Key Challenges

Serious structural
reforms needed
Serious structural reforms are needed in order to restore vigor and momentum to Japan’s economy. Vital policy objectives in this regard include a reduction in agricultural protections, the provision of equality-enhancing reforms and effective support for women and workers, liberalization of the immigration regime (paired with corresponding integration policies), a recalibration of energy policy, and better-targeted social policies. Some progress has already been made in these areas, one example involves a program inviting more foreign workers to Japan. However, other developments have moved in the wrong direction. Given that former long-serving Prime Minister Abe famously vowed to “let women shine,” the fact that the cabinet appointed in 2021 included only three women constitutes an embarrassment.
reform efforts
Overall, LDP-led governments have since 2012 not pursued structural reforms whole-heartedly. It is thus not surprising that the Japanese population is overall among the most pessimistic in the OECD . The LDP managed to hold onto power after the Lower house election in November 2021, but its success derives less from its own popularity and performance than from the calamitous state of the opposition. New Prime Minister Kishida has vowed to strive for a “new capitalism” that is focused on addressing income inequality and digitalization issues. The question is whether the government can undertake relevant reforms to affect changes or whether this will remain just a political slogan.
Opportunity for
new agenda
The COVID-19 pandemic has been wreaking social and economic havoc in Japan since 2020, making decisive reform difficult. On the foreign policy front, the U.S.-China trade conflict, and China’s increasingly aggressive behavior continues. However, being exposed to the pressure of global economic cooling and disruptions, possibly including financial turmoil, might in fact provide a rare opportunity to push through a far-ranging reform agenda.
Little room for
monetary policy
Given the country’s already ultra-low interest rates, monetary policy can play only a supportive role in this regard. The country needs to maintain its fiscal response until the economy recovers from the pandemic. The government should also consider implementing a major infrastructure drive to exploit the full potential of digital and artificial intelligence (AI) solutions within and across borders.
Controversial nuclear energy policy
Continuous opposition to restarting nuclear reactors from the public, regional governments and even courts should encourage the government to strive for a more acceptable and effective energy policy in line with the COP26 agreement. Broader socioeconomic reform will require the government to strengthen alliances with interest groups supporting such reforms. This may include Japan’s globally oriented business sector and its more unconventional tech and startup companies.
New checks and
balances, new
Japan’s parliament does not currently provide effective governmental checks and balances. Parliamentarians need to make better use of their resources to develop alternative legislative initiatives. Courts, the media (including social media) and civil society movements should also seek to improve their capacities to monitor and provide checks on the government. The government itself should not view media criticism as an obstacle to the fulfillment of its ambitions, but rather as a necessary corrective.
Letting strategic
interests be a guide
Moves toward constitutional change will have a negative impact on Japan’s foreign relations, particularly within the region. The government will also need to strike a balance between improving 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. Relations with South Korea are worse than they have been for many years, though the two democracies are natural partners sharing many challenges. Common strategic interests should guide their forward-looking relations.
Seeking reliable
In its pursuit of a liberal, rules-based multilateral system, Japan needs reliable allies. In this respect, the EU, Australia, Canada, India, New Zealand, some Latin American countries and, indeed, South Korea appear to be suitable partners with similar values and interests. The country’s policymakers should thus seek to build on the progress achieved over the past few years, including the 2019 Strategic Partnership Agreement with the EU. Japan should consistently strive for and act in the spirit of multilateral collaboration in areas of global relevance. This should include credible action in pursuit of its COP26 climate commitments, and an end to any circumvention of generally accepted rules such as the ban on whaling.

Party Polarization

Landscape of “big
tent” parties
Given the demise of the Japan Socialist Party in the 1990s and 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 recent genuine rival, the Democratic Party of Japan, have been “big-tent parties,” with personal allegiances to individual leaders and intra-party factions playing a bigger role than policy-related differences in terms of structuring intra-party competition.
Main parties agree
on policy issues
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 came to the fore during Prime Minister Shinzo Abe’s second time at the helm of government (2012-2020) was constitutional reform. At its core, this issue turns on whether Article 9 of the country’s constitution, the so-called peace clause, should be changed or not. The coalition’s loss of its previous two-thirds majority in the upper house in 2019, however, effectively closed the government’s window of opportunity for constitutional change.
Little real
As there is currently no other 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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