A plan by Chinese real-estate developers to invest in this little mountain town has opened a window onto a Japanese crisis of confidence.
For locals here, the planned development — vacation homes for rich Chinese — is a welcome infusion of capital into a town that has been in decline since its heyday in the 1980s as a hot spring resort.
However, seen from elsewhere in Japan — there have been news accounts in the national media, not all of them accurate — the investment is a menace to the area’s pristine forests and streams, a land grab that threatens the country’s natural resources and a chilling reminder of the expanding shadow cast by China, which recently surpassed Japan to become the world’s second-largest economy after the US.
“Targeted by Foreign Money? Japan’s Forests for Sale,” was the warning title of a news program this month by the public broadcaster, NHK.
A fear that “China money” is buying up the Japanese homeland is spreading across this nation, fanned by news reports and a general anxiety over Tokyo’s fading economic prowess and an increasingly hostile wealthy neighbor. The amount of money invested is still small by China’s standards, but seems to be setting off an outsize reaction among the Japanese.
Tokyo’s recent retreat from the diplomatic face-off over the arrest of a Chinese trawler captain, and China’s suspension of shipments of vital industrial metals and minerals to Japan, have also put many Japanese on edge.
“I’m all for closer ties with China, but we need to be on our guard,” said Hideki Hirano, author of the book Japan’s Forests Under Siege: How Foreign Capital Threatens Our Water Source, which was published in March. “We need to be more vigilant about who’s buying what.”
Here in Misasa, however, nationalist rhetoric is often tempered by pragmatism.
“Rich Chinese spend money in ways that no longer exist in Japan,” said Kiyomi Kawakami, a local developer who plans to build 47 luxury homes in Misasa with partners from Shanghai.
“People warn me not to sell land to the Chinese,” he said. “But I run a business. If somebody’s buying, I’m selling.”
Whether in far-flung corners of Japan like Misasa or in corporate boardrooms, there is a realization that as the Chinese economy booms, Japan needs — even as it remains wary of — China’s money.
The sentiment is reminiscent of the way Americans feared Japanese economic imperialism in the 1980s, alarmed by the acquisition of US icons like Rockefeller Center by Mitsubishi and Columbia Pictures by Sony.
Chinese companies spent US$120 million in the first half of this year to acquire various small and midsize Japanese enterprises, taking advantage of depressed asset prices, according to a recent report from Goldman Sachs. The figure represents a sixfold increase from the comparable period last year. China is also now Japan’s biggest trading partner, with overall trade surging by a third, to ￥12.6 trillion (US$151 billion) in the first half of the year, compared with the same period last year.
“We shouldn’t think it a bad thing that foreign investors are recognizing value in Japan,” said Kazuhiko Masumoto, an analyst at the Mitsubishi Research Institute in Tokyo.
Japan’s finance ministry has seemed slow to agree.
This month, Japanese Finance Minister Yoshihiko Noda asked Chinese policymakers to “clarify their objectives” after recent bulk purchases of Japanese government bonds. Tokyo was concerned that the buying was helping to drive up the yen’s value — making Japan’s exports less competitive with China’s.
Bowing to economic realities, and Japan’s already high levels of public debt, Finance Ministry officials have since then played down the conflict, saying Japan was happy to find foreign takers of its government bonds.
Until the trawler dispute prompted some tour groups to at least temporarily cancel trips to Japan, waves of newly rich Chinese tourists, with pocketbooks open, had been welcomed in Japan — even while heightening a sense that the country is at the mercy of rich Chinese.
Reports of Chinese snapping up Japan’s mountains and forests have struck a raw nerve, however. Although Japan is known for its big cities, about 70 percent of its landmass is mountainous forest, and the purchases raise the specter of China’s gaining control of the cherished hinterlands.
Japan’s logging industry is in decline, as the country has been flooded with cheap imported timber. As a result, forest real estate now sells for rock-bottom prices, and many plots have been abandoned by absentee or aged owners and have fallen into a state of neglect.
In January, the Tokyo Foundation, a respected independent research organization where Hirano is an analyst, issued a widely read report warning that foreign brokers could extract natural resources like timber and water and threaten Japan’s national security.
“If we wait until the exploitation of Japan’s natural resources by global interests is well under way,” the report said, “it may be too late.”
Since then, local news media have been sounding alarms, with accounts of deals, or potential deals, with Chinese developers — including a report of the sale of 57 acres of forest on the northern island of Hokkaido to a Chinese broker.
Then came news that Chinese investors were inquiring about mountains in Mie prefecture in western Japan, along with recent coverage of the development plans here in the spa town of Misasa.
Not all of the reports have been accurate.
In Hokkaido, for example, the buyer of those 23 hectares turned out not to be Chinese at all, but a French real estate tycoon based in Hong Kong who is known for developing eco-friendly holiday villas powered with solar energy.
Still, the government has ordered a nationwide survey of sales of woodlands to foreigners.
“There have been rumors of foreign companies quietly buying woodlands, so we decided to investigate,” said Takayuki Doi, a senior official at Japan’s Forestry Agency.
It is unclear what the government can do, however, since foreign ownership of forests is legal in Japan.
Kawakami has received visits from worried local officials over his plans to team up with Chinese investors.
His plans, he says, simply involve building mountain villas that he had initially planned to sell to Japanese buyers. However, after a four-month marketing blitz yielded just two bidders in the sluggish domestic market, Kawakami turned to China. In June, he set up a joint venture with a Shanghai-based developer to build and sell the holiday homes.
“I wanted to sell to Japanese,” he said, “but Japanese can no longer afford second homes.”
Whatever the wisdom of selling to rich Chinese, Misasa, like the rest of Japan, could use the cash.
Once a thriving hot spring resort, Misasa attracted almost 600,000 tourists a year in Japan’s bubble era, drawn by attractions including a spa-themed amusement park.
However, by 1998, the park had gone bust, crippled by over ￥1.7 billion in debt. The attractions fell into disrepair. Tourist numbers dwindled.
Now, the town of 7,000 is desperate to attract new visitors.
Michiko Mifune, 81, runs the Kiya Ryokan, one of Misasa’s oldest traditional inns. She says she has heard the rumors — that the Chinese are supposedly taking over Japan’s forests. But recognizing that newly rich foreign tourists come with pocketbooks open, she is eager to have more visitors to Misasa from China.
She recently learned the word huanying — “welcome” in Chinese.
“Nobody cared about Misasa until now,” Mifune said. “Now that foreigners might be after it, suddenly everyone cares.”
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