Greg Sheridan, Foreign Editor
From: The Australian
March 06, 2010 12:00AM
AT some point this year, if it hasn't already happened, an unpleasant and unsettling new reality will confront Japan. It will cease being the world's second-largest economy, a status it has held for more than 40 years, since 1968. China will replace it as No 2.
Japan today is caught in a complex web of circumstances more challenging than any it has faced since the post-war period.
Its population, about 125 million, has started to shrink. By 2055, it could be as low as 90 million.
One of its most iconic brands, Toyota, has been damaged by recurring safety problems. Toyota sales in the US fell by nearly 9 per cent in February, compared with a year earlier. Toyota's head, Akio Toyoda, has had to troop off to China to apologise for the mess, China having recently overtaken the US as the world's number one auto market.
China is at the back, and at the front, of every Japanese mind these days. As one senior government official tells me: "We no longer see China as an economic threat. Instead we see it as a big market. But if China's growth in military expenditure keeps up, it will be intolerable."
Here the Japanese official gives perfect expression to the Asian phenomenon of the divided mind concerning China. Economically, China is a boom; strategically, it's a deep worry.
Japan's economy, though, is looking a little better. Partly on the back of exports, unemployment has fallen slightly, to 4.9 per cent. Average wages have increased slightly, for the first time in 20 months. But this is an economy under massive stimulus, after two decades of stagnation. Government debt is 200 per cent of gross national product.
Last September Japan elected a new centre-left government, led by the dashing Prime Minister, Yukio Hatoyama, and his Democratic Party of Japan. It was a seismic moment. Only once before, and then only for a few months, had the conservative Liberal Democratic Party been out of office since the 1950s.
The nation yearns to be revived by a new and vigorous leadership. But Hatoyama's government has already been rocked by a string of financial scandals. It has recently lost regional elections in Nagasaki and Tokyo. Its popularity, as measured by the polls, has slumped. In July it faces critical Upper House elections. Most importantly Hatoyama's Government has seemingly sleep-walked into a crisis with Washington.
Thus, taken altogether, Japan seems to be at a pivot point. And if history is the remotest guide, when Japan pivots, the world rocks.
Does the old pattern of Japan, in alliance with the US, as the linchpin of the Asia Pacific still hold? Can this pattern adapt to new circumstances and reassert itself? Or does Japan face an altogether different future, one of introspection and decline, of estrangement from the US, of living ever more fearfully in China's shadow?
Here is one tremendous analytical mistake to avoid: don't write Japan off, and don't be too quick to write off its new government either. The travails of the DPJ's leaders should not obscure how many impressive young politicians it has brought to government. There is a cadre of new leadership in Japan, desperately keen to edge its way on to the main stage.
After eight days in Tokyo, interviewing some 40 politicians, bureaucrats, former officials, commentators, academics, business people and ordinary folk, it seems to me that Japan in the next year or two will answer for us a series of key strategic questions. Among them will be: will the US-Japan alliance thrive or wither, how will Japan approach China, can Tokyo sustain leadership in the region, will Hatoyama pursue pan-Asian ideas or an Asia-Pacific vision, where is the historic partnership between Japan and Australia headed?
Hatoyama is certainly an unusual politician for Japan. His detractors see him as a rich boy, born to rule lightweight. His supporters see him as a breath of fresh air. Friend and foe alike see him as heavily influenced by DPJ Secretary General, Ichiro Ozawa, a figure steeped in the dark and Byzantine ways of Japanese money politics. Ozawa has recently taken a strong pro-China tilt, and a corresponding anti-American bend.
Perhaps under Ozawa's influence, Hatoyama has done two things which greatly perplexed Washington, to put it mildly.
He proposed creating an East Asia Community, which would exclude the US, and he promised to tear up a deal to relocate the giant US Marine air base from Futenma in Okinawa to a more isolated part of Okinawa.
But Hatoyama is discovering the responsibilities, and realities, of government. In a long-winded but maddeningly vague policy statement to the Diet at the end of January Hatoyama waxed lyrical about his pan-Asian ideas, but then said: "Not only is the importance of an unshakeable Japan-US alliance unchanged, but such an alliance is indispensable as a pre-condition for forming an East Asian community."
This is reassuring, but a bit weird, because Hatoyama's previous position on Okinawa threatened to gravely compromise the entire Asia-Pacific security order. During the election he promised to force the US Marines to relocate their air base off Okinawa altogether. This stirred up the Okinawans and it stirred up the Marines, as there is nowhere else in Japan for them to go.
The previous government had negotiated with Washington for the air base to go to Honeko, in the more isolated northeast of Okinawa, with some 8000 Marines relocating to Guam.
The US Air Force assets in Okinawa, and the Marine Expeditionary Force there, are absolutely critical to US force projection capabilities in East Asia. Look at a map to see what I mean. See where Okinawa is located in relation to Japan, China and Taiwan.
If the Marines are chased off Okinawa, the US-Japan alliance will be gravely damaged. This would be very bad news for Australia.
But this week, senior Hatoyama officials have been quoted in the Japanese press saying that Hatoyama will now reverse himself and the Marines will stay in Okinawa after all. If this happens, Hatoyama will have stirred up massive disquiet and false expectations in Okinawa for no gain to anyone at all. Hatoyama has promised a decision by May.
The DPJ is learning hard lessons about many topics in government. Its smarter people are already developing a coldly realistic view of China. Remember the DPJ is the centre-left party, determined to repudiate as much of the LDP legacy as possible. Then listen to Kazuya Shimba, a DPJ politician very much on the rise and Vice-Minister for Defence. I met him in his office in the Diet building, a cramped, scruffy space plastered with strategic maps.
I asked him about the US-Japan-Australia trilateral security dialogue, and Beijing's objection to this. "I do understand China is rather sensitive on this," Shimba told me.
"But on the other hand China has increased its own military expenditure by 10 per cent every year for the last 10 years. As a result they have 20 times their former military capacity.
"There is a lack of transparency about this. They have a responsibility to explain it.
"Needless to say China's economic growth is beneficial for Japan and the US. But there are some in the Hatoyama administration who say that China, the US and Japan form an equal triangle in economic matters, But at least in the military sense, as Vice-Minister for Defence I must say such a triangle cannot hold, it makes no sense.
"The other day China conducted a military parade. We wonder why they need ballistic missiles that can reach South America, or nuclear submarines, or why they are planning aircraft carriers, or next generation fighter planes. Why do they need all those?"
Showing a forthrightness, and indeed courage, which would be just about unimaginable in an Australian minister, Shimba confronts the contradiction in political values between China and Japan, and says Japan will always raise human rights issues with China: "Take for example the Google case. The Chinese authorities deny information to their own people.
"They need to give their own people more freedom of expression. They need to give their own people more democracy -- some of the values that Japan, the US and Australia share and that China needs."
Those sound like the words of a political leader who knows what his own values are and also understands the core interests of his nation.
Senior Japanese government officials tell me it is impossible that Japan could deal with China in a mature and self-confident way without the US alliance being in robust shape. Commentators often point out that Japan without the US security umbrella would face increased pressure to develop its own nuclear deterrent.
Japan looks very conservative from the outside, very resistant to change. But history has shown it has an astonishing capacity to pivot, to take a radical new course, when necessary.
With so much in flux, Canberra should be as close to Japan as a glove to a hand. At this time of momentous choices for Japan, Australia should be straining every sinew to maximise influence and support.
Instead we have chosen to make our most high profile contribution to diplomacy with Japan a bizarre frolic -- half crusade and half national practical joke -- on whales.
Serious times, sadly, do not always call forth serious responses.
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