Yet even Tokyo's arguments that it knows best betray some ignorance. Take Prime Minister Junichiro Koizumi's comment that "it's nonsense that Japan's national strength is lower than African countries to which Japan is providing assistance." Japan's credit rating is nowhere near any such nation. Those willing to give Koizumi -- who's not an expert in economics -- a pass here should consider that Shiokawa's been making the same point.
Asia's getting antsy about Tokyo's denial, fearing a Japanese banking crisis would send shockwaves around the region.
Yet, as Edward Lincoln makes clear in his book Arthritic Japan, a financial crash here is highly unlikely. Lincoln, a Japan expert at the Brookings Institution, argues that Japan won't recover or crash over the next decade, but will muddle along.
Its slow and orderly decline will continue apace, leaving the world no choice but to adjust to a less prosperous and productive Japan, Lincoln concludes. The Japanese, awash in savings and wealth relative to the rest of the world, have merely amended their lifestyles and moved on. Unfortunately, muddling along is the best Asia can expect from Japan in the years ahead.
China's rise in the interim is increasingly eclipsing Japan. China's 7.3 percent growth in 2001 contrasted with Japan's slide into its third recession in a decade. China is sucking up the jobs and capital Japan once took for granted. Even investors here are shunning Japanese stocks and buying Chinese shares.
If Koizumi understands how much clout Japan is losing on the global stage, he's not admitting it. Nor is he doing much about it. Political scandals are dominating Tokyo these days, distracting Koizumi from doing what a year ago this week he was elected to do: Fix the economy.
Koizumi only made matters worse Sunday by making a surprise visit to Tokyo's Yasukuni Shrine, which honors Japan's 2.5 million war dead, including its war criminals. The act is sure to upset Asian neighbors and undermine Koizumi's hopes of improving ties with its Asian trading partners. The controversy also will distract him from focusing on the economy.
"If the Japanese government continues to favor short-term comfort over long-term reform, Japan seems to me likely to remain on a road characterized by stagnation," former US Trade Representative Charlene Barshefsky said in Tokyo in late February.
"Year by year, Japan's influence will erode, and the centrality of the US-Japan relationship to Pacific affairs will diminish along with it."
RSS