If you’re under 50, you probably don’t remember that there was a reason 1988’s Die Hard took place in Nakatomi Plaza. There was a reason 1983’s Pink Floyd song Not Now John, had the line, “Got to compete with the wily Japanese” - the Japanese were the economic boogeymen of the last 15 years of the Cold War era.
The Japanese Miracle ended at about the same time the Cold War did; 1991. Since then, well, she’s been in a funk. Shame, really. She is one of the best-run nations and most successful cultures on our planet.
There were multiple causes of her malaise, but her demographics were part of it … and with much of East Asia, she is in a demographic crash in the making that no one still has an idea how it will end. That and her significant levels of national debt have not put her at the top of anyone’s list for decades … but is that changing.
Europe’s unending war in her east, and the Middle East continuing to … well … be the Middle East, the USA is still having a hard time completing or even significantly making the “Pacific Pivot” we’ve been signaling for a long time, but there are a lot of things going on there that could even be considered good news for the USA and her friends that simply isn’t getting the attention it should be.
Tomorrow I plan to on The Philippines, but today let’s take a snapshot look at Japan. The Financial Times at the end of April had a nice overview of some good news.
Yes, good news. Let’s dive in. The 4th sentence is telling in so many ways. Humans have been doing this from the dawn of recorded history;
The idea that Japan is a haven in troubled times has obviously occurred to a few other people. Jack Ma, the billionaire founder of Alibaba, moved to the country after falling out of favour in his native China. Shortly after arriving in Tokyo, I passed Roman Abramovich — the much-sanctioned Russian oligarch — on a side-street in Omotesando, a fashionable shopping district.
Once you see that, you start looking for other indicators.
It is not just billionaires who have decided that, all things considered, Japan looks like a good bet at the moment. The country is currently undergoing a tourist boom — as travellers flock in, attracted by the cheap yen (which recently hit a 34-year low), as well as the food, culture and shopping. Investors are also taking a fresh look. A visit to Japan by the legendary investor Warren Buffett last year was seen as an endorsement. The Nikkei share index has risen by about 30 per cent over the past 12 months — finally surpassing the level it last reached in 1989, at the height of the bubble years.
The smart money has already moved.
… as concerns about the future of China and Hong Kong rise, so the attractions of Japan are coming back into focus. American firms such as Microsoft, Oracle, Micron and Blackstone have all recently increased their investments in Japan. Western executives who currently feel nervous about moving their families to China — or even travelling there — have no such reservations about Japan.
Watch for industry and brains;
This year TSMC, a Taiwanese firm that is the world’s leading semiconductor manufacturer, opened its first plant in Japan and also announced plans to open a second. The Japanese hope to see a resurgence of their semiconductor industry — as they become a key part of a global supply chain that skirts mainland China. Anxiety about the future of China is also helping Japanese service industries. Two prominent British private schools — Malvern and Rugby — have both recently opened campuses in Japan. Many of their newly enrolled students are likely to come from mainland China. Chinese investors are also increasingly keen on buying property in Tokyo.
… There are clearly opportunities for Japan in the American-promoted idea of “friendshoring” production among like-minded democracies.
There is a note of caution at the end that is worth pondering.
… If America looks unpredictable and unsettling, China looks downright scary when viewed from Japan. A relentless military build-up over the last 20 years means that Beijing now has the largest navy in the world. Japan and China also have an unsettled territorial dispute — and Chinese ships continue to harass the Japanese around the disputed islands, known as the Senkakus in Japan….One official argues that Japan faces a more dangerous environment than any other G7 nation — because it has China, Russia and North Korea as close neighbours. The Japanese like to say that the cherry blossom is all the more beautiful because it is fleeting. I feel the same way about the current moment in Japan. We should enjoy the country’s status as a haven from the troubles of the world because — sadly — it is unlikely to last for ever.
I am more on the optimistic side. Japan was on the front against the Soviet Union during the Cold War and had a communist terror group operating on its shores.
Yes, the People’s Republic of China is a significant threat to the region and the world … but Japan is on the rise again. Vietnam and the Philippines are getting stronger and closer to the USA. Australia is getting closer and stronger, as are others.
One could argue - in spite of some problem areas in the island nations west of Wake - that in aggregate our friendships and alliances in the Western Pacific are stronger now than they were 10 years ago.
If we are smart and nurture and grow these relationships … we just might get through the next 20 years in a strong position.
There is room for optimism … but not for rest. Much work to be done.
The fate of Japan will be determined not by China but rather if she succumbs to the siren call of demographic replacement with cheap non-Japanese labor. The reason Japan is great is that it is full of Japanese and therefore not full of the third world. If that changes Japan will end up like the West.
I've been to Japan twice, along with Okinawa, while in the Marines. Loved the country and the people. As long as you get out of the military liberty towns its great. One of my favorite places was Hiroshima. A short train ride from my base at Iwakuni. I would be "attacked" by Japanese high school and college students needing a native English speaker to practice with. English was a required subject in both HS and college. I always had a good time with the kids. We'd go to a tea shop and set up for several hours talking and drinking cha. I learned a lot of the Japanese language and a lot about their culture in return. Of course this was back in the 1970s.