Clues to Japanese economic recovery?

Saul Thomas stthomas at
Fri Feb 23 18:01:41 MST 2001

The Economist

Japan starts picking on China

Feb 8th 2001 | TOKYO

As its economy shows no sign of recovery, Japan is getting angrier. Some of
that anger is being directed against China

LIFE is not always full of thrills for the mushroom bureaucrats of Japan’s
agriculture ministry. Yet in recent weeks the atmosphere at the ministry’s
forest-products division has been little short of electric. A flood of
cheap imports is threatening Japan’s 30,000 shiitake growers. An
investigation is afoot, involving colleagues from the exalted finance and
trade ministries. For the first time since 1955, when Japan joined what is
now the World Trade Organisation, talk has turned to invoking its
“safeguards”—emergency tariffs or import quotas. Officials are also
considering a move against imports of a type of onion, and of the bulrushes
used for weaving tatami mats. What all three cases have in common is that
the targets of Japan’s proposed retaliation are Chinese.

It used to be said that the relationship between Japan and China was good
if their ageing leaders pronounced it so. These days, a more accurate
description is that, despite official assurances, relations are bad and
getting worse. For this, the Japanese blame Chinese aggressiveness, in
trade and in foreign policy. Yet a good part of the reason can be found in
Japan. There, old policies of “engaging” the Middle Kingdom are under
sustained attack from an assertive new generation of politicians, academics
and journalists. Even foreign-ministry officials have begun to pay
attention. Official China policy has suddenly begun to harden.

The China hawks have an attentive audience: as happens the world over,
Japan’s sick economy and persistent high unemployment are fanning the
flames of chauvinism. Racial violence is still infrequent. But milder forms
of prejudice are flourishing. Illegal Chinese immigrants infest the
building industry, grumble the Japanese, undercutting honest native
workers. Chinese crime syndicates are bringing confusion to Japan’s
carefully-ordered society. Chinese burglars are masterminding a surge in
petty crime.

The authorities are taking things seriously. Police statistics on rising
crimes by “foreigners” (ie, mainly, Chinese) are followed with keen
interest. Until they were hurriedly removed recently, posters put up by the
police in Tokyo urged that, since there had been a recent spate of
burglaries by “Chinese and other people”, “if you notice anyone speaking
Chinese, call the police.”

Trade friction is also rubbing away at the relationship. Although China has
enjoyed a trade surplus with Japan every year since 1988, the Japanese have
not worried much until recently. Most Chinese imports, after all, come from
Japanese manufacturing plants built in China, underlining Japan’s superior
role as a supplier of capital and technology to China, in return for access
to cheap Chinese labour and natural resources.

But this pattern has begun to change, especially in the ever-sensitive area
of agriculture. New refrigeration techniques, better distribution and—in
these difficult times—more cost-conscious Japanese shoppers are bringing
wheelbarrowfuls of Chinese tomatoes, aubergines, onions and garlic bulbs to
Japanese supermarket shelves. Japan’s inefficient, and often elderly,
farmers cannot compete. On Tokyo’s wholesale markets, for instance, Chinese
shiitake sell for less than a third of the price of Japanese mushrooms, and
have quickly snapped up a 40% share of the market.

A threat to its cherished farm lobby is something that even the bickering
politicians of the Liberal Democratic Party (LDP), which dominates the
coalition government, can unite behind. In the past, the favourite villain
for Japan’s protectionists was always America, says Yoichi Funabashi, a
columnist with the Asahi newspaper. Increasingly these days, it is China.

Japanese nationalists of various hues, meanwhile, are starting to call for
a more assertive foreign policy towards China. Hawks such as Ichizo Ohara,
the leader of the Liberal Party, and Shintaro Ishihara, Tokyo’s
irrepressible governor, are finding growing favour, especially among
younger Japanese. Unburdened by war guilt, younger voters feel frustrated
and humiliated by Japan’s low international profile and dependence on
American soldiers for its defence.

Japan’s China diplomacy, thunder politicians such as Mr Ishihara, is
weak-kneed. It appeases Chinese territorial assertiveness in the South
China seas and across the Taiwan Strait, while allowing generous Japanese
aid and soft loans to be met with Chinese insults and demands for apologies
for wartime atrocities. These politicians, and their admirers in academia
and the media, want a “normal” Japan—a country that can exercise
independent diplomacy backed by independent armed forces.

To these Japanese, the disclosure this week of a private e-mail by
Lieutenant-General Earl Hailston, the commanding American officer in
Okinawa (which hosts 16,500 American troops), says it all. Following an
indecent assault in January by an American soldier on a Japanese
schoolgirl, the latest in a string of attacks over the years, the Okinawan
assembly passed a resolution demanding fewer American troops on the island.
Local officials, General Hailston advised his officers, “are all nuts and a
bunch of wimps.”

Even urbane foreign-ministry types are waking up to the new mood in Japan.
Ministry officials have managed to fend off calls by LDP politicians like
Shizuka Kamei, the party’s powerful policy chief, to slash Japan’s overseas
aid budget by 30%—cuts that were clearly aimed at China. But after an
official review last year, aid to China is nevertheless about to fall.

China’s leaders are not deaf to Japanese hostility. During a recent visit
to Japan, for instance, Zhu Rongji, its prime minister, refrained from the
usual demands for another official apology for Japan’s wartime sins,
although he could not resist mild needling on the subject. But neither the
Chinese nor the Japanese government seems fully abreast of the forces at
work in Japan. As Takeshi Sasaki of Tokyo University points out, Japan’s
economic crusade has largely sublimated its nationalist urges since the
war. But, since the crash of the early 1990s, years of recession and
financial crisis have upset that delicate accommodation. Japan is getting
angrier. And it is unlikely to stop after taking out its frustration on
Chinese mushrooms.

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