Japan cannot export to Asian countries unless their economies are healthy, but the other Asian nations cannot recover unless they can export more to Japan. Producers in each country are consumers for each other, and vice versa. It is an integrated system, with Japan at its center. But we found little sense of urgency in Japan, neither about Asia nor about Japan's economy which has been in the doldrums for seven years. Still, the most important contribution Japan could make to the restoration of stability and growth in Asia is to strengthen domestic demand, deregulate its economy, and open up to imports.
Japan has the only economy with the ability to be an Asian locomotive.
The United States cannot play this role. I do not want to leave the impression that Japan has done nothing, for the Japanese government has taken some significant first steps. They have also taken steps to address the stability of their own banking system, including a 30 trillion yen package of measures. However, even with these welcome steps, Japan's overall fiscal policy still remains restrictive and insufficient to move the economy forward. Prime Minister Hashimoto has proposed some reforms of the domestic economy but the determined bureaucratic inertia has yet to be overcome.