Key Challenges

Structural reforms key
to sustained growth
If Japan’s tepid economic upturn is to be transformed into a strong and sustained upswing, the Abenomics program’s short-term expansionary measures must be followed by serious structural reforms in the near future. Policy objectives deemed vital in this regard include the significant reduction of protections and restrictions in the agricultural sector, the creation of a more liberal labor-market regime, the provision of effective and result-oriented support for well-educated women, the establishment of a more liberal immigration regime with corresponding integration policies, the development of a more convincing energy policy, and the introduction of better-targeted social-policy reforms.
Time running out to restore economic growth
The time in which it may still be possible to restore strong economic growth in Japan is running out fast. First, the world economy seems to be slowing, led by factors such as high levels of public and private debt, declining volumes of global trade due to the U.S.-China trade conflict, and a weakening of emerging economies due to increases in U.S. interest rates. Second, financial markets’ patience with the de facto monetization of Japanese public debt may come to an end soon, with potentially devastating effects for the stability of financial markets. Some 40% of Japanese public debt is already held by the central bank. Third, levels of trust in institutions remain very low, and the population is among the most pessimistic in the OECD world. Prime Minister Abe himself has been ensnared in two major scandals in the recent past. The electoral success of the LDP-led government thus derives not from its popularity and performance, but primarily from the disastrous state of the opposition parties, a condition that at some point may change.
Opposition to nuclear power remains strong
Continuing opposition to restarting nuclear reactors on the part of the public, regional governments and even courts should lead the government to rethink its strategy, and instead seek a more acceptable and enforceable energy policy conforming with the 2015 Paris Agreement goals. The 2030 goals for renewable-energy use appear too timid by international standards.
Government must choose between priorities
It will be risky for the government to pursue its two major priorities, economic and constitutional reform, at the same time, since the coalition’s remaining political capital may not suffice to accomplish both. Without a return to a strong economy, constitutional change will not create a more self-assured Japanese state. Thus, socioeconomic reform should take precedence. To achieve this goal, the government will need to strengthen alliances with interest groups that support the reform movement. This may include Japan’s globally oriented business sector, which has little interest in seeing its home market further weakened.
Balancing act between
US and China
In terms of foreign and security policy, it will be very tricky for the LDP to balance its assertive reformulation of security laws and possible further moves toward constitutional change with potential negative effects on foreign relations, particularly within the region. The limited degree of popular support for this policy direction only exacerbates the situation. The government also needs to strike a balance between better relations with an increasingly powerful China and the need to safeguard sound relations with the United States, which has become a difficult but still indispensable security and economic partner. Hedging rather than trying to contain China will be necessary. One promising approach may be joint cooperation on and funding of major infrastructure projects, in concert with China, the European Union, the United States, India, the Republic of Korea (ROK), Australia and other interested partners.
Reliable alliances
remain important
Japan’s interest in a liberal rules-based multilateral system also requires it to maintain reliable alliances. In this respect, the European Union, Australia, Canada, India, New Zealand, South Korea and some Latin American countries appear to be suitable partners with similar values and interests.
Majorities offer opportunity and challenge
The ruling coalition’s supermajorities in both chambers of parliament provide the government with both opportunity and challenges. These conditions provide the government with sufficient leverage to push through reforms, but also strengthen the position of parliamentary vested interests that oppose any disruption of the comfortable status quo.
Oversight should be viewed as vital corrective
Courts, the media (including social media) and civil society movements should seek to improve their capacities to monitor and provide checks on the government. The government should not view media criticism as an obstacle to the fulfillment of its ambitions, but as a corrective in an open and democratic society that works to improve the fit between government plans and popular aspirations and concerns.
As of this date, the parliament does not provide effective governmental checks and balances. Parliamentarians need to make better use of their resources to develop alternative legislative initiatives.
Pilot strategies should be more ambitious
The search for country-level solutions should be combined with policy experiments at other levels. The post-2014 special economic zones or the 2018 so-called Regulatory Sandbox scheme are welcome steps in this regard despite setbacks, but the strategy could be both bolder and broader.

Party Polarization

Party polarization not
an important issue
Following the demise of the Japan’s Social Democrat Party (JSP) in the 1990s, and given the continued marginal parliamentary presence of the Japanese Communist Party, party polarization has not been an important issue in Japan for many years. Both the center-right Liberal Democratic Party (LDP) and its more recently created rival, the Democratic Party of Japan, have been “big-tent parties,” with personal allegiances to individual leaders (and related intra-party factions) playing a bigger role than policy-related differences in terms of structuring intra-party competition. And even at the height of LDP-JSP confrontation in earlier decades, behind-the-scenes across-the-aisle collaboration limited the impact of polarization on policymaking.
Main parties agree on many policy matters
While the LDP has moved toward the right in recent years (as reflected in the composition of its leadership and the views held by its parliamentarians), the main parties still show substantial agreement on many policy issues. The one especially divisive issue that has come to the fore since the advent of the Abe government in 2012 has been constitutional reform. At its core, this turns on whether Article 9 of the country’s constitution, the so-called peace clause, should be changed or not. Given the LDP-led coalition’s supermajorities in both houses of parliament, there is today a rare window of opportunity for constitutional change. Yet it remains unclear whether the current LDP leadership can achieve its stated goal of constitutional change by 2020 given the ambivalent position of Komeito, its coalition partner, as well as the additional hurdle created by the referendum required following a parliamentary approval.
Single issue plays polarizing role
As there is currently only one, admittedly important, salient issue for which party polarization plays a significant role, it cannot be said that party polarization generally presents a major obstacle for policymaking in today’s Japan. (Score: 8)
Kenneth Mori McElwain, The Anomalous Life of the Japanese Constitution, Nippon.com, 15 August 2017, https://www.nippon.com/en/in-depth/a05602/

Kenneth Mori McElwain, Constitutional Revision in the 2017 Election, in: Robert J. Pekkanen et al. (eds.), Japan Decides 2017: The Japanese General Election, Cham: Palgrave Macmillan 2018, 297-312

Tomohiro Osaki and Daisuke Kikuchi, Abe’s dream to revise Japan’s Constitution drifts farther from reach as long-running scandals chip away at support, The Japan Times, 3 May 2018, https://www.japantimes.co.jp/news/2018/05/03/national/politics-diplomacy/abes-dream-revise-japans-constitution-drifts-farther-reach-long-running-scandals-chip-away-support/
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