Year in Review

Japan 2013: Abenomics

13 Jan, 2014    ·   4252

Angana Guha Roy presents an annual round-up

2013 turned out to be one of the most eventful years for Japan. Under Abe’s leadership, and with a revised security policy and an engaging foreign policy, Japan remained prominent in international diplomacy. It marked the completion of a year of Shinzo Abe’s accession to power as the Prime Minister. According to a report in The Economist, he has ‘supercharged Japan’s once fearsome bureaucracy to make govt vigorous again….he has sketched out a programme of geopolitical rebranding and constitutional change that is meant to return Japan to what Mr Abe thinks is its rightful place as a world power’. His sheer ambition to race Japan ahead has been described by the Japanese as ‘fukoku kyohei’ that means ‘enrich the country, strengthen the army’.

In 2013, Abe adopted certain fiscal and monetary policies and structural measures to carve out a growth strategy for Japan. The introduction of such popular economic reforms led to the coinage of ‘Abenomics’ (portmanteau of Abe and economics) that aimed at increasing nominal growth, phase out debts and establish a circle where investment, consumption and wages precede each other to create space for a normal economic cycle. Within the first quarter of his economic reforms, the unemployment rate decreased from 4 per cent to 3.7 per cent, and there was a 55 per cent rise in the stock market, thereby lifting the consumer spending to push up growth. Economics aside, Abenomics also aims at strengthening the national security of Japan. As per a report published in The Economist, ‘Abenomics, with its fiscal stimulus and monetary easing sounds as if it is an economic doctrine, in reality it is at least as much about national security’.

Revised Defence Posture
Underlining the need to strengthen Japan’s defence policy, Abe quickly departed from the 10-year National Defence Programme Guideline adopted in 2010. In the face of ‘several threats’, Abe recommended a quick layout of a new defence posture. The revised defence posture underlines that Japan now needs to collaborate with other nations to propel the idea of collective security. It talks about the need to upgrade intelligence surveillance techniques, ensure the security of remote islands, strengthen natural disaster management etc. The National Security Strategy finally adopted in December 2013 widely addressed security challenges and the approaches to address them. Another major reform was the establishment of the National Security Council, replacing the existing Security Council, in order to carry out flexible diplomacy. To support its plan of revamping military hardware, Japan also increased military spending by 2.8 per cent.

Discord with the Dragon
2013 was another critical year in Japan-China bilateral relations. Although a low key affair, both commemorated the 35th anniversary of their bilateral relations. Also, some efforts for rapprochement were made in the Tokyo-Beijing Forum. Nevertheless, the conflict-mending measures failed to bring about any major change. In fact, the international media carried headlines such as, ‘China Japan relations take turn for worse’ or ‘China Japan relations increasingly strained’. Japan and China’s ‘irreconcilable differences’ over the Senkaku/Diaoyu Islands and Yasukuni shrine has prevented them from entering into any reciprocal diplomacy. Immediately after Japan came up with a revised defense posture, China countered it by propagating its assertive ADIZ diplomacy. After China established an Air Defence Identification Zone, asserting its sovereign rights in the airspace over the disputed Senkaku/Diaoyu islands, Japan stated that the ADIZ was a ‘dangerous action that risks threatening the peace and stability of the Asia-Pacific region’. China replied by saying, ‘Japan has no right to make irresponsible statements like that and China is firmly opposed to it. Japan should stop these erroneous actions, and stop its meddling and provocation’.

Wooing the Elephant
Abe ‘attaches special importance to ties with India’. Amidst tensions over Senkaku Islands, it is apparent that Japan seeks friendship with India to balance China's growing ambitions. In 2013, India replaced China as the largest receiver of Japanese Official Development Assistance. Meanwhile, Japanese Emperor Akihito’s visit in November 2013, after Prime Minister Manmohan Singh’s official visit to Japan in May 2013, provoked huge speculation about Indo-Japanese counter-currents against an assertive Chinese foreign policy. China reacted by saying, ‘We hope that the development of bilateral relations by the relevant countries will be conducive to regional peace, stability and development’.

India, that looks keen to expand its presence along China's periphery, has stepped up its engagements in Northeast and Southeast Asian countries while pursuing its Look East Policy. In this regard, Japan is an important partner. Strategic concerns apart, there has been a spurt in Japan’s bilateral relations with India in other sectors. It has proposed to assist India in a number of projects, ranging from the Delhi Mumbai Industrial Corridor (DMIC), the Chennai Bengaluru Industrial Corridor (CBIC) to the Western Dedicated Freight Corridor. Japan is also a major partner in India’s ‘Nalanda diplomacy’ supporting the reconstruction of Nalanda University. It has also offered development aid to upgrade the campus of Indian Institute of Technology (IIT), Hyderabad.

Post Fukushima Energy Policy Changes
In December 2013, a draft of the new Basic Energy Plan was issued, with a 20-year perspective. It underlines nuclear energy as a source of ‘key base-load power’. It also emphasises that nuclear energy should be utilised safely to achieve stable and affordable energy supply and to combat global warming. Ruling out any possibility of phasing out the use of nuclear energy, the new plan says that the degree of dependence on it will be reduced ‘as much as possible’, consistent with those goals and the maintenance of nuclear technology and expertise.

40th Year of Japan-ASEAN Relations
ASEAN and Japan marked the 40th anniversary of the ASEAN-Japan Dialogue relations in 2013. Since many ASEAN nations have territorial disputes with China, Abe sees an opportunity to consolidate Japanese influence in Southeast Asian countries. Malaysia, Indonesia, the Philippines and Vietnam are all facing challenges from China, which claims nearby islands. Abe visited Laos and Cambodia in January 2013. Interestingly, Abe is the only Prime Minister in Japan who has already visited all ten members of the Association of Southeast Asian Nations. The ASEAN-Japan commemorative summit that opened in Tokyo also emerged as an important platform to discuss issues of regional implications.

2013 marked a phenomenal leap for Japan. Under Abe’s rule, it departed from the conventional discourse of Japan’s domestic and foreign policy. China’s centrality was fairly reflected in its foreign and security policy. With more structural reforms in place, a revised defence policy, and an expanding foreign policy, 2014 may appear more interesting than 2013.