Global Scenario and Japan

Kimio Uno
Dean,
Faculty of Policy Management
Keio University

Japan's gross domestic product corresponds to 70% of U.S. GDP and almost equals combined GDP of Germany, France and Britain. It is eight to nine times as large as China's GDP. Japan's per capita GDP was $37,700 in 1994, compared with $25,000 for the United States and Germany, $23,000 for France and $17,500 for Britain. China's per capita GDP is estimated at a little more than $400. The comparison uses nominal numbers and exchange rates. The purchasing power parity would have to be taken into account depending on the purpose of comparison. What I would to like emphasize here first are Japan's economic size and its international responsibility commensurate with the size.

The 21st Century is called the age of Asia. High growth of China, development of six ASEAN (Association of Southeast Asian Nations) countries, the maturing economies of South Korea and Chinese Taipei (Taiwan) indicate that Asia has become the engine for the global economy. This has been accepted as common sense of the international society. The 21st Century is imminent and time is passing. But the course of the new century is not automatically fixed. That depends on our actions. This is the second point for me to make. China or ASEAN could eclipse Japan in economic size in the 21st Century. But the role Japan would play with the largest savings in the world and technology development capabilities would be a great factor contributing to realizing the possibility. Since Japan opened its door to foreign countries in the Meiji Era, this country has tried to catch up with Western Europe in compliance with rules created by Western Europe. Especially since the end of World War II, Japan has exposed itself to the global economic order created by Europe and North America. Japan always joined international systems after they were established. Such systems include the International Monetary Fund (IMF), the World Bank, the General Agreement on Tariffs and Trade (GATT or World Trade Organization), the Organization for Economic Cooperation and Development (OECD), the Bank for International Settlements (BIS), the World Intellectual Property Organization (WIPO) and the Internet. Japan is not used to devising new visions or creating new rules. But Japan now must positively take part in creating global standards. Japan has created unique systems for its industrialization, including the fiscal loan and investment program, the financial system, keiretu corporate groupings, business circles, trade organizations and the employment system, as well as various regulations and standards.

But these unique systems now serve to restrain Japan from adapting itself to global standards. The information society requires rules that are different from those for the past industrial society. The rules must be global because of the characteristics of information technology. The third point I make is on global standards. Japan must realize itself as a member of the international community and consider how it should contribute to the international community with its industrial, financial and technological strength.

A focus in this respect would be how we should build the Asia-Pacific region. In Europe where the East and West had confronted each other during the Cold War, a new era is beginning with the expansion of the North Atlantic Treaty Organization (NATO) and other developments. In the Asia-Pacific region, the end of the Cold War means the beginning of a long transition period. China's policy of opening has already become irreversible, but a new global order including China has yet to emerge. U.S.-China relations as the precondition for the new global order have yet to be firmly established as some Americans see China as a business opportunity and others as the threat. Considering the economic, political and historical importance of Japan-China relations, Japan for its part cannot take any passive attitude toward U.S.-China relations. The fourth point I would like to make is that Japan should develop an Asia-Pacific scenario covering its relations with South Korea in the Far East, as well as its ties with ASEAN, China, the United States, Russia, India, Australia, Canada and others. The power vacuum emerging from the collapse of the Soviet Union is very similar to that after the ruin of Czarist Russia. We must remember the historical lessons from the earlier power vacuum that caused instability in Asia. Australia, Canada and other OECD countries are important as the countries of good sense for the international society. At the same time, these countries are willing to enhance their engagement with Asia. Japan must cooperate with them in developing a global scenario. An uncertain factor in the future of this region is energy. The rapid growth of ASEAN and China is good news, but this could tighten the international energy demand-supply relationship. A report by the International Energy Subcommittee of the Advisory Committee for Energy says: "In 1992, China's oil demand was half that of Japan and China was an oil exporter. In 2010, however, China is expected to consume more oil than Japan and depend on imports for 40% of its oil supply. ASEAN's oil demand was 40% of that in Japan in 1992, but its oil consumption would exceed that of Japan by 2010 to turn from an oil exporter to an importer. Asia is expected to depend more on certain regions, including the Middle East, for oil supply. It would more vulnerable in terms of energy supply."

As a matter of course, the energy problem amounts to the global environment issue. Any global scenario should be comprehensive enough to meet environment policy challenges. In Europe, cultural and historical relations between countries are ensured along with their institutional relations through the European Union and NATO. European countries have less economic gaps among them and can be considered a group of countries sharing interests. Most of the OECD members are in Europe. Compared with Europe, the Asia-Pacific region is far more diverse with nations having different interests. Asia-Pacific countries will have to narrow and eliminate their information gaps. Their conditions and policies should be made more transparent. Japan must positively provide forums to improve the transparency.