Washington – In reflecting on the 75 years since the end of World War II, the narrative of Japan’s economic regeneration from the ashes of devastation remains nothing short of breathtaking. The onset of the Cold War and the threat of communism, and more immediately the outbreak of the Korean War, were certainly instrumental in the country’s ability to recover from complete defeat. Yet Japan’s rapid postwar expansion was hardly a given even under those circumstances, especially amid trepidation of a re-emerging Japan as a global power.
In hindsight, not only do the stumbling blocks to Japan’s postwar recovery become clearer, but so too does the role that leadership plays in navigating a country out of a treacherous situation. In the face of an increasingly uncertain global outlook amid an ongoing international health crisis that will have severe implications for the world economy as well, a key legacy of the war should be valuing a vision for longer-term growth.
Now widely accepted as a given, Shigeru Yoshida’s push for Japan to focus above all else on ensuring economic recovery was anything but a fait accompli. The prospect of the Japanese economy rebounding so quickly after defeat, and being so heavily dependent on the U.S. security umbrella, had its fair share of opponents both within and outside the country.
Yet Yoshida’s decision to concentrate on industrial output and put aside developing an independent defense policy not only put Japan on the path to steady economic recovery, but also became a standard bearer for the rest of East Asia and beyond. Later, Japan came to redefine the nature of national power itself, with Prime Minister Takeo Fukuda’s declaration in 1977 that Japan would never be a military power again.
Today, it is all too easy to be downbeat about Japan’s future as an economic power, or a major actor on the global stage. It’s also inevitable not to be concerned about the country’s defense capabilities given the growing reluctance of the United States to remain committed in the Indo-Pacific on the one hand, and China’s ever-growing military as well as economic aggression on the other.
Yet China’s rise and hostilities between Washington and Beijing have actually reinvigorated Japan’s position on the global stage. Expectations for Tokyo to act as a regional stabilizer are on the rise, and the current prime minister is without doubt not shying away from embracing that role.
Support for Shinzo Abe has been on a steady decline since the COVID-19 outbreak, and even at the height of his popularity his electoral performance was often less about being able to mobilize voters to support him and more about the weakness of the opposition parties and a lack of a credible alternative to the Liberal Democratic Party.
On the foreign economic policy front, however, Abe has articulated a new role for Japan that reflects the rapidly evolving regional reality. Granted, his administration’s continued public support for the U.S. even under the Trump administration has been seen as inescapable in light of Japan’s security reality in the face of the immediate threats it finds arrayed against itself.
Tokyo’s decision not only to remain in the Trans-Pacific Partnership agreement even after Washington withdrew in 2017, but to ensure that the remaining 11 members would be able to conclude the trade deal marked a turning point in Japan’s position in the international order. By ensuring the successful conclusion of Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and also signing on to a bilateral free trade agreement with the European Union, Japan has emerged not only as a leader in supporting establishing rules that govern global trade, but also a leader in setting rules of multilateral cooperation and consensus-building.
Yet Japan’s rise as a rule-maker from a rule-follower coincides with growing anxiety about open markets and globalization more broadly. The global pandemic has only accelerated those concerns, and expectations are that the health crisis will only decrease support for greater market integration.
What the pandemic has also made clear, though, is that technological advancements have made it much easier for interconnectedness, and that the world is actually now much more borderless than it has ever been. Indeed, even as the COVID-19 pandemic has led the global GDP to tumble, certain industries in the service sector have been enjoying record-breaking profits.
Given the demographic challenge of dealing with a shrinking and aging society, Japan’s economic future too lies in remaining competitive in the services sector that focuses on efficiency, convenience and interconnectedness. At the same time, the service sector is exactly where the rules of trade have not adequately kept up with the reality.
With no end in sight to ongoing U.S.-China tensions and a worldwide reluctance to commit to multilateralism, expectations for Japan to uphold fair trade and open borders has only increased. That may not always be the most popular path either within or outside of the country, but Japan’s economic future will depend on a leadership that has a clear, longer-term vision for growth.
Shihoko Goto is deputy director for geoeconomics and senior associate for Northeast Asia at the Wilson Center’s Asia Program.
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