Japan Between Asia and the West

Economic Power and Strategic Balance

Ming Wan

• Publisher: Routledge
• Year: 2016
• Print ISBN:
  9780765607782
• eBook ISBN:
  9781315499277
• Topic: Economics
• Subtopic: Asian History
• Index: Economics

Japan seeks economic competitiveness vis-a-vis the West and economic dominance in Asia, but it mainly competes through cooperative use of economic resources, which facilitates realization of the goals of partner nations. This book studies Japan's balance between the United States and East Asia by focusing on the use of economic power - defense spending, consumption, and investment - to advance Japan's political and strategic as well as economic interests. It also investigates Japan's direct use of economic resources, namely, aid and sanctions, and by extension, discusses Japan's relations with the International Monetary Fund, the World Bank, and the Asian Development Bank.

1

Introduction

Two competing visions of Japan prevail in academic research and policy analysis. On the global level, Japan is often seen as a power that knows how to achieve economic success but does not know what to do in foreign policy. By contrast, on the regional level the country is viewed, with both awe and suspicion, as dominating the East Asian regional economic order with a strong sense of purpose, resourcefulness, and determination. Japan itself has adopted a two-track foreign policy—one track for the West and one track for East Asia. Japan’s prolonged economic stagnation in the 1990s has drastically changed the world’s view of the country. Japan is now seen as stuck in a system that has outlived its usefulness. But this recent development highlights rather than negates the importance of critically examining the cleavage between Asia and the West in Japan’s foreign policy to shed light on Tokyo’s motivation and strategic behavior. In fact, while retreating to some extent in the world, Japan has become more active, relative to its past behavior, in East Asia in recent years.

This topic has theoretical implications. Japan is often considered a one-dimensional power. Different from the United States, which possesses a wide range of resources, Japan’s main instrument of foreign policy is economic power. Japan is thus a good case for studying the effects and limitations of economic leverage. Also, Japan joined major international organizations well after they were established, thus allowing us to test the impact of international institutions on a latecoming economic power. In addition, the fact that Japan has behaved differently from what international relations theory predicts a “normal power” would have done illustrates the importance of ideas and learning in shaping a country’s foreign policy behavior.

The topic also has practical implications. A study of how Japan has used economic power is essential for determining whether Tokyo intends to act as a regional or world leader and how it will proceed if it does so. This is important because shifts in power distributions among major powers in the past have threatened international stability. In addition, whether and how Japan assists one region at the expense of another affects global balance of power.

This book focuses on Japan’s use of economic power. Economic statecraft has been Japan’s main instrument of foreign policy since the end of World War II. Japan has used economic power to advance its political and strategic interests as well as economic and commercial ones. Specifically, the discussion covers the three basic ways in which Japan may use its economic power: (1) defense spending, (2) consumption, and (3) investment. Japan’s direct use of economic resources—namely, whether it rewards or punishes other countries—is also explored.

This book discusses Japan’s relations with the United States and East Asia, the two most important policy areas for the country. In addition, it touches on Japan’s relations with the World Bank, the International Monetary Fund (IMF), and the Asian Development Bank (ADB). These cases place Japan’s dealings with Asia and the United States in a multilateral context, allowing a contrast with its bilateral and regional relations.

The following arguments are made: Japan has used cooperative spending to alleviate U.S. criticism of its massive accumulation of wealth and rapid overseas economic expansion and to protect its security arrangements with the United States. Toward other Asian nations, Japan has used cooperative spending to alleviate historical distrust and to facilitate economic exchange. There are three important qualifiers for this general assessment. First, Japan’s dealings with Asia and the West sometimes come into conflict when the relationship between the United States and some East Asian nations becomes contentious and when Japan’s cooperative spending for Asia or the West is seen as uncooperative or even harmful by the other party. Second, Japan’s relationships with the United States and East Asia have become more competitive. Third, there has been a moderate increase in noncooperative or even conflictual use of economic power in Japanese foreign policy in recent years.

Japan has been largely successful in achieving what it wants to achieve in its use of economic power. Japan has not only survived but also thrived. Japan has used its economic power to secure markets and stable supplies of natural resources, to win friends, and to ease its rise in the world. And, the Asia we see today is much closer to what the Japanese envisioned four decades ago than it is to the U.S., Soviet, or Chinese visions. communist visions have completely failed; Asia is not a communist bloc controlled by Moscow, nor one with “Chinese characteristics.” Despite America’s triumph over the Soviet Union in the cold war, few in the United States can say with confidence that this is the Asia they were hoping for. Capitalism has indeed flourished in the region, but in a manner that enables Asia to compete “unfairly” with the West and threaten U.S. supremacy in the global economy. In addition, Asia as a whole has not embraced Western ideas of human rights and democracy. This is not simply a historical coincidence. The Japanese have articulated their visions and committed economic resources to facilitate realization of their objective of leading a prosperous Asia. More important, based on its own success, Japan has altered the incentive structure faced by other Asian countries.¹

At the same time, there are limits to Japan’s success. Use of economic power mitigates but does not eliminate sources of conflict and disputes. Japan’s financial support has alleviated American concerns for a Japan turning against the United States but has not done away with U.S. economic grievances. Also, Japan can no longer simply rely on economic instruments in the post-cold war era when the United States expects Japan to do more in security areas. Furthermore, Japan’s choice of limited forms of cooperation—namely, official development assistance (ODA) and private investments—restricts its influence in the world. Japan could have acquired far greater influence in global and regional political economy if it had been willing to lead by example, which includes, in the first instance, opening its market to foreign goods and services.

Four factors explain the pattern and dynamic of Japan’s relations with the United States and East Asia: Japan’s bargaining power, its norms and ideas, its position and roles in international organizations, and its domestic politics. Japan behaves the way it does because it is at the same time a latecoming power, a status quo power, and a changed power. It is well known that Japan was a rising power until recently as measured by economic, financial, and technological indicators, and this has enhanced its bargaining position. But it is less recognized that Japan is also a status quo power in its attitudes toward both formal international organizations and informal norms and rules. Japan has not attempted to restructure international institutions; it is mainly interested in higher status and greater prestige in them. This is in part because Japan is a much changed power in its norms and ideas—I focus on “instrumental” rather than “fundamental” norms and ideas in this book—based on its learning from World War II and its patterns of interaction with other nations after the war.

This chapter includes three sections. The first section makes the case that Japan has behaved strategically in international relations, which is reflected in its two-track foreign policy toward the West and Asia. The next section conceptualizes and operationalizes the key concepts used in the book to describe and explain use of economic power. The last section lays out the design of the book.

Japan’s Strategic Behavior

A country uses a strategy in setting goals and seeking to accomplish these goals by employing its available resources given both external and internal constraints and opportunities. As Kenneth B. Pyle argued, “in the post-World War II era, Japan had a more clearly defined national strategy than any other major power.”² Chalmers Johnson went further: “[T]he Japanese, like the Venetians before them, might be master strategists” if we recognize “the essence of all strategies—indirect approach … and the disguise of intent.”³

The conventional wisdom in Japan and the United States is that Japan is passive. Sassa Atsuyuki, a former cabinet official, argued that “[w]aiting for demands from the Americans and then responding to them … is the single basic theme running through Japan’s post-war foreign relations.”⁴ “Without its own strategic vision for international order,” Noda Nobuo, a former Kyoto University professor, offered a gloomy prediction that “the Japan of the twenty-first century will probably be like a soccer ball kicked back and forth between the Americans and Chinese players.”⁵ Foreign observers often share this view. Kent E. Calder argued that Japan, as a “reactive state,” adjusts its foreign policy in response to external pressure.⁶ Michael Blaker saw Japan’s foreign policy as “coping”—assessing carefully external environments and adopting minimum adjustments.⁷

However, being “passive” is a strategic choice that has benefited Japan. Pyle maintains that the reactive nature of Japan’s foreign policy is “the product of a carefully constructed and shrewdly implemented foreign policy.”⁸ Susan J. Pharr argued that Japan is not “reactive” but “defensive” in that it pursues a “low-cost, low-risk, benefit-maximizing strategy.”⁹ Chinese scholars, who are generally more concerned than Americans about Japan’s rising power, believe that Japan has clear strategies to become the leader in Asia and one of the three poles in the world by “winning without victories”—gaining influence without alarming potential opponents.¹⁰

What are Japan’s strategic objectives? Japan’s long-term goal is creation of a situation in which the nation is safe and prosperous. This is certainly not unique to Japan. What is unique about Japan is the way it has pursued this goal. For the first twenty years after Japan recovered its sovereignty from the United States in 1952, it concentrated on economic growth while relying on the United States for security protection and political leadership. Japan’s single-mindedness in mobilizing resources to achieve economic growth could be compared to the U.S. preoccupation with competing with the Soviet Union during the cold war. Since the 1970s, Japan has become more active in foreign relations. The end of the cold war, in particular, has affected Japan’s external environment. But Japan’s basic mission remains unchanged. What has changed is Japan’s realization that it has to depend more on its own efforts for a higher status and greater respect in an international system that it is basically happy with.¹¹

Few people, including those who see no clear Japanese foreign policy strategies, dispute that Japan has adopted explicit strategies for economic growth: a single-minded desire to catch up with and surpass the West. For example, Chalmers Johnson argued that “in modern times Japan has always put emphasis on an overarching, nationally supported goal for its economy rather than on the particular procedures that are to govern economic activity.”¹² Although we may debate whether Japan is a successful “developmental state,” the Japanese government has actively designed and implemented economic development strategies.¹³ The view that Japan is passive originates from its perceived “timidity” in using its tremendous economic power for well-defined, discrete foreign policy goals. But this book shows that Japan has behaved strategically in its use of economic power vis-à-vis the United States and East Asia, although not always as coherently or explicitly as the term “strategy” indicates. As in its guidance of domestic political economy, the Japanese government combines market forces and interventions to achieve long-term strategic objectives abroad. Japan’s policy is shaped through trial and error, bargaining, and consensus-building between various players facing domestic and external constraints and opportunities. But this does not suggest that Japan lacks strategic actions. In securing an external environment for its survival and prosperity, Japan has been remarkably strategic and successful.

Japan’s strategic use of economic power is indicated in its varying degree of cooperation between regions and over time depending on its competitive needs, its bargaining positions, and the rules of the game. Conversely, how cooperative one evaluates Japan’s use of economic resources to be depends on one’s own objectives. To understand Japan’s use of economic power, therefore, we need to study regional differences in its foreign policy.

Japan has extended its global reach since the 1980s, but it still follows a two-track foreign policy: one track for Asia and the other for the West. Saito Shiro used the term “twin-track diplomacy” to characterize Japan’s balancing between Asia and the West, focusing on Japan’s participation at Group of Seven (G-7) summits and its dialogues with the Association of Southeast Asian Nations (ASEAN) at the group’s annual ministerial meetings. He reasoned that “without an assured political and security relationship with the West, especially with the United States, Japan could not safely pursue its economic interests in the Asian Pacific region; without roots in Asia, it would not count for much in the Western world.”¹⁴ “In non-Asian regions Japan, even today, basically follows U.S. leadership,” as Susan J. Pharr and Ming Wan argued. “Within Asia, however, Japan has a long postwar track-record of greater independence from the Unites States and today increasingly pursues an independent course.”¹⁵ It is a prevailing theme in studies on Japanese foreign policy by Chinese scholars that Japan is torn between Asia and the West and that to play a significant global role Japan needs support and understanding of its East Asia neighbors, particularly China.¹⁶

Japan seeks competitive advantage over the West and Asia, but mainly through cooperative means that facilitate the realization of the goals of those nations. The pattern and dynamic of Japan’s cooperation differ between the West and Asia. More important, what is cooperative for East Asia may not be cooperative for the United States and vice versa. How cooperative one evaluates Japan’s use of economic power to be depends on whose objectives such spending facilitates or impedes.

In addition to Japan’s relations with Asia and the West, this book investigates Japan’s approach toward international financial organizations. If we want to label Japan’s foreign relations, we may classify its relations with t...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• List of Tables and Figures
• Acknowledgments
• Acronyms
• 1. Introduction
• 2. Competitor and Supporter for the United States
• 3. Unique Leader in East Asia
• 4. Financier of International Institutions
• 5. Japan Between the United States and East Asia
• Bibliography
• Index