Shinzo Abe, who has resigned as Prime Minister, was able to maintain his country’s status, but huge challenges remain, notably in facing up to Xi Jinping.
On 28th August, Shinzo Abe announced that, for medical reasons, he was resigning as Prime Minister, a post he had occupied for eight years. In doing so, he put an end to the longest mandate held by a head of government in Japan since 1945. Although his record breaks with the chronic instability that is one of the scourges of Japanese politics, he has been unable to resolve Japan’s structural problems or to meet the challenge posed by Xi Jinping’s China.
When he returned to power in December 2012, Shinzo Abe had the intention of pulling Japan out of its inertia and its slow decline. He had three priorities: fighting deflation by means of “Abenomics”, containing China’s expansion, and restoring full sovereignty by revising the Constitution – notably Article 9 which states that “the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as a means of settling international disputes.”
Shinzo Abe’s achievements are far from negligeable. Japan is still the third largest economy in the world with a GDP of almost $5,000 billion and is at the cutting edge of innovation. It has shown itself to be remarkably resilient in overcoming the Fukushima disaster as well as in combatting the Covid-19 virus – by September, only 70,000 cases and 1,330 deaths had been recorded – and the 7.8% recession in the second quarter of 2020 was lower than the average for developed countries (9.8%). As a final point, Shinzo Abe’s term of office was truncated because of the USA’s move to nationalism and protectionism under Donald Trump which gave China access to a considerable strategic space – in particular by the liquidation of the Transpacific Pact – and because of the foreseeable dead end that overtures to North Korea had led to, and which were doomed to failure from the start.
But it has to be concluded that Abe failed on what was essential. Abenomics did not stop the deflationary movement, for ultra-expansionist monetary and budget policy did not go hand in hand with structural reforms.
Potential growth remains very low (0.85%) because of the population decline, few productivity increases and a huge public debt ( 250% of GDP). Also, there have been more and more natural disasters, as well as Donald Trump’s trade war, which has affected exports. The level of purchasing power and full employment has only been maintained because the working population is decreasing by 500,000 a year and millions of baby boomers have reached retirement age. Inflation has never reached its annual target of 2%.
There is an ever-widening gap between Japan and China under Xi Jinping, who came to power at the same time as Shinzo Abe. Beijing has overtaken Japan economically and technologically. Japan remains the principal foreign investor in China, which is more than ever establishing itself as a production center and a vital market for Japan’s large groups, but it is having trouble going against Beijing’s plan for the integration of an Asia-Pacific area. At a time when China is becoming a world power, Japan is withdrawing into itself.
Japan is one of the main targets of Chinese nationalism and imperialism, particularly in its intent to annex the South China Sea. Shinzo Abe has not managed to release the country from the stranglehold of Beijing, which is deploying both its military forces and the new Silk Roads. Strategically, Japan depends for its security on guarantees from the USA, and this has been badly weakened, as evident in Donald Trump’s discussions with North Korea. At the same time, despite rearmament and a budget of $50 billion, Japan cannot provide for its own security autonomously, unless its pacifist Constitution is revised. Finally, from the diplomatic standpoint, there has been a rapprochement between Japan under Abe and India under Modi, but Japan failed to conclude a peace treaty with Russia or to federate the Asian democracies, because of past conflicts with South Korea that play into the hands of Beijing and Pyongyang.
It looks as if it is going to be difficult for Abe’s successor, Yoshihide Suga, to do any better than his mentor. The fall in population, an insufficient workforce and continued deflationist pressures leave him little choice but to pursue the strategy of helicopter money and forging ahead with public indebtedness, as long as the Japanese refuse to open up the country, to preserve its cohesion and its culture. The future of Japan will continue to depend largely on how the cold war between the USA and China evolves.
The uncertainty over postponement of the 2021 Tokyo Olympic Games, which were to be a showcase for Japanese technology, is a symbol of the headwinds blowing over Japan. The accession of Emperor Naruhito marks the beginning of the Reiwa era – Reiwa implying peace, order and harmony. These are notions that seem increasingly alien in the world of the 21st century.
(Article published in Le Point, 10th September)