China-centered regional order, and emerged as the dominant power in Asia. After its defeat in World War II, a chastened Japan—chastened in part by others—changed course.
It supplied Asian countries with capital and technology and helped lead their economic development through what economists called the “flying geese” model. Has Japan now lost its position in virtually every field?
.
No. There is little point in indulging in national self-pity.
During Japan’s high-growth era, exports accounted for much of its economic expansion. Today, exports are equivalent to about 44 percent of GDP in South Korea and as much as 65 percent in Taiwan. Japan, by contrast, now has a much larger domestic economy, and exports amount to only about 23 percent of GDP. Even if we were to count production by Japanese companies overseas as exports, the figure would probably be only around 30 percent.
.
In other words, Japan still has competitive advantages in machinery, materials, electronic components, and other areas. As long as it can maintain a sustainable trade balance through such exports and thereby help preserve the value of the yen, it can rely more heavily on expanding domestic demand to raise living standards.
.
South Korea and Taiwan have become formidable economic powers, and so have the ASEAN countries. In this new era, Japan should abandon its old mindset of obsessing over maintaining its “rank” in Asia. Perhaps because government offices in the samurai-ruled Edo period (1603–1868) were hereditary and each family occupied a fixed place in an elaborate social hierarchy, Japanese people remain unusually sensitive to questions of rank and status even today.
.
Put simply, Japan should stop trying to act like the big man in Asia. As Asian countries become increasingly modern and increasingly similar to one another, Japan should instead see itself as something like the coordinator of the group—working alongside its neighbors rather than standing above them.
.
When it comes to maintaining peace in Asia, we should recognize what is probably the underlying reality.
Perhaps no country—including China—seriously believes that it can invade and conquer another country by force. Perhaps the people of no country are really eager to fight to the death if they are attacked. And perhaps the United States is not truly prepared to come to their rescue, either.
.
If so, the real calculation of most governments is probably much more prosaic: they are better off securing their interests within the existing framework. No one wants to launch an invasion under the eyes of the world, fail spectacularly, suffer humiliation, and wreck their own economy in the process.
Japan should understand this underlying reality and build upon it.
.
Asia could, for example, develop something comparable to the Helsinki Final Act adopted in 1975 by European countries, the United States, the Soviet Union, and Canada through the Conference on Security and Cooperation in Europe. Its basic principles would include a commitment not to change borders by force and to promote cooperation and exchanges among countries.
.
Now that American power has receded, the existing alliance system will remain important. But alongside it, Japan may also need to engage in a flexible balance-of-power game among the countries of the region—including China.
.
Economically, Japan should remember that it is also a major importer.
The leading ASEAN economies export goods to Japan worth roughly one-third of what they export to the United States. Japan should therefore work to sustain the principles of free trade and investment by strengthening institutions and frameworks such as the WTO and the CPTPP, or TPP-11.
.
In finance, meanwhile, China appears reluctant to pursue the full internationalization of the renminbi, since that would ultimately require greater liberalization of capital transactions. Japan can therefore continue making an important contribution by maintaining and expanding yen-based currency-swap arrangements for use during financial crises and by making international payments easier and more efficient.
.
This summer, on my way home from an escape from the heat in Northern Europe, I changed planes in Singapore.
Singapore’s per capita national income is by far the highest in Asia—nearly three times Japan’s. I expected its airport to be dazzlingly sleek and futuristic.
Yet during my transit, I found the atmosphere surprisingly untidy: worn and somewhat grubby sofas in a pay lounge for ordinary travelers, accompanied by the incessant clatter of dishes being washed. It felt quite different from Japan’s Narita Airport.
.
In Japan, things are done properly—right down to the cleaning of the restrooms. Foreign workers, too, tend to adapt to these standards. Japan has built a society in which a certain ethic, sense of responsibility, and habit of “doing things properly even when nobody is watching” remain deeply rooted.
By preserving such a society, Japan may be able to contribute something important to the deeper modernization of other Asian countries.
.
The days when Japanese could expect to be respected simply because they were Japanese are over. The hierarchy among Asian nations is becoming increasingly fluid. Standing must now be earned through performance.
So Japan had better get to work.
Leave a Reply