The very fact that Peking is so purposeful about what is to happen in East Asia increases the pressures now bearing down upon Japan’s (self-proclaimed) “omnidirectional peaceful diplomacy”—or what might more cynically be described as “being all things to all men.”51 The Japanese dilemma may perhaps be best summarized as follows:
Due to its immensely successful growth since 1945, the country enjoys a unique and very favorable position in the global economic and power-political order, yet that is also—the Japanese feel—an extremely delicate and vulnerable position, which could be badly deranged if international circumstances changed. The best thing that could happen from Tokyo’s viewpoint, therefore, would be for the continuation of those factors which caused “the Japanese miracle” in the first place. But precisely because this is an anarchic world in which “dissatisfied” powers jostle alongside “satisfied” ones, and because the dynamic of technological and commercial change is driving so fast, the likelihood is that those favorable factors will diminish—or even disappear altogether. Given Japan’s belief in the delicacy and vulnerability of its own position, it finds it hard openly to resist the pressures for change; instead, the latter must be slowed down, or deflected, by diplomatic compromise. Hence its constant advocacy of the peaceful solution to international problems, its alarm and embarrassment when it finds itself in a political crossfire between other countries, and its evident wish to be on good terms with everyone while it gets steadily richer.
The reasons for Japan’s phenomenal economic success have already been discussed (see above, pp. 416–18). For over forty years the Japanese homeland has been protected by American nuclear and conventional forces, and its sea lanes by the U.S. Navy. Thus enabled to redirect its national energies from militaristic expansion and its resources from high defense spending, Japan has devoted itself to the pursuit of sustained economic growth, especially in export markets. This success could not have been achieved without its own people’s commitment to entrepreneurship, quality control, and hard work, but it was also aided by certain special factors: the holding-down of the yen to an artificially low level for decade after decade in order to boost exports; the restrictions, both formal and informal, upon the purchase of imported foreign manufactures (although not, of course, of the vital raw materials which industry needed); and the existence of a liberal international trading order which placed few obstacles in the way of Japanese goods—and which was kept “open,” despite the increasing burdens upon itself, by the United States. For the past quarter-century, therefore, Japan has been able to enjoy all of the advantages of evolving into a global economic giant, but without any of the political responsibilities and territorial disadvantages which have, historically, followed from such a growth. Little wonder that it prefers things to remain as they are.
Since the foundations of Japan’s present success lie exclusively in the economic sphere, it is not surprising that this also is the field which worries Tokyo most. On the one hand (as will be discussed below), technological and economic growth offers fresh glittering prizes to the country whose political economy is best positioned for the coming twenty-first century; and only a few dispute the contention that Japan is in that favorable position.52 On the other hand, its very success is already provoking a “scissors effect” reaction against its export-led expansion. The one “blade” of those scissors is the emulation of Japan by other ambitious Asian NICs (newly industrialized countries), such as South Korea, Singapore, Taiwan, Thailand, etc.—not to mention China itself at the lower end of the product scale (e.g., textiles).53 All of these countries have far lower labor costs than Japan,* and are challenging strongly in fields in which the Japanese no longer enjoy decisive advantages—textiles, toys, domestic goods, shipbuilding, even (to a much less degree) steel and automobiles. This does not, of course, mean that Japan’s production of ships, cars, trucks, and steel is doomed, but to the extent that it is increasingly necessary for them to move “up-market” (e.g., to higher-grade steels, or more sophisticated and larger-sized automobiles) they are withdrawing from the bottom end of a production spectrum where previously they were unchallenged; and one of the more important tasks of MITI (the Ministry for International Trade and Industry) is to plan the phasing out of industries which are no longer competitive—not only to make the decline less traumatic but also to arrange for the transfer of resources and personnel into other, more competitive sectors of the international economy.
The second, even more worrying blade of the scissors has been the increasingly hostile reaction of Americans and Europeans to the seemingly inexorable penetration of their domestic markets by Japanese products. Year after year, the populations of these prosperous markets have bought Japanese steel, machine tools, motorcycles, automobiles, and TV sets and other electrical goods. Year after year, Japan’s trading surpluses with the EEC and the United States have widened. The European reaction has been the tougher one, ranging from import quotas to bureaucratic obstructionism (such as the French requirement that Japanese electrical goods be admitted only via an understaffed customs house in Poitiers).54 Because of its own belief in an open world trading system, American administrations have hesitated to ban or otherwise restrict Japanese imports apart from dubious “voluntary” limits. But even the staunchest American advocates of laissez-faire have grown uneasy at a situation in which, essentially, the United States supplies Japan with foodstuffs and raw materials and receives Japanese manufactures in return—a sort of “colonial” or “underdevelopment” trading status it has not known for a century and a half. Moreover, the growing U.S. trade deficits with Japan—$62 billion in the fiscal year ending March 31, 1986—and the pressures from beleaguered American industries which have felt the brunt of this transpacific competition have increased Washington’s demand for measures to reduce the imbalance—e.g., to encourage a rise in the exchange value of the yen, a substantial increase in American imports into Japan, and so on. As the western world drifts toward quasi-protectionism, moreover, its tendency to put limits upon the total amount of textiles or televisions imported implies that Japan will have to divide that shrunken market with its Asian rivals.
It is scarcely surprising, therefore, that some Japanese spokesmen deny that things are good, and point to an alarming conjunction of threats to their present market shares and prosperity: the increasing challenge by Asian NICs in so many industries; the restrictions upon Japanese exports by western governments; the pressures to change Japan’s tax laws, divert monies from savings to consumption, and ensure a large increase in imports; finally, the swift rise in the value of the yen. All of these, it is claimed, could mean the end of Japan’s export-led boom, a decline in its payments surpluses, a slowing-down in its growth rate (which has already been decelerating as its economy becomes more “mature” and its potential for spectacular expansion diminishes). In that connection, Japan worries that it is not only its economy which is maturing: because of the age structure of its population, by 2010 it will have “the lowest ratio of working-age people (those 15 to 64 years old) among the leading industrial nations,” which will require high social security outlays and could lead to a loss of dynamism.55 Moreover, all the attempts to get the Japanese consumer to buy foreign-made manufactures (except those with a certain prestige, like Mercedes cars) lead to domestic political controversy,56 which might in turn cause a possible breakdown in the consensus politics which has been an integral part of Japan’s sustained export-led expansion in the past.
Yet while it may be true that Japan’s economic growth is slowing down as it enters a more mature phase, and while it is certainly true that other countries are unwilling to permit Japan to keep the economic advantages which aided its previous explosion of exports, there nevertheless remain considerable substantive reasons why it is likely to expand faster than the other major Powers in the future. In the first place, as a country so incredibly dependent upon imported raw materials (99 percent of its oil, 92 percent of its iron, 100 percent of its copper), it benefits enormously from the changing terms of trade which have reduced the prices of so many ores, fuels, and foodstuffs; the drop in world oil prices after 1980–1981, which saves Japan billions of dollars of foreign currency each year, is only the most spectacular of the falls in raw-materials and foodstuffs prices.57Furthermore, while a rapid appreciation in the value of the yen is likely to cut some of the country’s exports overseas (depending always upon the elasticity of demand), it also greatly reduces the cost of imports—and thus helps industry to stay competitive and inflation to remain low. In addition, the 1973 oil crisis stimulated the Japanese into searching for all sorts of energy economies, which contribute to the still greater efficiency of its industry; in the past decade alone, Japan has reduced its dependence on oil by 25 percent. In addition, that same crisis impelled Japan into a sustained search for new sources of raw materials and a heavy investment in such areas (somewhat akin to Britain’s investments overseas in the nineteenth century). None of this makes it absolutely certain that Japan can rely upon a continued flow of low-priced raw materials; but the auguries for that are good.
More significant still is the continued surge of Japanese industry toward the most promising (and, ultimately, most profitable) sectors of the economy for the early twenty-first century: that is, high technology. In other words, as Japan steadily pulls out of the production of textiles, shipbuilding, basic steel—leaving them to countries with lower labor costs—it clearly intends to be a (if not the) leading force in those scientifically advanced manufactures which have a much higher added value. Its achievements in the computing field are already so well known as to be legendary. Borrowing heavily from American technology in the first instance, Japanese companies were able to exploit all their native advantages (a protected home market, MITI support, better quality control, a favorable yen-to-dollar ratio) as well as—most probably—“dumping” at below-cost prices to drive most American companies out of the production of semiconductors, whether of the 16k RAM, the 64k RAM, or the later 256k RAM.58
Even more worrying to the American computer industry is the evidence of Japan’s determined move into two fresh (and much more profitable) fields. The first is the production of advanced computers themselves, particularly the sophisticated and extremely expensive “fifth generation” supercomputers, which can work hundreds of times faster than the largest existing machines and promise to give their owners enormous benefits in everything from codebreaking to designing aircraft shapes. Already American experts are stunned by the speed at which Japan has moved into this area, and at the amount of research capital which MITI and large companies like Hitachi and Fujitsu are pouring into it.59 Yet the same is also happening in the field of computer software, where again American firms (and a few European firms) were unchallenged until the early 1980s.60To be sure, the successful production both of supercomputers and of software is a much larger task than making semiconductors, and will test Japan’s designers to the utmost; and in the meantime both American and European companies (the latter strongly supported by their governments) are preparing to meet the commercial challenge, while the U.S. Department of Defense will give its massive backing to ensuring that its national firms remain ahead in the development of supercomputers. Nonetheless, those bodies would be very sanguine to assume that Japan can be permanently held off in these fields.
Since respected journals like The Economist, the Wall Street Journal, the New York Times, and many others frequently carry articles about Japan’s move into further areas of high technology, it would be superfluous to repeat the details here. Mitsubishi’s link-up with Westinghouse has been seen as evidence of Japan’s increasing interest in the nuclear-power industry.61 Biotechnology is also a large Japanese concern, especially with its implications for enhancing crop yields. So, too, is ceramics. The reports that the Japanese Aircraft Development Corporation has joined up with Boeing to produce a new generation of fuel-efficient aircraft for the 1990s—denounced by one American expert as a “Faustian bargain” whereby Japan will provide cheap finance and acquire U.S. technology and expertise62—may be even more significant for the future. But perhaps the most important (in terms of sheer output) will be the already impressive lead which Japan has in the field of industrial robots and its development of (experimental) entire factories virtually controlled by computers, lasers, and robots: the ultimate solution to the country’s decreasing labor force! The latest figures show that “Japan continued to introduce about as many industrial robots as the rest of the world combined, several times the rate of introduction in the United States.” Another survey indicates that the Japanese use their robots much more efficiently than Americans do.63
Behind all of these high-technology ventures are a cluster of broader, structural factors which continue to give Japan marked advantages over its chief rivals. The role of MITI as a sort of economic equivalent to the famous Prussian General Staff may have been exaggerated by foreigners,64but there seems little doubt that the broad direction which it gives to Japanese economic development by arranging research and funding for growth industries and a gentle euthanasia for declining ones has worked better to date than the uncoordinated laissez-faire approach of the United States. The second strength—one of the most important of all in explaining the rise and fall of particular firms and industries—is the large (and increasing) amount of money which is allocated to research and development in Japan. “The proportion of GNP devoted to R&D will virtually double this decade, rising from 2 percent of GNP in 1980 to an expected 3.5 percent by 1990. The United States has stabilized R&D expenses at about 2.7 percent of GNP. However, if military research is excluded, Japan is already devoting about as many man-hours to R&D as the United States and will soon be spending about as much for it. If present trends continue, Japan will take the lead in nonmilitary R&D spending by the early 1990s.”65 Even more interesting, perhaps, is the fact that a far higher proportion of Japanese R&D is paid for and done by industry itself than in Europe and the United States (where so much is done by governments or universities). In other words, it is aimed directly at the marketplace and is expected to pay its way quickly. “Pure” science is left to others, and tapped only when its commercial relevance becomes clear.
The third advantage is the very high level of national savings in Japan, which is especially marked compared with that in the United States. This is partly explained by the differences in tax systems, which in the United States have traditionally encouraged personal borrowing and consumer spending—and in Japan encourage private savings. On average, too, the individual in Japan has to save much more for his or her old age, since the pension schemes are usually less generous. What all this means is that Japanese banks and insurance companies are awash with funds and can provide industry with masses of low-interest capital. The share of GNP which is collected in Japan both as income tax and social security payments is much lower than in the other major capitalist-cum-“welfare state” societies, and the Japanese evidently intend to keep it that way, in order to free the money for investment capital.66 Europeans who would like to imitate “the Japanese way” would first of all have to massively reduce their social welfare spending. Americans enamored of Japan’s system would have to slash both defense and social expenditures, and to alter their taxation laws even more drastically than they have done so far.
The fourth strength is that Japanese firms have a virtually guaranteed home market in all except prestige and specialized manufactures—a situation no longer enjoyed by most American firms or (despite their protectionist efforts) by the majority of European companies. While much of this was aided by in-built bureaucratic practices and regulations designed to favor Japanese producers in their home market, even the abolition of such mercantilistic devices is unlikely to persuade Japan’s consumers to “buy foreign,” other than raw materials and basic foodstuffs; the high quality and familiarity of Japanese products, a strong cultural pride, and the complex structure of domestic distribution and sales will ensure that.
Finally, there is the very high quality of the Japanese work force—at least as measured by various mathematical and scientific aptitude tests—which is not only groomed in an intensely competitive public education system but also systematically trained by the companies themselves. Even fifteen-year-olds in Japan show a marked superiority in testable subjects (e.g., mathematics) over most of their western counterparts. In the higher reaches of learning, the balance is different: Japan has a dearth of Nobel Prize scientists, but it produces many more engineers than any western country (about 50 percent more than the United States itself). It also has nearly 700,000 R&D workers, which is more than Britain, France, and West Germany have combined.67
No statistically quantifiable assessment can be made of the combined effects of the above five factors, compared with conditions in other leading nations; but, taken together, they obviously give Japanese industry an immensely strong bedrock. So, too, does the docility and diligence of the Japanese work force and the harmony which seems to prevail in the industrial-relations system, where there are only company unions, a search for consensus, and virtually no strikes. There are, clearly, unattractive features here as well: longer hours of work, the all-pervading conformism to the company ethos (from the early-morning physical exercises onward), the absence of truly independent trade unions, the cramped housing conditions, the emphasis upon hierarchy and deference. Moreover, Japan also contains, outside the factory gates, a radicalized student body. Such facts, and other disturbing traits in Japanese society, have been commented on by many western observers68—some of whom appear to view the country with the same sort of horror and awe that continental Europeans manifested toward the “factory system” of early-nineteenth-century Britain. In other words, what is clearly a more effective arrangement of workers, and of society, in terms of output (and thus wealth creation) involves a disturbing challenge to traditional norms and individualist ways of behavior. And it is because the emulation of the Japanese industrial miracle would involve not merely the copying of this or that piece of technology or management but the imitation of much of the Japanese social system that observers such as David Halberstam argue, “This is America’s newest and … most difficult challenge for the rest of the century … a much harder and more intense competition than … the political-military competition with the Soviet Union.… ”69
As if these industrial strengths were not enough, they have been complemented by the amazingly swift emergence of Japan as the world’s leading creditor nation, exporting tens of billions of dollars each year. This transformation, which has been under way since MITI’s 1969 dismantling of export controls upon Japanese lending and its creation of financial inducements for overseas investments, is rooted in two basic causes. The first of these is the inordinately high level of personal savings in Japan—over 20 percent of Japanese wages are saved, so that by 1985 “the average total savings of Japanese households exceeded the average annual income for the first time”70— which has left financial institutions flush with funds that are increasingly invested abroad to gain a higher return. The second reason has been the unprecedentedly large trade surpluses occurring for Japan in recent years because of the explosion in its earnings from exports. Fearing that such surpluses would fuel domestic inflation (if returned home), the Japanese finance ministry has been encouraging the giant banks to invest vast sums overseas.71 In 1983, the net outflow of Japanese capital was $17.7 billion; in 1984, it leaped to $49.7 billion; and in 1985, it leaped again, to $64.5 billion, turning Japan into the world’s largest net creditor nation. By 1990, the director of the Institute for International Economics forecasts, the rest of the world will owe Japan a staggering $500 billion; and by 1995, the Nomura Research Institute predicts, Japan’s gross overseas assets will exceed $1 trillion.72 Not surprisingly, Japanese banks and securities firms are rapidly becoming the largest and most successful in the world.73
The consequences of this vast surge in Japanese capital exports contain dangers as well as benefits for the world economy, and perhaps also for Japan itself. A considerable amount of these funds is invested into infrastructures around the globe (e.g., the English Channel tunnel) or into the opening of new iron-ore fields (e.g., in Brazil), which will benefit Tokyo indirectly or directly. Other monies are being channeled by Japanese companies and their balances into the creation of overseas subsidiaries (especially for production)—either to have Japanese goods manufactured in low-labor-cost countries so that they can remain competitive, or to place such plants within the territories of, say, EEC countries and the United States in order to obviate protectionist tariffs. The greater part of this capital flow has, however, gone into short-term bonds (especially U.S. Treasury bonds), which if ever recalled back to Japan in large amounts could unsettle the international financial system—just as in 1929—and place tremendous pressures upon U.S. dollars and the U.S. economy, since much of this money is going to finance the huge budget deficits incurred by the Reagan administration. On the whole, however, Tokyo is much more likely to keep recycling its surplus capital into new ventures overseas than to bring it home.
The rise of Japan in the past few years to be the world’s leading net creditor nation—combined with the transformation of the United States from being the biggest lender to being the biggest borrower—has occurred so swiftly that it is still difficult to work out its full implications. Since “historically a creditor nation has led growth in each period of global economic expansion, and Japan’s era is just arriving,”74 it may well be that Tokyo’s emergence as the leading world banker gives a further middle-to-long-term boost to international commerce and finance, following the earlier examples provided by the Netherlands, Britain, and the United States. What seems remarkable at this stage is that the surge in Japan’s “invisible” financial role is occurring before there is any significant erosion of its immense “visible” industrial lead, as happened (for example) in the British case. Perhaps that may change, and swiftly, if the value of the yen soars too high and Japan experiences long-term “maturity” and slowdown in its manufacturing base and in its rate of productive growth. Yet even if this does happen—and there are reasons (as given above) to think that any decline of Japan as a manufacturing nation will be a slow process—one fact is clear: with the forecast amount of overseas assets in its hands by the year 2000, its current-account balances are bound to be handsomely supplemented by a vast flow of earnings from abroad. In all ways, therefore, Japan seems destined to get much richer.
Just how powerful, economically, will Japan be in the early twenty-first century? Barring large-scale war, or ecological disaster, or a return to a 1930s-style world slump and protectionism, the consensus answer seems to be: much more powerful. In computers, robotics, telecommunications, automobiles, trucks, and ships, and possibly also in biotechnology and even in aerospace, Japan will be either the leading or the second nation. In finance, it may by then be in a class of its own. Already it is reported that its per capita GNP has sailed past those of the United States and western Europe, giving it almost the highest standard of living on earth. What its share of world manufacturing output or of total world GNP will be is impossible to say. It is worth recalling that in 1951, Japan’s total GNP was one-third of Britain’s and one-twentieth (!) of the United States’; yet within three decades it had risen to be double Britain’s and nearly half the United States’. To be sure, its rate of growth over those decades was unusually swift, because of special conditions. Yet according to many assessments,75 the Japanese economy is still likely to expand about 1½ to 2 percent a year faster than the other large economies (except, of course, China) over the next several decades.* It is for that reason that scholars such as Herman Kahn and Ezra Vogel have argued that Japan will be “number one” economically in the early twenty-first century, and it is not surprising that many Japanese are fired by that very prospect. For a country which possesses only 3 percent of the world population and only 0.3 percent of its habitable land, it seems an almost unbelievable achievement; and but for the possibilities inherent in the new technology, one would be tempted to assume that Japan was already close to maximizing the potential of its people and land and that, like other relatively small peripheral or island states (Portugal, Venice, the Netherlands, even Britain in its time) it would one day be eclipsed by nations which had far larger resources and merely needed to copy its successful habits. For the foreseeable future, however, Japan’s trajectory continues to rise upward.
No matter how one measures Japan’s present and future economic strength, two facts are overriding. The first is that it is enormously productive and prosperous, and getting much more so. The second is that its military strength, and defense spending, bears no relation to its place in the international economic order of things. It possesses a reasonable-sized navy (including thirty-one destroyers and eighteen frigates), a home-defense air force, and a modest army, but it is clearly much less of a military power, relative to others, than it was in the 1930s, or even in the 1910s. More pertinent still for the debate upon “burden-sharing”78 is the fact that Japan allocates so relatively little for defense. According to the figures in The Military Balance, in 1983 Japan spent $11.6 billion on defense, compared with $21–24 billion spent by France, West Germany, and Britain, and a colossal $239 billion by the United States; per capita, therefore, the average Japanese inhabitant had had to pay only $98 for defense that year, compared with the average Briton’s $439 and the average American’s $1,023.79 Given its current prosperity, Japan seems to be getting off lightly from the costs of defense—and in two related ways: the first is that it shelters under the protection of others, namely, the United States; the second is that its low defense outlays help it to keep down public spending and thus provide more resources for the Japanese manufacturing effort which is so hurting American and European competitors.80
Were Japan indeed to respond to the pressures of the U.S. government and of other western critics and to increase its defense spending to the level allocated by the European NATO members—averaging around 3–4 percent of GNP—the transformation would be dramatic and would turn it (along with China) into the third-largest military power in the world, with expenditures on defense of over $50 billion a year. Nor is there any doubt, given Japan’s technological and productive resources, that it could build, for example, carrier task forces for its navy, or long-range missiles as a deterrent. That would certainly benefit domestic firms like Mitsubishi, as well as providing a counter to Soviet power in the Far East, thus rendering help to an overstretched United States.
What is much more likely to happen, however, is that Tokyo will endeavor to escape those external pressures, or at least to maintain defense spending as low as it possibly can without provoking a rupture with Washington. The chief reason has not been the purely symbolic one of wishing to keep Japanese expenditures on defense within the ceiling of 1 percent of GNP; by NATO definitions (i.e., by including military pensions), it had already broken that barrier, and in any case, it spent a considerably larger percentage of its GNP upon defense in the early 1950s. Nor has it much to do with the conditions of the 1951 U.S.-Japan security treaty, which is the legal basis for the American military presence in Japan, and which further encouraged Tokyo to think of trade rather than strategic power; for the circumstances of the 1980s are now quite different from those of the Korean War. The real reasons, in the view of the Japanese government, are the domestic and regional objections to a massive increase in its defense spending, and to a revision of the constitution, which forbids sending troops (or even selling arms) abroad. The memory of the militaristic excesses of the 1930s, of the wartime losses, and (especially) of the horrors of the A-bombs has ingrained upon the Japanese consciousness a dislike and suspicion of war and of the instruments of war which is at least as strong as western pacifism after the First World War; and while that may change in time, with the coming of a younger, more assertive generation, the prevailing opinion in the near future is much more likely to constrain the Tokyo government to keep increases in spending on the aptly named “self-defense forces” to modest levels.81
To these moral and ideological reasons there can be added economic ones. Among Japanese businessmen and politicians there is considerable opposition to increasing public spending (which, as mentioned above, is much lower in Japan than in any of the other OECD countries): to them, a doubling or trebling of defense expenditures must be paid for by either adding to the large public-sector deficit or raising taxes—and both are acutely disliked. Besides, it is argued, a large army and navy did not bring Japan “security,” whether of the military or the economic sort, in the 1930s; and it is difficult to see at present how an increase in defense spending could prevent a possible cutoff of Arab oil—which is a far greater danger to Japan strategically than, say, the hypothetical nuclear winter, and explains Tokyo’s desperate efforts to “lie low and say nothing” whenever there is a crisis in the Middle East. Is it not better, then, for Japan to abjure the use of force and to resolve all international disputes peacefully, as a cosmopolitan “trading state” should? Since modern war is so costly and is usually counterproductive, the Japanese feel that there is a lot of merit in their zenhoi heiwa gaiko (“omnidirectional peaceful diplomacy”).
These feelings are no doubt reinforced by Tokyo’s awareness that many of its neighbors would react with alarm to a large-scale buildup of Japanese military power. That would obviously be the response of the Russians—against whom, after all, the United States wants Japan to “burden-share” in defense matters, and who are still in dispute with Tokyo over the islands north of Hokkaido, and who probably feel that they have enough on their hands in the Far East with the expansion of Chinese power. But it would also be the response of those lands previously subjected to Japanese occupation—Korea, Taiwan, the Philippines, Malayasia, Indonesia—as well as Australia and New Zealand, all of which have reacted nervously to any signs of a revival of Japanese nationalism and bushido mentality, and which have encouraged Tokyo to “focus on productive nonmilitary ways to enhance Southeast Asian peace and security.”82 Above all, perhaps, there looms for Tokyo the difficulty of assuaging the suspicions of a touchy Peking, which still nurses memories of the Japanese atrocities of 1937–1945, and has also warned Japan not to get too heavily involved in developing Siberia (which in turn complicates the Tokyo-Moscow relationship) or to support Taiwan.
Even Japan’s economic expansion (while bringing with it much-needed investments, plus some development aid and tourism) has left many of its neighbors suspicious, feeling that they are being sucked into a newer and more subtle version of the “Greater East Asia Co-Prosperity Sphere” once again—the more especially since Japan does not import very much (except raw materials) from those countries, yet sells a great deal of its own manufactures to them. Here, too, China has been the most outspoken, at first welcoming the late 1970s boom in Japanese trade and investments, then sharply curtailing them, partly because of its own balance-of-payments deficit, partly to avoid economic dependency upon any single foreign country which might take undue advantage of it; America’s trade with China, Deng urged in 1979, “must come equal to Japan’s,”83and thus prevent any possibility of a Japanese variant of “the imperialism of free trade.”
All of these are, at the moment, merely straws in the wind, but they make politicians in Tokyo worry about how best to evolve a coherent external strategy for Japan as it moves toward the twenty-first century. There is no doubt that with its economic power expanding, it could become a second Venice—in the sense not just of extensive trading, but also of protecting its maritime sea lanes and of creating quasi-dependencies overseas; yet the internal and external objections to a strong Japan are such that not only will it avoid any move toward territorial acquisitions along old-fashioned imperialist lines, but it is also unlikely to increase its defense forces by very much. This latter conclusion, however, will increasingly irritate American circles who are pressing for “burden sharing” in the western Pacific. Ironically, therefore, Japan will be criticized if it does not substantially increase its spending upon arms, and it will be denounced if it does. Either way spells trouble to what has been nicely termed Japan’s “maximal gain/minimum risk foreign policy.”84 This suggests, once again, a Japanese preference for as little change as possible in the military and political affairs of East Asia, even as the pace of economic growth quickens. That, too, compounds the dilemma, for even a non-Marxist would be puzzled to imagine how the profound economic transformation of Asia could avoid being attended by far-reaching changes in other spheres as well.
The deepest worries of the Japanese, therefore, are probably those which are rarely if ever discussed publicly—partly out of diplomatic discretion, partly to avoid bringing such developments about—and concern the future balance of power in East Asia itself. “Omnidirectional peaceful diplomacy” is all very well for the present, but how useful will it be if an overextended United States does withdraw from its Asian commitments, or finds it impossible to protect the flow of oil from Arabia to Yokohama? How useful if there is another Korean war? How useful if China begins to dominate the region? How useful if a declining and nervous USSR takes aggressive actions? There is, of course, no way of answering such hypothetical and alarming questions; yet even a mere “trading state” with small “self-defense forces” may one day find it unavoidable to provide some answers. As other nations have discovered in the past, commercial expertise and financial wealth sometimes no longer suffice in the anarchic world of international power politics.