Bending Adversity: Japan and the Art of Survival (40 page)

There was also the question of how inflation would affect ordinary Japanese. Rising prices would hardly be a good thing if wages didn’t go up too. Deflation had helped preserve living standards. Inflation could erode them. In April McDonald’s announced that it intended to increase the price of its burgers by 25 per cent. There was to be no commensurate rise in its employees’ wages. Abe asked Japanese businesses to help his reflationary project by paying workers more. Many were unmoved, though some did respond. Lawson, the chain of convenience stores, raised salaries for most of its staff by 3 per cent from April 2013, though its boss, Takeshi Niinami, was a hardly neutral member of one of Abe’s economic panels. Toyota, whose business had
roared back to health after a few rough years, paid its workers an average bonus of Y2.05 million (about $21,000 at the time), the highest in five years. Still, such rises would need to become widespread if workers were not to feel poorer as the result of inflation.

Critics also objected that flooding the country with money ignored fundamental economic problems. How would cranking the printing presses, they asked, encourage more women to work, make the country more open to immigration or businesses more innovative? Abe had an answer – of sorts. His third arrow was structural reform, or deregulation aimed at creating more competition. In addition to energy deregulation, Abe proposed to free up rules governing commercial farms as well as hospitals and nursing homes. He revived the idea of special economic zones where taxes could be lower and some government regulations waived. He even began to talk about the need to get more women into the workforce and proposed a new law compelling companies to promote at least one woman to executive level. ‘Women are Japan’s most underused resource,’ he said, echoing what foreigners had been telling Japan for years.
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There was much scepticism about Abe’s third arrow, which sounded to many like empty rhetoric and a recycling of old ideas. Still Abe surprised many by committing Japan to join the Trans-Pacific Partnership, a sophisticated trade agreement that the US was hatching with several Asian states. Among the alphabet soup of trade pacts, the TPP was meant to stand out. For one thing, it did not include China, no doubt a big plus for the hawkish Abe. For another, it aimed to set rules governing intellectual property, non-tariff barriers, state-owned companies and public tenders. It was supposed to be the Rolls-Royce of trade agreements. Japan’s cosseted farmers reacted to the idea as might be expected: with horror. But proponents argued that the TPP would force Japanese businesses to raise productivity, vital to counteract the effects of a declining workforce. ‘This is Japan’s last chance,’ Masaaki Kanno, an economist, said somewhat dramatically.
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For his part, Abe told parliament, ‘The future of Japan’s economic growth depends on us having the willpower and the courage to sail without hesitation onto the rough seas of global competition.’ It was the old debate about what it meant to be an island: inward-looking and defensive, or open and buccaneering. Abe appeared to be arguing for the
latter. In reality, some Japanese business leaders had beaten him to the punch. In 2012, Japanese companies spent a whopping $113 billion acquiring foreign businesses, second only to the US and far more than China, whose companies spent $63 billion, or the UK, at $56 billion.
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One company alone, Softbank, a telecoms giant run by Masayoshi Son, one of Japan’s most swashbuckling entrepreneurs, was proposing to pay some $20 billion for a controlling stake in Sprint Nextel, the third-largest US mobile operator. Japanese companies, often with government backing, were pouring billions into emerging Asian markets, including China, Indonesia, India and Myanmar. Japan’s days of fast growth were behind it, but the country was located in the world’s most dynamic region. Japanese business was not about to stand idly by.

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Abe’s promise to restore economic vigour had not been his only selling point. Voters were also looking for someone who could stand up against China. Changed international circumstances had transformed Abe’s nationalism from a negative to a positive in many voters’ eyes. For months before his re-election, Sino-Japanese relations had been darkening over the issue of the Senkaku, the five uninhabited islands in the East China Sea known as the Diaoyu in China. Tokyo regarded the islands, incorporated into its territory in 1895, as indisputably Japanese. Beijing said they had been Chinese since ancient times and were stolen. In the summer of 2012, Shintaro Ishihara, the octogenarian rightwinger, in what proved to be his last significant act as Tokyo governor, began to raise private donations to buy three of the islands and develop them. His aim was doubtless to provoke China and to prod his own government into taking a stand. He succeeded on both counts.

‘If Ishihara’s plans are acted upon, then it will result in an extremely grave crisis between Japan and China,’ Japan’s ambassador to Beijing warned in unscripted remarks that were to get him sacked.
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The official line was that the transfer of ownership made no difference since the islands were indisputably Japanese. Still, in the interests of avoiding friction, the Japanese government decided to scupper Ishihara’s plans by buying the islands itself. That way it could leave them undeveloped – and, it thought, take the sting out of the dispute with China. It was a spectacularly clumsy piece of diplomacy. From Beijing’s perspective, Japan had ‘nationalized’ the islands and thrown down the gauntlet.

On the day Tokyo purchased the islands for a little over $20 million in September 2012, all hell broke loose. The worst anti-Japanese demonstrations since the war erupted in fifty-seven cities across China, where tens of thousands of protesters took to the streets, torching Japanese factories and ransacking Japanese shops. In Xi’an, the ancient capital, now a sprawling city of 8 million people, protesters lost their fear of China’s internal security forces when they overturned police cars of Japanese make. One Chinese man, Li Jianli, caught driving a white Toyota Corolla, was hauled out of his car and nearly beaten to death with a bicycle lock.
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In Chengdu, where several thousand marched, one banner chillingly proclaimed: ‘Even if China is covered with graves, we must kill all Japanese’.
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This was the background to Abe’s re-election. Many Japanese voters were wary of Abe’s revisionist tendencies and social conservatism. Yet there was a growing nervousness about China’s intentions that made the election of a strongman more palatable. Abe came to power saying he would strengthen Japan’s military, and even suggesting he might station Japanese troops on the Senkaku. He would not only stand up to China but also to South Korea and Russia, the other nations with which Japan has emotive territorial disputes dating back to the Second World War.
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His re-election coincided with a once-in-a-decade political transition in China. Xi Jinping, the new Chinese president, was in no mood to appear soft either. In the waters around the Senkaku, there were now almost daily stand-offs between coastguard ships from China and Japan. Activists from both sides tried to plant flags on the remote islands. On 10 January 2013, two weeks into Abe’s premiership, Chinese and Japanese fighter aircraft tangled over the Senkaku. A few days later, the
PLA
Daily
reported that the General Staff Department had ordered all units to prepare for battle, in what may have been the first such order since China fought Vietnam in 1979.
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The following month, Tokyo accused the Chinese navy of aiming its weapons at a Japanese warship, an action that involves locking a fire-control radar onto its target. If the Japanese ship had assumed it was under attack, it could have fired back, potentially provoking an armed clash. (Beijing said it had used only normal surveillance radar.) Japan’s defence minister, Itsunori Onodera, called
it ‘extremely abnormal behaviour’.
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One small mistake, he implied, could lead to war.

Increasing brinkmanship over the islands was doubly dangerous since the US was bound by the US–Japan Security Treaty to come to Japan’s aid if Japan were attacked. To Beijing’s anger, Washington confirmed that the Senkaku islands were covered by the treaty, although many policymakers privately doubted that the US would risk American lives to defend a few uninhabited rocks.
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In short, the Senkaku islands, about which the world had scarcely heard a few months before, were now among the planet’s most dangerous flashpoints. Surin Pitsuwan, secretary-general of the ten-member Association of Southeast Asian Nations, called them ‘Asia’s Palestine’.
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The world has a bad record when it comes to accommodating rising powers. One academic calculates that since 1500 in eleven out of fifteen cases when a rising power rose to challenge a ruling power the upshot has been war.
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In this case, the rising power was China and the ruling power the US. But Japan was Washington’s representative in the Pacific – and it carried plenty of historical baggage of its own.

As prime minister, Abe asserted Japan’s determination to defend what it regarded as its undisputable territory. ‘No nation should underestimate the firmness of our resolve. No one should ever doubt the robustness of the Japan–US Alliance,’ he said.
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As the economy gave signs of flickering into life, and his approval ratings rose above 70 per cent, he began to show his nationalist colours. In April, he sent a cypress tree as an offering to Yasukuni shrine along with several members of his cabinet. Altogether, a record 168 Diet members prayed at the shrine for Japan’s war dead. When I interviewed him years before, he had said, ‘Yasukuni shrine is in Japan, and it is ridiculous to suggest that the prime minister can’t step on a particular spot on his own soil. When they [Beijing] realize there is no room for negotiation, they will stop complaining.’
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Back in office, Abe raised doubts about Japan’s 1995 apology for its wartime atrocities. Using the same logic as Yuko Tojo, granddaughter of the wartime prime minister, who died in 2013, he questioned the use of the word ‘invasion’ to describe Japan’s occupation of much of
Asia in the 1930s and 40s.
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He also stepped up his plans to revise the pacifist constitution. His approach was to change Article 96, the one that dealt with the procedure for amending the constitution itself. Instead of the requirement of a two-thirds majority of both houses, followed by a referendum, he proposed a simple majority. ‘It’s been over sixty years since its enactment and its contents have become obsolete,’ he said.
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Japan had not revised a single word of its constitution since 1947 compared to Germany, which had amended its charter fully fifty-eight times since 1949. Among the changes Abe sought were to restore the emperor’s role as ‘head of state’, rather than mere symbol, and to re-establish Japan’s ‘sovereign right’ to wage war. Six decades of pacifism notwithstanding, an editorial in the
China Daily
cast Japan as an unrepentant militaristic nation, liable to go on the rampage if its constitutional shackles were removed.
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The Abe administration provided much grist to the mill. It launched the largest naval vessel Japan has built since the war, nominally a destroyer, but an aircraft carrier in all but name. Abe began to make appearances perched defiantly atop military equipment. Taro Aso, the deputy prime minister whose revisionist convictions were similar to those of his boss, casually suggested that Japan had a few tricks to learn from Nazi Germany. ‘We should proceed quietly,’ he said of plans to revise the constitution. ‘One day people realized that the Weimar constitution had changed into the Nazi constitution. Why don’t we learn from that approach?’ Those remarks, incredibly, did not lead to his dismissal, but rather to the excruciatingly embarrassing clarification that ‘The Abe administration does not perceive Nazi Germany in a positive light.’
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No wonder that, around the same time, Paul Kennedy, a prominent academic who in the late 1980s had written in epochal terms about Japan’s precipitous rise, concluded unflatteringly that Japan was ‘still bewildered by the outside world [and] cramped by its past’.
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In Japan, too, many were alarmed by Abe’s revisionism and his hankering after backward-looking traditional values. Kiichi Fujiwara, professor of international politics at Tokyo University, said he was terrified by plans to tinker with constitutional provisions protecting equality and the rights of the individual. Abe’s proposals, he said,
were not so much a revision as a ‘dismantling’ of constitutional safeguards.
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Most opposition centred on the threat to pacifist Article 9. ‘If that goes, everything else will follow,’ said Noriko Hama of Doshisha University. ‘Who cares if it was written by Americans,’ she added of the constitution’s origins during the US occupation period. ‘It’s a fundamentally decent document. The constitution is there to protect the people from power. Abe’s version is that people should have a responsibility towards the state, not the other way around.’
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Opposition to constitutional revision has eroded somewhat since the 1990s when surveys suggested two-thirds of Japanese objected. Still, in 2013, Pew, the international polling organization, found that 56 per cent of Japanese opposed amending the constitution.
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If the issue of revision is ever put to the public – as it must be if the constitution is to be altered – most Japanese academics say the proposition would be roundly rejected. Even Abe admitted he didn’t have the numbers. In the summer of 2013, not for the first time, the idea of constitutional revision was quietly shelved. Such deep-rooted support for a progressive and uniquely pacifist document belies the idea that Japan stands on the brink of some sort of nationalist revival.

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We can’t pretend to unravel the causes and effects of history with any accuracy. Yet in the case of Abenomics, a bold attempt to reflate the economy, it may not be too farfetched to look for a catalyst in the twin shocks dealt by the 2011 tsunami and a more assertive China. In retrospect, the earthquake and tsunami do seem to have shaken Japan psychologically. Ishihara had echoed the Taisho emperor by declaring the catastrophe to be divine retribution. Although his remarks caused outrage and he uncharacteristically apologized, he may have hit a nerve. Perhaps what he called ‘egoism’ had dulled the Japanese senses after all. Perhaps, its leaders had been kidding themselves for years, imagining that Japan could somehow stumble on as usual. The tsunami brought with it a sense of crisis. In its wake, the economy shrank and Japanese businesses worried about locating their factories on an archipelago susceptible to natural disasters and chronically dependent on foreign energy. Hadn’t one politician compared shutting down the nuclear reactors to ‘group suicide’? Yet that was exactly what had
been done. Now a nation that had built its post-war prosperity on exports was running chronic trade deficits. Soon its future might be mortgaged to foreigners. Even if there were no immediate crisis, could Japan afford more years of genteel decline? Yoichi Funabashi, my friend at the
Asahi
, thought not. Northeast Asia was ‘a jungle’, he said. If Japan were weak, it would not survive.
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