Japan as Relevant as Ever: The Economist Special Report on Reiwa Japan

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On Thursday, January 6, 2022, Sasakawa Peace Foundation USA (Sasakawa USA) hosted the virtual event, “Japan as Relevant as Ever: The Economist Special Report on Reiwa Japan,” featuring Mr. Noah Sneider, Tokyo Bureau Chief at The Economist. Mr. Sneider based his presentation on his recent special report, “On the front line: Japan” published on December 11, 2021, and outlined the shifting dynamics of Reiwa Japan by focusing on seven major topics: foreign and security policies, disasters, Tokyo as the model for livable megacities, demographics, immigration, economy, and the future of Japan’s domestic politics.

This talk was presented by Sasakawa USA’s Policy Briefing Series and was held virtually via Zoom. Attendees included distinguished guests from the Washington, D.C. policy community along with members of academia, think tanks, media, and the private sector in both the United States and Japan. Introductory remarks were provided by Dr. Satohiro Akimoto, Chairman and President at Sasakawa USA, who also facilitated the event and moderated the Q&A discussion.

Reiwa: Japan’s New Era

With Dr. Akimoto’s brief introduction, Mr. Sneider opened the event explaining how his special report on the Reiwa era (May 1, 2019-present)[1] reflects the metanarrative for Japan at a historical juncture including the end of the Abe administration, the passing of the 2020 Tokyo Olympics and Paralympic Games, and the start of the Reiwa era. His report further envisions to capture Japan’s bottom-up changes that the central government is falling behind on. Two main narratives explain incremental changes in Japan. One side claims Japan’s shifting paradigm reflects a nation in decline with its stagnating economy and its shrinking and aging population. The other side perceives Japan as a more alluring, hyper-functional, and eccentric society with unique characteristics less relevant to the outside world. Mr. Sneider stated such conflicting views mislead people to think Japan is an outlier, an idiosyncratic nation, and that its successes and challenges are nonapplicable to other countries. He claimed Japan is a “Kadai Senshinkoku” (a country advanced in challenges) and a harbinger for the challenges other countries will face in the coming years. Japan serves as a model for both success and failure for other countries to learn from. Mr. Sneider’s analysis focused on the following seven major topic areas.

Foreign and Security Policy

Mr. Snider pointed to Yonaguni Island to highlight Japan’s shifting diplomatic and defense posture. According to interviews he conducted while compiling his special report, locals are currently worried about matters such as the decline in the United States’ regional hegemony, ambivalence of U.S. policy, and China’s aggression in the region. Based on these conditions, Mr. Sneider recommended that Reiwa Japan move away from U.S.-centric policy and formulate a multi-pillar security architecture. Japan’s security policy should still be anchored in its close relationship with the United States, especially as it strives to deter but not antagonize China, but Japan will benefit from increasing its own contributions to the U.S.-Japan security alliance rather than relying on a U.S.-centric security strategy.

While some critics explained the changes to Japan’s defense posture occurred because of Prime Minister Abe’s “revisionist” vision, Mr. Sneider remarked that many Japanese people see it as an incremental transformation— “evolution, not revolution”—driven by the formative traumas of the first Gulf War and China’s aggression near the Senkaku Islands. As a result, recent changes include legal frameworks governing its Self-Defense Forces (SDF). The SDF’s operations certainly became more flexible yet it still requires more political decisions to be made. The SDF’s recent posture to station in the Nansei Islands is welcoming but also needs more bases built in the region. Additionally, Japan’s security partnership has been expanding to Australia, India, and other European nations sending their warship to the disputed waters in the Indo-Pacific region. There is a great opportunity for Reiwa Japan to strengthen its ties with ASEAN nations as Japan invests heavily in infrastructure programs and is considered a highly trusted partner in the region. Many ASEAN member states are concerned about the United States’ inflexibility to cooperate with state-owned enterprises and its tendency to talk in ideological terms emphasizing “democracy vs. authoritarianism.” In contrast, many Japanese firms have focused on exploring the pragmatic benefits of investing in the region as opposed to a values-focused approach, allowing for greater flexibility and breadth of economic engagement. These Japanese firms are similarly wary of a situation in which the United States could potentially force ASEAN nations to choose a side between China and America. So far, Reiwa Japan has managed to successfully cooperate with ASEAN nations on a selective basis and could support its broad regional security goals (which the United States shares) by continuing this manner of engagement in Southeast Asia.

Three foreign policy challenges for Reiwa Japan are: repairing its relations with South Korea, maintaining balanced relations with China, and achieving a healthy balance to ensure priority issues in both security policy and domestic policy are addressed. Additionally, Mr. Sneider pointed out that Reiwa Japan and the United States differ in their perceptions of how to address a Taiwan contingency, with Japan focusing more so on possibilities of gray zone conflict (such as China’s cyberattacks and actions near Japan’s remote islands) and making less equivocal assessments of invasion risk compared to the United States.

Disasters

As the risk of natural hazards is growing across the world, Mr. Sneider recommended that Japan provides great lessons for other countries to follow. Especially since the Kobe earthquake in 1995, Japan has increased its resiliency and built up its infrastructure (including its social infrastructure) to withstand all manner of natural disasters and prepare for future risks. While most nations still consider preparation as an overhead cost, Japan sees it as an investment.

Reiwa Japan’s resilience is built on a multilayer system. On the governance layer, the local and central government is involved in city and contingency planning, which includes activities such as establishing systems to rebuild infrastructure immediately after crises and stockpiling goods. On the hard infrastructure layer, Japan understands engineering-based solutions are critical, but the 3/11 earthquake has taught the country that even the best hardware could fail. On the “soft” infrastructure layer, Japanese people see disaster risks as their own personal business and thus mobilize quickly to cooperate on the local level when disaster strikes Japan. Japan’s social infrastructure is a key element in its disaster resiliency.

Despite this, Japan’s climate policy is falling behind the rest of the world. Since the Fukushima nuclear plant crisis in 2011, Japan has been reliant on coal as one of the main sources of energy. Additionally, Japan’s changing landscape, such as its aging population and converging hazards (simultaneously experiencing typhoons, floods, and pandemics), adds more challenges for Reiwa Japan. Lastly, Japan must be prepared for the possibility of a Nankai Trough earthquake which according to scientific predictions would hit the Tokyo metropolitan area, causing devastation that would make the 3/11 earthquake look tame.

Tokyo, the Livable Megacity

Tokyo continues to thrive as a megacity housing approximately 14 million people and 37 million people in the greater metropolitan area. Tokyo is recognized as one of the world’s most livable cities thanks to its urban planning successes, which include emphasis on public transportation and polycentric city planning. Emerging megacities like Mumbai, India, are looking into replicating the “Tokyo model.” Although Tokyo’s success story rejects the previous understanding that urbanization is finite and megacities are not sustainable in locations with an aging population, Japan must continue to adapt its urban planning policies as its population is projected to continue shrinking.

Recently, Tokyo experienced a “paradigm shift” or shift in Japanese people’s perception that traditional urban planning challenges are now viewed as virtues. For example, mixed-use neighborhoods have encouraged more equal growth in housing prices and more resilience, while laxer zoning helps contribute to the housing supply. The COVID-19 pandemic played a role in this shift in perception by refocusing attention on improving the square mile around us.

Demographics

Huge shifts in demographics such as an aging and shrinking population have resulted in major challenges for local towns across Japan. One such town highlighted in Mr. Sneider’s special report is Gojome, Akita prefecture, whose population has shrunk to approximately half its size in 1990. More than 50 percent of the remaining residents in Gojome are over the age of 65. Such trends are not unique to Japan and are part of a vast and gradual global demographic shift other countries must also overcome. Reiwa Japan has been outlining a “new map of life,” redesigning infrastructures and generating growth to manage the speed and intensity of decline. However, Mr. Sneider emphasized that Japan must assess the context on both the individual and community level and offered different solutions for each issue.

For Japan’s aging population, he argued the problem is not about longevity itself but the fact that many elder people are living unhealthy, lonely, and dependent lives. Therefore, Japan must shift its focus from life expectancy to healthy life expectancy. This may involve providing workplaces for post-retirees and offering preventative care to maintain the elderly population’s health. For Japan’s shrinking population, Mr. Sneider forecasted Japan would maintain its low birth rate. Therefore, local communities should invest more to attract newcomers from the cities who will bring in new visions for the future development of dwindling rural areas.

Immigration

The number of foreign workers entering Japan was increasing before the pandemic but has halted since the outbreak of COVID-19. Mr. Sneider assessed Japan’s immigration policy and concluded Japan has a broken system. The national government does not recognize the underlying issue for foreign workers seeking to immigrate to Japan. Although there is still resistance within some Japanese communities against foreigners, through multiple interviews Mr. Sneider discovered that more Japanese entrepreneurs and local mayors were in favor of welcoming foreigners in contrast to what the stereotypes suggest. In this sense, the national government would benefit from reevaluating its immigration policies to better address the needs of local leaders and entrepreneurs who are eager to bolster Japan’s workforce.

The Economy

After Japan’s economy burst in the late 1980s, many economists predicted Japan would encounter a fiscal crisis due to its massive national debt that was deemed unsustainable. Even with Governor of the Bank of Japan Haruhiko Kuroda’s massive monetary policy, the national debt has remained high at present. Strangely, Japan has not experienced any fiscal crisis as predicted and has not reached its 2% inflation target while other G7 nations are now experiencing sluggish economic growth. Mr. Sneider identified three lessons to be learned from Japan’s experience.

First is the new fiscal limit Japan established through its post-bubble economic policies, which demonstrates that the interest rate can stay below the growth rate and the national debt can remain higher for a longer time than initially predicted. Secondly, there are conflicting views inside and outside of Japan with regard to its economic success. Many Western economists tend to believe Japan will continue to manage its economy successfully under its present conditions, whereas Japanese economists have generally expressed a more pessimistic view about Japan’s economic prospects moving forward. Thirdly, Japan has defied the experts’ expectation that a massive monetary policy would lead to inflation.

Despite its challenges, Mr. Sneider stated Japan’s economic growth is on the whole successful, but there remains room for improvement. Japan’s economic growth is sluggish when analyzed in nominal terms, but when taking into account adjustments for GDP per capita on an average annual basis, Japan remains the world’s third-highest economy for the 2010 to 2019 period.

The Future: Politics and Possibilities

For a brighter future in Reiwa Japan, Mr. Sneider proposed that Japan should cultivate a more competitive marketplace of ideas for generating new reforms that will address the country’s various social, economic, and political challenges. Through the many interviews Mr. Sneider conducted while writing his special report, he came to recognize a great demand amongst the Japanese public for bigger change and more drastic reforms, especially in rural areas where demographic changes are happening at a much faster rate than in Tokyo. Japanese communities at the local and prefectural level are also developing faster than the national government on social issues including family law and gay rights. Unfortunately, many young people are dissatisfied with the current system and perceive the government as unresponsive. This trend towards political apathy could become a great risk moving forward. However, there are productive ways for Japan’s youth to circumvent conventional politics to achieve meaningful societal change, such as through private entrepreneurship and nonprofit work.

Before concluding the event, Dr. Akimoto asked about Mr. Sneider’s view on the future of Japanese democracy, considering how the state of the United States’ own democracy has been called into question in recent years. Mr. Sneider replied Japan has so far avoided problems that other democratic nations are facing including populism, polarization, and willingness to attack democratic institutions. He reemphasized his concern that Japan’s younger people feel their votes do not matter and that they do not have a voice in the political system. Based on his own extensive experience reporting on Russia, Mr. Sneider warned that political apathy amongst Japan’s youth could metastasize into greater political unrest if nothing is done to address the disconnect between national policy and local political sentiments.

Q&A Session

Following Mr. Sneider’s talk, there was an engaging Q&A with the audience. Questions asked covered topics such as the gap between the Japanese public and government elites’ perception on national security issues, the Kishida cabinet’s geopolitical policy, lessons for developed nations to learn from Japan’s urban policy, and the potential impact of the COVID-19 pandemic hardening Japan’s posture on immigration policy.

[1] For more information about the Reiwa era, please see: https://www.cnn.com/2019/03/31/asia/japan-new-era-reiwa-intl/index.html

Sasakawa USA is grateful to Mr. Noah Sneider for his insightful remarks on the various challenges and opportunities Japan faces during the Reiwa era, as outlined in his special report published in The Economist on December 11, 2021. Sasakawa USA also thanks the Q&A participants and attendees for joining us in this engaging discussion.

The summarized views of the speakers expressed herein are entirely the work of Sasakawa USA and do not represent the official positions of any of the speakers.

For more information about Sasakawa USA’s Policy Briefing Series, click here.