In this year’s general election, voters in the land of the rising sun chose from a field of nine eminently qualified candidates. The incumbent, Yoshihiko Noda, was elected in 2011. His primary challengers were Shinzo Abe, who served as Prime Minister between 2006 and 2007, and Shintaro Ishihara, an aging nationalist who served as Governor of Tokyo from 1999 until October of this year.
Abe won in a landslide, the second-biggest in Japanese history. His Liberal Democratic Party (LDP) swept 294 of 480 seats in the Japanese House of Representatives, while Noda’s Democratic Party of Japan (DPJ) lost three-quarters of its seats in the Diet’s lower house, ending up with only 57. Ishihara’s brand-new Restoration Party won 54 seats, 11.25% of the total.
There are three issues of central importance in Japan today. The first is the dilemma of nuclear energy: after the disaster at the Fukushima Daiichi reactor in March 2011, Japanese society experienced a severe backlash against nuclear power and all but two of the country’s 54 nuclear power plants remain offline. The second topic is the failing economy: Japan has experienced persistent deflation for much of the last decade, as well as an upsettingly strong yen and and low overall growth. The third and most ominous matter is that of Japan’s rising tensions with China. This year has been marked by a series of heated altercations over the various disputed islands and shoals of the South China Sea; the People’s Republic has evidently decided to crookedly hopscotch its way to regional dominion.
Abe will contend with all of these issues and much more as he takes office, although it is not at all clear that he will have the opportunity to do so for long. Indeed, Japan has gone through five Prime Ministers in five years.
Under Yoshihiko Noda’s DPJ, nuclear power was to have been slowly phased out by the 2030s. With the election of Shinzo Abe and the resurgent dominance of the LDP, it seems likely that Japan’s leaders will move cautiously to restart the nation’s nuclear infrastructure: the planned atomic suspension would have impaired Japan’s economy, increasing electricity costs and reliance on fossil fuels. Like many of the world’s elections over the past five years, Japan’s general election was in many respects a referendum on the economy, and it is telling that not even widespread angst and anxiety about the safety of Japan’s nuclear power plants was enough to override economic worries.
After the collapse of the late-1980s asset-price bubble, Japan’s government ran huge deficits in an ultimately futile attempt to pluck the economy from its doldrums. As the 2000s began, with asset prices continuing to fall and insolvent banks unable to lend, the country experienced severe deflation. To date, efforts by Japan’s central bank to combat this phenomenon have mostly failed: while Japan has the lowest interest rates in the developed world, the yen is still overvalued (partly as a result of investors’ flight to the “safe haven” yen after the 2008 recession). This latter circumstance has made Japanese goods expensive for domestic consumers, and imported goods cheap; Japan has been running a trade deficit for nearly two years.
Abe seems likely to push for a more stringent regime of quantitative easing (QE) to fight deflation, having pledged both to urge the Bank of Japan to pursue more aggressive reflation measures and to pass a budget featuring a healthy dose of federal stimulus. There is not much else he can do. Japan has historically had a very high personal savings rate, a state of historical affairs that has likely contributed to the economy’s present regrettable state. The yen lost some value with Abe’s election; if this is evidence of public confidence in his ability to speed repair of the economy, there is hope yet.
Shinzo Abe is also an unapologetic nationalist, an heir to a political family who has spent a more-than-standard amount of time trivializing and playing down Japan’s wartime atrocities. He quite clearly sees himself as a hardliner and a defense hawk, having long sought to broaden the definition of Article 9 of the Japanese Constitution, which dictates that Japan’s military must be a strictly defensive force.
As he takes office, Abe is faced with a confrontational North Korea and an expansionist China. This year’s dispute over the Senkaku Islands—to which China lays claim, although it calls them the Diaoyu Islands—was largely precipitated by Shintaro Ishihara, Abe’s electoral opponent in the recent election. It was Ishihara’s offer to buy the islands on behalf of Japan that caused the uproar in the first place. Abe has spoken menacingly of Japan’s claim on the Senkakus; this, combined with his hopes for Article 9 and his proposals to increase defense spending, has some worried.
It does not seem likely that military conflict will erupt over the Senkakus. China and Japan conduct nearly $300 billion of trade every year. The number-one recipient of Japanese exports is China; Chinese products are Japan’s most-imported and Japanese products are China’s most-imported. It is this mercantile intertwinement that will save the South China Sea from war, and from Shinzo Abe’s martial yet largely rhetorical machinations.