Japan Update 2022

Introduction

On 7 September 2022, the Australia-Japan Research Centre and the ANU Japan Institute hosted the 10th annual Japan Update at Crawford School, The Australian National University. The esteemed group of presenters and panellists discussed the contemporary economic, social and security challenges that Japan faces. A total of 688 attendees signed up for the event, with 288 registered for in-person attendance, 400 registered online and 2.2k views as of 4 November 2022.

The agenda can be viewed here: Japan Update 2022 Agenda.

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Summary: panels and keynotes

Economy keynote
The opening keynote speech was given by the former governor of the Bank of Japan, Professor Masaaki Shirakawa. Professor Shirakawa discussed many of the societal and economic problems Japan is experiencing, such as its rapidly ageing society. He noted that the term ‘Lost Decade’, used to describe Japan’s low GDP growth rate since the 1990s, masks the reality that Japan’s GDP growth per working-age population is higher than the United States. He underscored the difficulty for Japan to increase birth rates through government spending as Japanese politics favours spending on the elderly — the largest demographic of voters. Shirakawa highlighted that ultimately Japanese society needs to forge a consensus that will lead to a sustainable economy and society, and that every country is faced with a similar challenge.

Japan and the global economy
In this session, Professor Noriyuki Yanagawa gave a presentation which illustrated that Japanese prices do not respond sensitively to changes. This minimises the signalling effect of Japanese prices, preventing structural change to the market and the economy. He also raised that increasing the potential growth rate is the most important issue facing the Japanese economy. He suggested that this could be achieved in part by increasing labour force productivity by utilising market mechanisms to increase labour mobility and nurture Japan’s emerging start-up industry. This was followed by a panel discussion with Professor Yanagawa and Professor Shirakawa. They argued that increased immigration is essential to boosting Japan’s economy. Additionally, increasing worker productivity is also necessary to combat the challenges Japan’s economy faces.

Japanese society keynote
Professor Sawako Shirahase spoke about the effects of the COVID-19 pandemic on Japanese society. She emphasised that Japan faces the dual problem of a rapidly aging society and a falling fertility rate, both of which were exacerbated by the pandemic. She also said that while female participation in the workforce has increased, a large gender imbalance in the workforce remains, with many women only engaged in part-time work. A greater proportion of women also left employment during the pandemic. She argued that greater diversity, flexibility and investment are needed to create an inclusive future to tackle Japan’s problems.

Japanese society post-COVID-19
Shirahase’s keynote was followed by a panel discussion on Japanese society post-COVID-19, chaired by Dr Lauren Richardson. Professor Hiroshi Ono noted that many Japanese firms are structurally inefficient, and many operations have still not been digitalised. He said that COVID-19 accelerated some parts of digitalisation in Japan. The transition to remote work revealed that some aspects of Japanese working culture — previously viewed as essential — proved to be unnecessary. Professors Shirahase and Professor Ono then debated the possible reasons why Japan has few women in managerial positions.

Japan’s strategic choices
The final panel on Japan’s strategic choices was chaired by Associate Professor Amy King. Ryo Sahashi argued that Japan needs to adjust its diplomacy and economy to deal with a more assertive China. The United States’ domestic issues mean that the United States is restricted in what it can do on the global stage, so Japan and Australia must work to create inclusive multilateral mechanisms such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Professor Evelyn Goh stated that Japan has propped up US hegemony in East Asia and that if Japan were to align itself more with China, it would tip the regional order. She also noted that any Taiwan Contingency assumes that Japan will support US defensive operations, but this may not always be the case. She highlighted that not enough attention is given to how domestic politics affects Japan’s decision-making. Professor Yoshihide Soeya discussed that Shinzo Abe’s legacy is that of divided politics in Japan, with conservative politics currently being dominant. He suggested that current Prime Minister Fumio Kishida is more likely to focus on multilateral diplomatic efforts as part of Japan’s comprehensive security strategy. Yoko Iwama talked about the Japanese reaction to Russia’s invasion of Ukraine. She said that the invasion had generated a change of atmosphere in Japan, with the population fearing something similar could happen to Japan. She noted Japan’s efforts to augment its deterrence capability, citing its increase in defence spending to 2 per cent of GDP. This is the first-time defence spending has reached this level in the post-war era.

The Japan Update 2022 was supported by the Japan Foundation.