Japan with a trade deficit, a concept almost unimaginable to its business competitors in the United States and elsewhere, could well become a fact of the near future.
Pumping out exports from cars to camcorders, Japan has posted trade surpluses with the world since 1980, despite constant pressure from its competitors and partners to become more open to imports.
But a deficit is likely in the next few years, says Douglas Ostrom, an economist at the Japan Economic Institute in Washington, D.C. "Economic forces are gathering to reverse the surplus."
Imports will rise, Mr. Ostrom predicts, as deregulation and revived consumer demand cause Japan to buy more goods from abroad than it exports.
Still, Japan probably won't have an overall deficit in its international payments balance. It will still be the world's biggest creditor nation and will still be investing its savings in other nations, such as the US.
"Its influence on capital markets may be just as large," he says. "It may even grow."
Ostrom sees Japan becoming something like an individual living partially off the interest or dividends from accumulated wealth. He likens it to Britain in the early decades of this century, buying more goods from its colonies and other nations than it sold, making up the difference from the return on investments abroad.
Japan's international investment position (as opposed to its annual payments balance) is more than $800 billion in the black - nearly as much as the US is in the red.
This positive balance is the result of its longstanding trade surpluses. The extra income must be invested and thus piles up.
Japanese policymakers, though actually knowing better, says Ostrom, tend to embrace what economic historians call mercantilism. The policy was a hallmark of post-feudal Europe, as many nations sought to encourage exports, block imports, and build up stocks of gold bullion. To modern economists such a policy looks foolish.
But some Japanese leaders define their nation's wealth more by what it produces than by what its citizens consume.
This thinking, Ostrom says, is partially behind current government measures to reduce a large budget deficit, freeing up more money to invest abroad.
Such investments have been mostly conservative. Much of Japan's $907 billion in foreign bonds are US Treasury securities.
The Japanese took more risk in the 1980s in US real estate and other properties but got clobbered when those investments collapsed after the stock market crash of 1987.
Japan's strong creditor position "has not elevated it to the role of international financial ringmaster or even taciturn banker," Ostrom says.
Nations on average hold far more US dollars in their official international reserves than yen - 60 to 75 percent dollars versus less than 15 percent yen.
Even Japanese exports are denominated more in dollars than in yen. And more than twice as many international bonds are denominated in dollars than in yen.