Government Subsidies in Japan

GOVERNMENT subsidies have been a consistent feature of Japanese practice since the country emerged from the feudal system in the eighteen-sixties. Japan's industrial history is singularly unlike that of other countries in that it is not marked by a policy of "laissez faire." Immediately following the restoration of 1867-8, the government set itself the task of industrializing the country, realizing that for this purpose it would have to convert into capitalists and factory workers a nation of knights and retainers. From the first, therefore, the government has exercised a paternal rôle in Japan's economic development. The result has been to make the Japanese people dependent upon the government to a degree unparalleled in other capitalist countries. "Almost any new industry," says a recent writer,[i] "so long as its promoters had some political friends, could secure exemption from taxation, even if no more direct form of subsidy could be obtained."

In starting modern industries it was the government's intention to turn them over to private management and ownership as soon as possible, retaining only a measure of control. In some cases this was done, but not in all. Not only has the government continued to manufacture steel, woolen cloth, and other articles, but it has reserved as state monopolies the trade in salt, tobacco, camphor and ginseng. For the rest, the "westernization" policy has created mammoth corporations, which -- despite their size -- still look to the government for sustenance. Indeed, the list of interests receiving aid in one form or another covers almost the entire field of Japanese economic life. Banking, industry, agriculture, labor, shipping, and shipbuilding, foreign trade, construction, and domestic commerce, all are in receipt of help; hardly any activity of importance or promise is not clamoring for it.

The most important subsidies reported in 1930, apart from those to the all-important silk industry, are those to shipping. Plans are afoot this year which look to low-interest loans, postponement of loan repayments, and other financial assistance to the shipping industry in general and to shipbuilding in particular.

Register for free to continue reading.
Registered users get access to three free articles every month.

Or subscribe now and save 55 percent.

Subscription benefits include:
  • Full access to ForeignAffairs.com
  • Six issues of the magazine
  • Foreign Affairs iPad app privileges
  • Special editorial collections

Latest Commentary & News analysis