Japan

   
 

Executive Summary

Leading world economy despite alarming debt
Despite a rapidly aging population and alarmingly high levels of public debt, Japan remains one of the world’s leading economies. Its per capita economic growth rate is in line with that of the United States or the European Union. However, disposable incomes have risen little in recent years, and real per capita consumption has been flat. In a country once hailed as the epitome of equitable growth, a new precariat has emerged, with some 40% of the labor force in non-regular employment.
Economic stimulus
reaches limits
Since gaining power in late 2012, the Abe government has pursued two major policy goals, seeking to achieve a robust economic upturn and effect the first-ever change to Japan’s postwar constitution. The initial economic-stimulus program of 2013 (“Abenomics”) included an aggressive course of monetary easing and additional deficit spending. The short-term effects of the unprecedented policy gamble were positive, but consumption and investment levels have remained anemic, leading to a weak but prolonged recovery. Deflation has given way to mild inflation without producing a definitive upswing. Monetary easing seems to have reached its limits. Key factors behind the stimulus measures’ no more than moderate impact include the lack of serious structural reforms and the population’s limited purchasing power.
Social programs distract from structural reforms
Since 2015, the policy focus on strengthening the economy, expanding childcare and improving the social security program has further deflected attention from structural reforms. Meanwhile, old-age poverty and the instability of jobs, especially among young people, remain pressing issues. In late 2019, Abe became Japan’s longest-serving prime minister, and is now in his third (and officially last) term as LDP president. There is thus little time left to secure a lasting legacy. The cabinet reshuffle of September 2019 telegraphed a certain coming emphasis on social-policy reform, including overdue changes to the pension system.
Constitutional reform remains unpopular
Constitutional reform, the government’s second major priority, remains unpopular. In the 2019 upper house election, the LDP-led coalition lost its two-thirds majority (although it retains this supermajority in the lower house). To effect constitutional change, Abe needs two-thirds support in both chambers, as well as a positive outcome in a subsequent referendum. This will be difficult to achieve; indeed, the best Abe can hope for is a modest revision of the constitution that at least formalizes the legal status of Japan’s military, the Self-Defense Forces.
Checks on government
are weak
The LDP-led government has steered from the center. However, some observers have expressed concerns that tightening the political reins has negatively affected the neutrality and professionalism of the state bureaucracy. The courts and the media as yet remain unable to provide effective checks on the government. While high-level courts have become somewhat more restless, social-media criticism of the government has grown in intensity. Civil society organizations have also become somewhat more active. However, these developments have to date had quite limited impact on public policy. Concerns about press freedom and civil liberties have been mounting. The governing coalition’s parliamentary strength severely impedes the opposition’s capacity to exercise effective oversight. Decreasing voter turnout rates signal indicate that alternative party options lack appeal. A traditional bulwark of liberal democracy in East Asia, Japan has become overshadowed in this regard by Taiwan and perhaps even South Korea.
Renewed international activity
Faced with an assertive China and a United States turning its attentions inward, Japan has again become more active internationally. For instance, after the withdrawal of the United States, Japan was instrumental to the achievement of a trans-Pacific free-trade agreement. At least on a superficial level, relations with China have become somewhat less strained, while Japan has also signed a free-trade agreement with the European Union, paving the way for closer strategic relations. Seeing itself as a defender of a free and rules-based multilateral order, Japan has also actively supported multilateral mechanisms and initiatives at the global and regional levels in recent years.
Citations:
Purnendra Jain, Abe and the LDP remain dominant after Japan’s Upper House elections, East Asia Forum, 25 July 2019, https://www.eastasiaforum.org/2019/07/25/abe-and-the-ldp-remain-dominant-after-japans-upper-house-elections/

Sakura Murakami, Abe becomes Japan’s longest-serving prime minister, Japan Times, 20 November 2019, https://www.japantimes.co.jp/news/2019/11/20/national/politics-diplomacy/shinzo-abe-japan-longest-serving-prime-minister/
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