RIPS Policy Perspectives
No.15

Can Japan Restore Its Place in Asia?
Masashi Nishihara
November 2012

Research Institute for Peace and Security
Tokyo

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Research Institute for Peace and Security (RIPS)

is an independent

research institution established in Tokyo in October 1978. The RIPS conducts
research on issues of national and international peace and security, publishes
research reports, and proposes policy recommendations.
The institute publishes an annual report, Ajia no anzenhosho (Asian Security),
which surveys the changing security environment of the Asia-Pacific region. Wellregarded by both the academic and the security communities, the institute alsoorganizes seminars for specialists and the public on national, regional, andinternational security and sponsors joint research projects with institutes in othercountries.
In addition to its research activities, the institute, together with the JapanFoundation's Center for Global Partnership, offers fellowships to young scholars
wishing to pursue security studies. Many of these recipients have since become
valuable contributors to security studies in Japan.

RIPS Policy Perspectives

are intended to provide timely alternatives to andanalyses of existing peace and security policies, thereby contributing to further
debate. The views of the authors are their own and do not represent the official
position of the RIPS.

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Can Japan Restore Its Place in Asia?

Masashi Nishihara1
The Rise of Asia and the Decline of Japan’s Influence
Japan today is in deep conflict with South Korea and China, tworising powers in East Asia. Whether Japan and these historicallydifficult neighbors can manage their relations will affect both theregion’s stability and its economic prosperity. Japan’s relations
with China and South Korea also will affect the United States’
policy toward East Asia, that is, U.S.-China relations, U.S.-South
Korean relations, and those of the Korean peninsula.
Asia now occupies a dominant position in the world. It
has more than 3.3 billion people, and it has 31 percent of theworld’s GDP. If you add Canada and the United States, then the
Asia-Pacific region contains more than half the world’s populationand produces more than 60 percent of the world’s GDP. It isindeed one of the world’s most dynamic regions.
For Japan, the1990s was “the lost decade,” as its average
yearly growth of GDP was just 1.4 percent, and the first decade ofthis century was the “second lost decade,” as its average yearly
GDP growth rate was only 0.6 percent. In fact, Japan’s annual
GNP growth rate has been 1 percent for more than twenty years,
which makes me fear that we may be entering a “third lost
decade.” Last year, our GNP was exceeded by China’s, and that
This paper is based on the keynote speech that the author gave before theCommemorative 25th Annual Conference of the Japan Studies Association of
Canada, held at Carleton University, Ottawa, on October 12, 2012. The
author is President of the Research Institute for Peace and Security.
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country is now the world’s second largest economic power after
the United States. China, however, has many internalsocioeconomic conflicts, and its economic growth is beginning to
peak. Nonetheless, our main concern is whether and how Japan
can restore its national power and influence so that it can protect
its national interests and play a meaningful role in the region.
The three disasters that hit northeast Japan in March lastyear have slowed the pace of our economic recovery. Althoughsome specialists have argued that Japan’s misfortunes could beturned to its advantage, the reality has been disappointing.
Japan’s estimated GDP this year is 1.3 percent, and the Japanese
government’s debt is equivalent to about 220 percent of its GDP.
Not surprisingly, these financial difficulties have constrained thecountry’s official development assistance activities, which havebeen a mainstay of Japanese diplomacy.
Power Shift in the Asia-Pacific Region
Japan’s official development assistance has shrunk from $15
billion in 1999 to $10.6 billion in 2011. In addition, its
contribution to the UN’s budget, which was 20.6 percent in 2000,
has declined to 12.6 percent, or $294 million.
Japan’s influence in international organizations also has
weakened and has been eclipsed by more robust economies, suchas those of South Korea and China. The Republic of Korea becamea new member of the OECD’s Development Assistance Committee
in 2010, and it now is a donor country. In addition, South Korea
hosted both the G-20 summit meeting last year and the nuclear
security summit, which President Obama initiated in 2010. A
Chinese was appointed to the position of IMF secretary-general in
March of this year, and another Chinese became a deputy
4managing director in July.
Japan used to have a dominant position in Southeast Asia’s
trade and investment market, as well as strong political influence.
But now this, too, is being challenged by China and South Korea.
Those nations of continental Southeast Asia now depends somuch on China’s economic power that it can hardly afford tocriticize it on political and security matters. This became clear
last July when Cambodia, as the chair of the ASEAN foreign
ministers’ meeting, sided with China because it was the recipientof a large amount of aid, and it also rejected the meeting’s closing
statement because it criticized China’s position on issues
regarding the South China Sea. This was the first time in
ASEAN’s forty-five-year history that its foreign ministers’
meeting failed to issue a joint statement.
South Korea and China now are economically more
self-confident than they ever have been, and as a result, they are
becoming politically more assertive. This assertiveness can beseen, for instance, in the current tension between Japan andSouth Korea and between Japan and China over their territorial
claims to groups of tiny islands.
This is only part of general power shift that is taking placein the Asia-Pacific region. Russia has returned to the region andis a new member of the East Asia Summit. President Vladimir
Putin hosted the Asia-Pacific Economic Cooperation meetings in
Vladivostok last month. And even though North Korea’s GDP isinsignificant, we still must pay attention to its missile andnuclear programs. In addition, we have the unresolved issue ofJapanese citizens who were kidnapped and not returned by North
Korean intelligence agents. In this sense, then, North Korea is an
important actor as well.
Although ASEAN’s relative power fell back for a short while5

after the downfall of Lehman Brothers in New York, it has
resumed its prominent place in Asia with the growing economies
of Vietnam, Indonesia, and Singapore.
The most important power shift naturally is that of theUnited States. After withdrawing its troops from Iraq andreducing its troop level in Afghanistan, President Obama shifted
the country’s foreign and security policy emphasis to theAsia-Pacific region, rebalancing its position. In an article inForeign Policy magazine in late 2011, entitled “America’s PacificCentury,” Secretary of State Hilary Clinton wrote, “TheAsia-Pacific region has become a key driver of global politics,” and“major decisions will be made in Asia.” But the United States is
not the same strong power that it was before. Besides, with many
troubling countries in the Middle East such as Iran, Syria, Egypt,and Libya, it is doubtful that the United States is really pivoting
to Asia. Nonetheless, in response to China’ growing military
power, the United States has started to disperse its militarypresence in the Pacific, transferring 9,000 of its 18,000 marines
stationed in Okinawa to Guam, Hawaii, Darwin in northern
Australia, and other places.
The Changing Security Environment
With their greater power, certain nations are acting more
assertively, and they are changing the landscape of international
relations in the region. As a result, Japan is finding its own
security environment being challenged.
North Korea and China are Japan’s greatest security
concerns today. Even though conflicts between Japan and South
Korea will be difficult to solve, at the moment they do notconstitute a security threat to Japan. China also is a difficult
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neighbor, and it is indeed a security concern because of its
enormous military power.
It is difficult to predict what kind of leader North Korea’s
new young leader, Kim Jong-un, might become. He has followed
his father’s “military first” policy. He launched a long-range
missile, under the guise of a satellite, and it failed. Since then, he
has shown some interest in economic reform, most likely
encouraged by China, but it will be a long time before we could
see any significant economic reform. In the meantime, China’s
economic presence in North Korea is increasing, and it is violating
the UN Security Council’s resolution to impose economic
sanctions on North Korea. For example, China has signed aforty-year commitment to develop mining resources in North
Korea. For its part, North Korea has set up a special economic
zone for China at the mouth of the Tumen River, giving China
access to the Sea of Japan. This development is to become anothersource of tension between Russia and China, and there arereports that Chinese soldiers are patrolling this zone.
The six-party talks have lost their goal of preventing North
Korea from becoming a nuclear power. Because of its close ties
with North Korea, China can no longer serve as an honest broker
as the chair of the six-party talks. Furthermore, the growing
economic and political ties between China and North Korea would
make it very difficult to form a new structure in place of thesix-party talks. Perhaps we should establish “a Northeast Asia
regional committee” within the ASEAN Regional Forum. This way,
the foreign ministers of the committee-member nations could
meet at least once a year.
China’s economic influence over South Korea also has grownsignificantly, and China has now surpassed the United States as
South Korea’s no.1 trading partner. This means that even though7

China’s policy is to protect and even “colonize” North Korea, Seoul
would find it hard to criticize China for the latter’s policy on
North Korea, for fear of economic retaliation. Neither the UnitedStates nor Japan is pleased with South Korea’s new attitude
toward China, as it has complicated the efforts of Japan, theUnited States, and South Korea to coordinate their respective
policies toward North Korea and China.
China’s military expansion and “coercive” diplomacy havecombined to make its presence quite formidable. For the lasttwenty years, its defense budget has increased by double digits,
growing eight times as much as it did in the previous twenty
years. The expansion of China’s navy is particularly impressive. It
now contains large destroyers and submarines, many of which itpurchased from Russia. China’s fleet commonly shadowsJapanese and American vessels to collect intelligence and thereby
establishing its naval presence in the Western Pacific. China’s
ships sail out to the Pacific through the strait between the mainisland of Okinawa and Miyakojima. China’s control of the now
disputed Senkaku Islands thus would enhance its naval strategy.
The People’s Liberation Army now has its first aircraft
carrier, which China bought from Ukraine and refurbished. Until
recently it sailed in and around the Yellow Sea, but in
mid-September of this year it was officially transferred to thenavy. Although the carrier’s quality is far inferior to that of the
U.S. carriers, its presence has had a psychological impact on theJapanese. The PLA plans to construct half a dozen aircraft
carriers before 2020.
With the support of its military power, China has conducteda diplomacy of intimidation or coercion toward some ASEAN
countries, such as Vietnam and the Philippines. Last year a
Chinese coast guard ship cut an undersea cable that Vietnam had
8installed for the exploration of oil resources in the Paracel Islands.
This year China had a dispute with the Philippines over fishingrights in the area of the Scarborough Shoal in the Spratly Islands
and overpowered the Philippine coast guard vessels with its own,larger coast guard and naval ships. Beijing also pressured Manila
to give up its claim for the Scarborough Shoal by deliberately
delaying quarantine inspection of its imported Philippine
bananas, which consequently spoiled.
The current conflict between China and Japan over the tiny
Senkaku Islands (or Daioyudo in Chinese) in the East China Sea
has created yet more tension in East Asia. The Noda
government’s decision to buy the islands from a private owner
was intended to “maintain the peaceful and stable environment of
the islands.” The Japanese government thought that if the Tokyo
Metropolitan Government had bought the Senkakus, it would
construct ports and helicopter pads there, which would causeeven more tension. However, the Chinese reacted to the Japanese
government’s move, and in mid-September, there wereanti-Japanese demonstrations in more than eighty cities
throughout China. The Japanese embassy, the consulate general,
restaurants, and Japanese-run factories were heavily damaged
while armed police simply stood by. Several Japanese factories
were burned down. Most of these demonstrations clearly wereauthorized; in fact, many of the protestors were paid by theauthorities. Then the demonstrations abruptly stopped on
September 19, a day after the eighty-first anniversary of theManchurian (Mukden) Incident of 1931, evidence that the
government was controlling the action. In addition, more than theusual number of Chinese coast guard and even naval ships
patrolled around and near the islands.
This has been a rough summer for the Japanese.
9Japanese-Korean relations also soured over another territorial
problem, with the small, rocky Takeshima (or Dokto in Korean)Islands located between Japan and the Korean peninsula.
Tensions grew high on August 10 when President Lee Myung-bak
became the first president to go to the islands, which are under
Korean control. His subsequent tactless remarks about theemperor angered the Japanese government and people, as did his
criticism of Japan’s insufficient apology and his demand forcompensation for Korea’s wartime “comfort women.”
Japanese-South Korean disputes on Takeshima (or Dokto in
Korean) will continue for a long time. They may become acampaign issue in South Korea’s presidential elections in
December. All candidates will probably take a tough stand on
the issue or they may avoid the issue. Whoever is elected, he or
she will continue to take a tough stand. However, since South
Korea controls the islands, the tension between Tokyo and Seoul
would be in political areas, and not in terms of armed clashes.
Besides, South Korea may be embarrassed, when theInternational Court of Justice eventually asks Seoul for reasons
why South Korea will not make a joint appeal with Japan.
In the territorial disputes, both South Korea and China
have based their claims on the history of the islands’ ownership,
whereas Japan has turned to international law and agreements.
Disagreements over territorial sovereignty can easily lead tonationalist arguments and mutual distrust. In Asia, unlike
Europe, territorial sovereignty still is a vital part of national
interests. Because these issues will not be settled any time soon,
it seems more realistic to try to manage the tensions rather thanto try to solve the disputes.
Although the United States is very concerned about these
territorial conflicts, other countries are benefiting from them.
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Russia’s Vladivostok sees an opportunity to draw Moscow’s
attention to its Fast East region and to deploy more forces there,
which will help its economy. North Korea must be pleased to see
the imminent demise of the six-party talks.
The Chinese government now is undergoing a fierce power
struggle. Xi Jinping is apparently solidifying his position as
China’s next general secretary and president and appears to bebenefiting from the territorial disputes to show his tough patriotic
stance, as is President Lee Myung-bak of South Korea. To someextent, Prime Minister Yoshihiko Noda has gained a politicaladvantage as well.
Japan’s Strategy to Regain Its Influence
Under this challenging environment, can Japan resume its
former position in Asia, despite its reduced financial resourcesand other socioeconomic problems. First, Japan’s strong yen,which hurts exports, has slowed the growth of its GDP and also
has driven firms to move their factories overseas, where labor ischeaper.
Second, Japan’s unemployment rate has risen, to 4.2 percent
in August this year. Worse, the unemployment rate for thosebetween the ages of twenty-five and thirty-six is 7.8 percent,which is very high by Japanese standards.
Third is Japan’s shortage of electric power. On September 15,
the government announced that Japan would shut down its
nuclear power plants by 2030, although since then it has modified
this position somewhat. Before the earthquake, around 25
percent of Japan’s electric power was generated by nuclear power
plants. Since then, the shortage of electric power has raised thecost of electricity, which in turn has caused many firms to11consider moving out to foreign countries, China in particular,
where Japanese companies can produce their products at morereasonable prices. Before March last year, 86 percent of Japan’s
oil imports came from the Middle East. Now, because our supplyof nuclear energy has almost stopped, we have had to increase ourdependence on Middle East oil. Alternative energy sources suchas solar and wind energy are far from filling the gap. Energy
security is indeed a serious challenge for Japan.
Fourth, the shrinking population of young people and the
expanding number of aging and aged people have created a labor
shortage, as well as a demand for large pensions andcomprehensive medical care. Today one of every four Japanese isover the age of sixty-five, or more than 30 million people out of a
total population of 127 million people. Our welfare expenditure
takes up 29 percent of the government’s total budget, whereas,
incidentally, our defense budget is only 5 percent. In order to close
the gap between government revenue and social needs, thegovernment has decided to cut the wages of government officials
by 7.8 percent and to raise the consumption tax from the current
5 percent to 8 percent in 2014 and to 10 percent in 2015. Still, thedeficit will remain more than twice the GDP, at 219 percent.
(Compare Canada’s 92.8 percent.)
These are the challenges for Japan today. Even if we change ourpast strategy of emphasizing official development assistance(ODA) as a key element of Japanese diplomacy, we can still play asignificant role, albeit with fewer financial resources, and restore
our political and economic vitality. On this point, I would like tooffer some of my thoughts.
(1) Japan Should Adopt a New Official Development Assistance12

Philosophy
First, Japan should use its aid not just to help build
infrastructure and improve human conditions in developing
countries but also to contribute to the region’s security. In the past,
Japan’s development aid was strictly for nonsecurity purposes,
but now the country is gradually shifting to a policy of combining
development and security. Its current aid for Afghanistan, forinstance, has assumed security implications, by paying thesalaries of police officers fighting the Taliban. Japan also provides
coast guard vessels to the Philippines and Indonesia for
antipiracy and antismuggling operations. Japan should do morealong this line in order to contribute to both regional security andeconomic development.
(2) Japan Should Be More Flexible on the Constitutional Ban on
Collective Self-Defense
Second, Japan’s interpretation of its constitutional constraints on
the use of force should be relaxed so that Japan’s Self-Defense
Forces can gradually exercise its right of collective self-defense, as
Article 51 of the UN Charter recognizes. It is difficult for theinternational community to understand this problem. Although
Japan used to impose a strict ban on the SDF helping defend its
friendly countries’ forces under attack, it slowly has been relaxing
the ban. If the government were to adopt a slightly more flexible
interpretation, it would allow the SDF to help defend its friendly
countries’ troops in areas under Japanese control. We should
move a step forward in this regard. In fact, the SDF is alreadydoing something similar in the Gulf of Aden, where it can legally
help defend other countries’ vessels that are being threatened by
pirates.
The Maritime SDF participated in a multinational
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mine-sweeping exercise off Bahrain in mid-September, in theevent that Iran mines the Strait of Hormuz. These are steps
toward accepting collective self-defense.
Japan is gradually overcoming the constitutional and legal
restrictions that it imposed on itself. In fact, we could say thatJapan is moving toward becoming a normal country. This is one
area where Japan can enhance the level of its presence in regional
and international security.
(3) Japan Should Build a Stronger Alliance with the United States
Japan should work to build a stronger and more stable alliancewith the United States. Both countries share the strategic
objectives of maintaining regional stability by securing the safetyof sea-lanes connecting the Indian and Pacific Oceans and byprotecting basic human values. Japan’s key contribution isproviding bases and facilities for U.S forces to accomplish their
mission of projecting their military power throughout Southeast
Asia, the Indian Ocean, and the Middle East.
Japan is likely to have territorial conflicts with China formany years to come, but this is the first time since 1945 thatJapan has faced the possibility of an armed clash with anothercountry. Almost every day, Chinese government ships and fishingboats can be found just outside the territorial waters of the
Senkakus, in defiance of the Japanese coast guard’s repeatedefforts to keep them away. The rise of a “peaceful” China is now
becoming an “assertive and coercive” China. The current conflicts
show that economic interdependence may not prevent armed
tension. The incoming leader, Xi Jinping, who is said to strongly
support the People’s Liberation Army, is likely to take a tough,coercive line toward Japan.
For this reason, the Japanese-U.S. alliance is essential to14

hedge against Chinese moves. If Japan expects the United States
to help it cope with China, it should become a more reliable ally,for example, by adopting a more flexible interpretation of its
constitutional ban on the exercise of collective self-defense. By
relaxing the ban, the SDF could help fight together with U.S.
forces in areas outside Japanese territory, such as the Korean
peninsula and the Strait of Hormuz. Although Japan’s such role
may be limited in scope, a strong alliance with the United States
would also help Japan maintain influence in the region.
(4) Japan Should Develop Ties with Canada as a Political andSecurity Partner
Japan also can have greater say in the region and the world
through stronger ties with like-minded partners, with whom itshares basic human values. Canada is one of these countries. I
believe that Japan has many things to learn from Canada’s
experience in multilateral diplomacy. I am grateful that our two
countries have no particular political problems, that our relations
are good. Every year our prime ministers meet each other on
several occasions, including the G8, G-20, APEC, and UN General
Assembly meetings.
Our two governments have been talking about UN
peacekeeping, disarmament and arms control, nuclear
proliferation, small weapons, natural disaster relief, and the like.
The two countries’ militaries regularly meet and exchange views,
and they both participate in RIMPAC (Rim of the Pacific naval
exercise), PSI (Proliferation Security Initiative) and otherorganizations. The two governments are in negotiations for an
ACSA, an acquisition and cross-servicing agreement. Throughthis agreement, the two governments can keep their respective
stocks of emergency materials on each other’s territories so they15

can be used for emergencies such as natural disasters.
It would be useful for Japan if the two countries could also
discuss energy security in more depth. Japan would like to reduce
its dependence on Middle East oil because of its cost and regional
instability. But it does not want to increase its dependence on the
Russian Fast East’s natural gas. For Canada, exporting shale gas
and natural gas to Japan would form the cornerstone of a stable,transpacific partnership.
One area of concern is Canada’s and Japan’s differing
perceptions of China. According to a survey conducted in May
2009, when Canadians were asked, “Which country in Asia is
Canada’s most important partner?” 55 percent said China; 20
percent said Japan; and 6 percent said India. And when asked,“Which country is likely to become Canada’s most importantpartner?” 42 percent of Canadians said the United States; 19
percent said China; and 17 percent said India. Only 2 percent
named Japan. Although this is disappointing, Japanese might
have offered similar opinions. Canadians and Japanese simply do
not appreciate each other’s importance.
Leadership Needed for Rebuilding National PowerWe need a strong, sustainable government. In the six years since2006, Japan has had six prime ministers. In 2009, the Democratic
Party of Japan took power, and there was hope that it would do a
better job both domestically and internationally. Unfortunately,
however, many people were disappointed with Prime Ministers
Yukio Hatoyama and Naoto Kan. Hatoyama badly managed
Japan’s relations with the United States, by advocating theestablishment of “an East Asia community” without the UnitedStates. He also mishandled the U.S. Marine base issue. Then Kan
16poorly handled the aftermath of the March 11 disaster, missing an
opportunity to combine the reconstruction of the devastatedregion with the country’s overall economic recovery.
Prime Minister Noda’s tenure ends in September next year,
when he and other members of the lower house of the Diet willterminate their four-year term. However, if the opposition parties
succeed in passing a non-confidence vote before September nextyear, Noda will either have to resign or dissolve the Diet. His
tenure is precarious. This system constrains the political strengthof a Japanese prime minister.
Japan needs a strong leader who also has a clear vision of its
future, something that Japanese leaders often lack. The
government makes decisions too slowly. An example is the plan tomove the U.S. air base from its current site to another site in
Okinawa, a plan that was decided in 1996 but has yet to be
implemented because of local opposition.
Japan has much work to do before it will earn the respect of
its neighbors. It can, and should, become a stable and trusted
partner of like-minded nations in the Asia-Pacific region.

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