The Thrill Is Gone for Japan in Trying to Lead Asia's Economy
On Saturday, many nations met in Tokyo and criticized Japan for not cleaning up its own economic mess.
In the early 1990s, Japan sought to portray itself as the chief goose of the East Asian gaggle - a country with the economic might to lead the world's most dynamic region. Officials in Tokyo imagined Japan flying at the front of a V-formation.Skip to next paragraph
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East Asia, of course, is in big trouble these days. While Japan may not be the sorriest bird in the bunch, the size of its economy magnifies the significance of its debt-laden financial industry and other problems.
It has become almost commonplace for the United States and some European countries to reprimand Japan for weak action in the face of crisis, but this weekend the rest of the East Asian geese offered the most-concerted criticism yet of their once preening mentor.
Officials of 17 governments gathered in Tokyo on Saturday for a hastily arranged discussion of Asia's enduring crisis. The group included the seven leading industrialized nations (the US, Japan, and five others) as well as 10 Asia-Pacific countries.
The latter includes countries that have been hit the hardest by the regional downturn that began a year ago: Indonesia, South Korea, and Thailand. It also includes nearly all the economies that have been seen as partial imitators of Japan's state-guided capitalism or particular beneficiaries of Japanese investment: Hong Kong, Malaysia, Singapore - as well as Indonesia, South Korea, and Thailand.
East Asia can hardly forsake this country - the role of Japanese corporations and foreign aid is too great - but Japan's claim to regional leadership is slipping.
For one thing, the US is stepping in more aggressively, intervening in currency markets to keep the yen from losing too much value and being more vocal about the need to forestall a downward spiral of financial markets.
Emergence of China
And China, by resisting the temptation to devalue its currency, a move that would make its goods more competitive with the products of the new, cheaper Asia, is becoming more influential. "An island of stability in Asia" is how Treasury Secretary Robert Rubin described China last week.
More broadly, India's detonation of nuclear devices last month also complicates regional politics. Japan is an avowedly nonnuclear nation, so it stands to look weaker now that China is no longer the only Asian nation with a declared bomb.
"I don't think Japan has any capacity to lead Asia," says Michael Mosher, a political scientist researching globalization at the Institute for Advanced Study in Princeton, N.J. Although officials and academics tried to promote Japan as the regional powerhouse several years ago, "nobody actually tried to make it happen."
In contrast to South Korea, where the political system gives President Kim Dae Jung the authority to make difficult decisions, Japan a "helpless giant," says Professor Mosher. This country is perpetually slow in reacting to crisis, perhaps because, as some experts have argued, it has a weak and fuzzy democracy in which political leaders cannot exercise true power.
Former Prime Minister Yasuhiro Nakasone, in a recent paper on Japan's "political crisis," says the country should push for a "new East Asian financial policy consultation body." The idea is a far cry from the days when Japan helped fund a World Bank study on the "East Asian miracle."