Evening star. [volume] (Washington, D.C.) 1854-1972, 1954-08-10
Japan in Trouble

There Is ample Justification for the adj
mtnistration's anxiety over the economic
outlook in Japan. For the fact Is that that
strategically vital country, If It's dollar re-
serves continue to dwindle and II 1t cannot
improve its export business with nom Com
muniSt lands, will be extremely hard put to
avoid the type Of depression that could
quickly drive 1t within the Peiping- Moscow
orbit-a development that would have ex-
ceedingly grave consequences for the
United States and the rest Of the free world
This situation Is the product Of several
important factors. To begin with, as far as
dollars are concerned, the Japanese must
now get along without two of the stimulants
that have played major role In their eco
nomic recovery since 1945. One OF these
has been American occupation aid amount
Ing to about So billion before being cut on
in mid-1951. And the Enthusiastically
reduced since the signing Of the Panmun-
JON armistice-has been the hundreds Of
millions earned by Japan through the sale
OF goods and services to our armed forces
during the Korean war.
To Offset the drying up of these two
significant sources of dollar income. the
Japanese have had to try to build up new
export outlets in free Asia, Latin America
and elsewhere In the non-C Communist world.
But they have run into stiff competition
from the British, the West Germans and
others, with the result that they are suffer-
ing serious imbalance in trade, importing
much more than they are selling. And their
plight in that respect is potentially des-
perate because they must work without the
great overseas empire they lost as q result
of their defeat in 1945-an empire (includ-
ing Manchuria) that used to be one of their
major suppliers of raw materials and
profitable market for their manufactured
goods.
Above all, Japan although 1t has been
reduced to relatively tiny insular nation
with fast-growing population Of IS million
lis ofdcially committed against 1arge-Scale
or strategic trade with Red China What
this means, in effect, is that the Japanese
in line with American policy-are carry
ing on only negligible commerce with a
country that regularly absorbed almost Is
per cent Of their exports, and supplied them
with roughly the same percentage Of their
imports, in the years before the Second
World War. However, since adequate re-
placement markets have not been devel-
oped in areas like Southeast Asia and Latin
America, many of Japan's influential in
duStrialiStS and politicians are exerting
pressure on the Tokyo government to drop
this policy and step up business with the
Chinese and Russians.
In fact, within recent days, Japanese
delegations have visited both Peiping and
Moscow to explore the possibility of working
out big trading deals with them, and agita-
ton for such deals is likely to grow as long
as the country's dollar reserves continue to
decline and its imports heavily exceed its
exports. The situation, in short, seems to
be one in which Premier Yoshida and his
pro-Western government may And 1t in
creasingly difficult, If not impossible, to
resist domestic demands for a new economic
and political approach to Red China and
the Soviet Union-an approach full of pit
falls
All things considered, therefore, the
United States-together with like-minded
nations whose interests demand that there
be no upset In the present precarious bal
ance Of power in ASia-haS every reason to
do whatever can be done to help the Jap
anese surmount their difficulties. Other
wise their economy may drift from bad to
worse until they themselves drift behind
the Iron Curtain.
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