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NEW PARTY: Japanese political kingmaker Ichiro Ozawa (center) and parliament members raise their arms as they shout slogans at their party’s first convention in Tokyo on July 11. Ozawa launched the People’s Life First Party along with some 50 other ruling party defectors that day
Japan’s domino effect began with a political earthquake in July when the ruling Democratic Party of Japan(DPJ) split and was exacerbated when Japanese Prime Minister Yoshihiko Noda declared the plan of “nationalizing” the Diaoyu Islands, spreading domestic political disputes to the diplomatic field.
Political analysts pointed out that the sluggish economy is the root of Japan’s internal instability. The Japanese Government chose to jeopardize its friendly relationship with China by showing an iron fist in order to gain public support in the upcoming elections. Experts warn that such a radical tactic will not solve Japan’s economic problem, but will instead add to uncertainties in Japan’s political situation. However, both China and Japan should stay calm when dealing with territorial disputes.
Sandwiched administration
Japan’s recent political drama has been eye-catching. On June 26, the DPJ and the opposition Liberal Democratic Party (LDP) jointly passed a law raising the sales tax at the lower house of the parliament. It became the last straw that split the DPJ. Fiftyseven DPJ parliament members, including influential DPJ leader Ichiro Ozawa and former Prime Minister Yukio Hatoyama, strongly opposed the law. Ozawa submitted his resignation on July 9 along with 49 other lawmakers of the ruling party in a move to oppose the tax hike bill, and was thereby expelled by the DPJ. On July 11, Ozawa announced that he organized a new party named People’s Life First.
Economic woes are stirring up political instability, said Chinese observers. Hu Jiping, Director of the Institute of Japanese Studies at the China Institutes of Contemporary International Relations (CICIR), said to Beijing Review that aside from the devastating earthquake in March last year and the global financial crisis, Japan’s economy has been distressed for a long time. “The economic problem is so big that it’s difficult to deal with for any party and any prime minister,” Hu said.
Li Wei, Director of the Institute of Japanese Studies at the Chinese Academy of Social Sciences (CASS), said that encouraging domestic consumption and increasing employment are Japan’s targets for now.
Compared with other developed countries, the Japanese economy is in slow recovery this year. The Japanese Government said that Japan’s GDP grew 1 percent in the first quarter, or an annualized rate of 4.1 percent for 2012. The GDP growth was driven by strong domestic demand, particularly from government expenditures.
Jin Baisong, a researcher with the Chinese Academy of International Trade and Economic Cooperation, believed that the post-quake reconstruction is a big reason for hiking government expenditures and growing GDP. But Japan’s economic situation has a poor outlook partly due to the influence of Europe’s sovereign debt crisis.
Jin explained that the shrinking European economy will drag down economic growth throughout the world, including developed countries like the United States and emerging economies like China. This will greatly impact a country relying on international trade like Japan. As the euro seriously depreciates, the Japanese yen tends to appreciate, thus decreasing Japan’s export competitiveness. Jin added that the turbulent global financial market will also negatively influence the Japanese economy. Plus, a power supply shortage after the earthquake is hurting Japan’s productive ability.
However, government expenditures also have added to the country’s financial prob- lems. Due to Japan’s decreasing birth rate and aging population structure, the country’s social burden is getting heavier. For example, statistics show that the Japanese Government spends over 7 trillion yen (about $86 billion) on public services for aged citizens. According to a report from the Japanese Government, the country’s public debt will set a new record of 1,000 trillion yen ($12.3 trillion). Its net debt balance will be 120 percent of Japan’s GDP. A recent Reuters report said that it’s possible the Japanese Government will have run out of money by the end of October this year if the country cannot pass a special bill issuing new national bonds. By then, all governmental expenditures, including salary of governmental employees, pensions and unemployment subsidies, will be at risk.
To solve the urgent need of cutting the financial budget deficit, the Japanese Government must figure out ways to raise revenue. The sales tax hike bill was one attempt to do so as the Japanese Government faces high economic and financial pressure.
Raising the sales tax rate has been a political minefield in Japan. The sales tax bill was adopted in the late 1980s by Noboru Takeshita’s cabinet to decrease the rising financial deficit. The original tax rate was 3 percent. In Ryutaro Hashimoto era in the late 1990s, the rate was raised to 5 percent, which directly led to the end of Hashimoto’s politi- cal career. Noda’s government is planning to raise the tax to 8 percent in April 2014, and up to 10 percent by the end of 2015.
The tax hikes have cost the internal unity of the DPJ, which will further destabilize the political situation of Japan. “The split will shake the administration basis of the DPJ, which might cost the DPJ’s ruling position in the coming elections,” said Hu from the CICIR.
Ozawa is a strong-willed politician, Hu said, so when Noda and the DPJ refused to accept Ozawa’s political opinion, Ozawa chose to found a new party. Being an experienced and influential leader, Ozawa had made great contributions to the DPJ’s victory three years ago.
Ozawa’s departure is likely to cause problems for the DPJ. Previously, the DPJ occupied 289 seats in the lower house, and Ozawa’s split decreased the number to its current 251, which exceeds by only 11 seats the majority of the lower house.
Hu said that some DPJ parliament members headed by former Prime Minister Hatoyama are not satisfied with the Noda administration’s policy of increasing the sales tax and restarting nuclear power plants. For example, Hatoyama said on July 7 that the Noda administration’s decision had betrayed the DPJ’s promise of not elevating the sales tax within four years. These dissenting parliament members worried the sales tax hike might hurt the country’s domestic demand. If they choose to leave the party, the DPJ will be incapable of handling any non-confidence motion against the cabinet inside the lower house, Hu warned.
To the DPJ, Ozawa’s split might end its ruling position of the past three years. The parliamentary elections are scheduled for next year. Noda promised to dismiss the parliament and hold the general elections earlier, so as to get the LDP’s support in passing the sales tax hike bill.
Hu said Japan may have the parliamentary elections this year, and the DPJ’s prospects for a strong showing are weak. However, Ozawa’s new party is not strong enough to compete with the DPJ and the LDP, so if neither of the two major parties can get the majority of the lower house seats, Japan will have a coalition government.
“No party in Japan is powerful enough to stabilize the political situation of this country and further carry out efficient economic reforms, so political instability will continue,”Hu said.
Radical diplomatic policy
Observers believed that the turbulent political situation is pushing the Japanese Government to take radical diplomatic tactics, leading to its territory disputes with China on the Diaoyu Islands in the East China Sea.
Tokyo Governor Shintaro Ishihara revealed in April that he was in “purchasing talks” with the “owner” of the three islands, saying his move was largely intended to put pressure on the government to play a bigger role in the islands’ administration. He said he plans to use public funds to buy several islands. Tokyo has already received more than 1.3 billion yen ($16.3 million) in donations for the purchase, which is expected to cost between 2 billion and 3 billion yen ($25.5 million-$38.2 million).
Noda said on July 7 that he’s considering“nationalizing” part of the Diaoyu Islands to strengthen Japan’s control over them. Noda also stressed that the islands are “indisputably part of Japan’s inherent territory by historical evidence and international law.”
Chinese observers analyzing the situation said that Japan’s sudden focus on the Diaoyu Islands is related to its domestic political turmoil, which is centered on the upcoming elections.
“Disputes over the Diaoyu Islands have been ongoing between China and Japan for decades. Japan tried to make the area a hotspot to distract attention from its domestic political turmoil,” said Liu Jiangyong, a professor with Tsinghua University. He pointed out that the DPJ has fallen on hard times since it won the parliament elections in 2009, and changed the prime minister several times in the last three years. In the meantime, Japan’s right wing is on the rise. Some independent politicians, such as Ishihara, hope to stir up the country’s nationalist emotions in order to occupy a favorable position in the future elections.
Hu from the CICIR lamented, “On some level, one party and politician’s political ambition is kidnapping the country’s diplomatic policy.” Like Ishihara, Noda and the DPJ also hope to elevate their public authority to win the elections, Hu said, which explains why Noda pronounced to “nationalize” the islands.
As Japanese politicians try to win political points by provoking nationalism, observers worry that Japan’s domestic political disputes and growing conservative emotions might harm the Sino-Japanese relationship. Just as a recent poll showed China’s popularity is on the decrease among Japanese people, Chinese people are enraged by Japan’s radical actions on the Diaoyu Islands.
Chinese Foreign Ministry spokesman Liu Weimin reiterated Beijing’s position that the islands belong to China. “China’s territory simply cannot be bought or sold by any person,” Liu said in a statement. Liu said the Chinese Government would continue to take necessary measures to “resolutely safeguard the sovereign rights of the Diaoyu Islands and adjacent islets.”
“We cannot let territorial disputes damage the bilateral friendship of the past 40 years, but we will persist in our stance of sovereignty and territorial integrity,” Hu said. He suggested strengthening communication with all involved Japanese parties to decrease strategic misunderstanding and boost mutual trust.
Regional stability benefits all countries involved, including Japan’s ally, the United States, he stressed, mentioning U.S. Secretary of State Hillary Clinton’s recent statement on holding a neutral position on territorial disputes between China and Japan.
Liu from Tsinghua University said the Japanese Government must keep a clear mind when rising right-wing forces try to gain political credit by provoking territorial disputes. He stressed that Japan’s key problem is whether it should stop jeopardizing the Sino-Japanese relationship over the Diaoyu Islands. “The Noda administration is being manipulated by right-wing forces,”Liu warned.
Feng Zhaokui, a senior research fellow on Japanese studies with the CASS, stressed that the Diaoyu Islands dispute does not constitute the whole Sino-Japanese relationship, and is not expected to be solved immediately. “The two countries have more practical joint efforts to make in economic cooperation and people-to-people exchanges,” Feng said. He suggested that on the one hand, China should stick to the principle of solving the dispute through cooperation and coordination. On the other hand, China must persist in its stance of maintaining sovereignty and territorial integrity and let Japan know the serious consequences of irrational diplomatic policy.
Hu added that growing territorial disputes with neighboring countries are an inevitable process of China’s peaceful rise. “Some countries are afraid of China’s rise and are trying to profit from it,” Hu said, “but China will not give up its sovereignty and national interests.”
Hu said China’s stance on disputed territories is to put aside disputes and develop them peacefully together. “Personally, I abhor open warfare,” he said. “But if there is no other option when a country escalates territorial disputes, war will be the final solution.”