While the Japanese economy has seen the beginning of its recovery from the fifteen-year recession in recent months, the tension with China and South Korea heightened over the last week. This was largely due to the visitation to Yasukuni Shrine by 168 members of the Parliament. Both China and South Korea reacted and voiced their frustration over the incident. Later, Prime Minister Shinzo Abe spoke about the issue of colonization vis-à-vis South Korea, which angered officials in Seoul. All these things can have troubling economic implications insofar as the foreign trades are concerned.
Why rock the boat at this timing? Does the current administration need extra stress and trouble when the economy, though it is recovering, still needs much more attention. There are still a few concerns over the effectiveness of Abenomics. While many foreign investors have returned to the Japanese market, none are certain that the recovery is real and long-lasting.
The biggest concern is whether the current administration is able to truly work to cut the deficit and balance the budget. Japan’s gross debt to GDP ratio is expected to go above 245 per cent this year. This simply is not sustainable. As Christine Lagarde of the IMF continually demands Japan to lower the debt to GDP ratio, this issue can definitely influence the long-term recovery of Japanese economy.
In addition to the issue of the national debt, the current administration is yet to demonstrate to the world the truthfulness of Mr. Abe’s willingness to ease the regulation to spur domestic economic growth. There are also a few concerns over this issue. At the recent meeting of the Council on Economic and Fiscal Policy, the prime minister spoke about “Japanese-style Capitalism.” This is not a good sign when regulation is being discussed. Overly protective Japanese-style Capitalism has outgrown itself and will not work in this rapidly changing global economy. We have experienced it in the last twenty years.
All these issues still need to be dealt with before we can confidently say that Japan has recovered economically and growing once again. So in the midst of still a turbulent time, no extra trouble, especially with nations that can greatly influence Japanese economy, is needed.
Please do not get me wrong. Yasukuni, of course, is not an unimportant thing. It is very much the heart of the national symbol just as Arlington Cemetery in Washington D.C. is for Americans. The dead who sacrificed for their nation have to be thanked and remembered. The place happened to be Yasukuni Shrine for Japanese people. Every Japanese has a great debt owed to all the dead.
An important question must be asked. Does going to the shrine to thank and remember the dead entail automatically Japan becoming a militaristic state? By no means! That way of reasoning comes out of only few countries. Japan is not and will not become a militaristic state. Japan may change its constitution and call their self-defense force actual military in a near future. But that simply means Japan becoming a normal country—not becoming a militaristic state.
It is almost like arguing that the effort to correct deflation immediately leads to hyperinflation. Of course, there is a slight chance for Japan to have a hyperinflation. But it is a very slight chance. Japanese people’s desire to thank and remember the dead who died for the country is a very natural emotion.
But the current administration and Mr. Abe knew well the implication and emotional turmoil caused by the mass visitation, even including Vice Prime Minister/Finance Minister Taro Aso, for the neighboring countries. This type of trouble is not something that the Japanese economy needs right now.
So what should the current administration do? Since the event has already taken place, they need to explain to the world—not only to those angered countries since they probably are not willing at all to listen—why it is important to thank and remember the dead. By doing so, the administration needs to explain the current situation with 14 class-A war criminals is not the best situation and the change is necessary, but the people cannot be stopped to remember and thank the dead meanwhile.
Without clear explanation of the sort suggested here concerning Yasukuni Shrine to the world, the impression of the world cannot be improved. China and South Korea would continue to make a big deal about the shrine. The issue is simple. Until laws on Yasukuni are passed, nothing can be done. Meanwhile Japanese people need a place to remember and thank the dead. The administration must convince the world, just as the newly installed Bank of Japan governor, Haruhiko Kuroda, was able to explain at the G20 meeting the need of monetary easing in order to get out of deflation rather than to dampen the yen.
The focus of the government needs to be the true recovery of its economy. Abenomics has to be implemented truly insofar as regulatory and budgetary reforms are concerned. That ought to be the primary focus of Mr. Abe and his cabinet members. And if these ministers need to visit Yasukuni to remember and thank the dead, they have the responsibility to explain to the world that it is very natural and even becoming to express gratitude to the dead with an acknowledgement that the current state needs to be modified in a near future.
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