cessive LDP governments and the uninspiring
choice of leaders by a cabal of powerful elders
behind the scenes. Hasimoto admitted failure in
1998 and was succeeded by Keizo Obuchu, avun-
cular and unpretentious he did rather better,
introducing some cautious reforms; in April 2000
Obuchu was felled by a stroke and died before he
achieved very much, however. The elders of the
Liberal Democrat Party then gathered in secret in
Tokyo’s Akasaka Prince Hotel and from their
deliberations Yoshiro Mori emerged as caretaker
prime minister. He performed so badly that he
was pushed aside and ‘resigned’. His successor,
Junichiro Koizumi, broke the mould of elderly,
staid politicians. He looked different for a start,
more with it, like a rock star with a trademark
shock of hair. For once the LDP power-brokers
had clearly chosen someone who was popularly
acclaimed by the voters placing their hopes on the
exterior of his appearance. Koizumi may well have
been genuine when promising radical reform. He
called an election in 2001 campaigning for the
LDP. They won in the Diet and dictated the pace
of change. The power-brokers of the LDP had
not lost control. Koizumi was unfortunate to
come to office during the economic world down-
turn. Deep reforms would cause massive pain.
The LDP did not change its ways, continued the
palliative of printing money, increased Japan’s
high debt to finance a wasteful public works pro-
gramme to prevent rising unemployment, and did
not clean up the failing banking sector, the root
of the problem. Some moderate reform opened
Japan cautiously to fairer competition at home.
Some keiretsushave improved their efficiency by
laying off workers and manufacturing abroad and
supporting factories in mainland China. But the
banks, burdened with bad loans, remained an
obstacle to financial health. The big monopolies
have not been broken up, the stimulus of cutting
interest rates has been applied to the point where
it can go no further as interest rates are set close
to zero, the huge public works budget was only
slightly reduced. Eventually, the economy will
emerge from the doldrums and perhaps sooner
than was expected, in 2003.
Despite the stagnation of more than a decade
and the destruction of individual wealth, the
annual Gross Domestic Product at around
$38,000 per head is still the highest in Asia.
Abroad, Japan has followed a cautious policy of
improving relations with its neighbours. Koizumi
even normalised relations with North Korea by
paying the Dear Leader a visit. But security is
founded on the military shield of its US ally. There
was debate about modifying its ‘peace constitu-
tion’ in which the Japanese people forever
renounced war as a sovereign right of the nation
and the threat or use of force as means of settling
international disputes; Japan further undertook
that land, sea, and air forces would never be main-
tained (Article 9 of the Constitution of 1946). The
reality is that Japan does have armed forces, mod-
est army, navy and air units for self-defence which
may support US forces, but cannot fight offen-
sively abroad though Japan has supported a peace
mission in Afghanistan under UN auspices. Public
opinion remains strongly averse to any enhanced
military role. But Japan lies at the crossroads of
a volatile tense region of China, Taiwan, North
and South Korea. Of greatest concern has been
the development of missiles by the North Korean
regime. Their capacity was demonstrated when
in 1998 a first-generation missile passed over
Japan into the Pacific; it was probably not
intended as a threat, but was most likely a space
shot whose third stage had failed. Still there is no
complacency about North Korea’s missile capabil-
ity. North Korea’s nuclear ambitions, once assisted
by Pakistan, and probable possession of a small
1
THE PROSPEROUS PACIFIC RIM I 655
Japan and China, 2000
Population GDP per head, Purchasing GDP per head
(millions) Power Parity (US$) (US$)
Japan 127.1 27,100 38,160
China 1,300 3,900 860
