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Shinzo Abe is trying to restore Japanese consumer confidence by boosting inflation. But confidence must rest on something more substantive: meaningful structural reforms to reverse Japanese companies’ lagging competitiveness. Otherwise, any temporary economic boost will soon give way to disillusion.
When it comes to Japan, China seems torn. On security issues, it is increasingly hawkish. But on economic ties -- from Japanese imports to Japanese investments -- it has become downright dovish. At the heart of China’s reversal is the economic reality that China needs Japan just as much as Japan needs China.
Tensions between China and Japan are rising, but an economic version of mutual deterrence is preserving the uneasy status quo. Put simply, China needs to buy Japanese products as much as Japan needs to sell them.
Is globalization to blame for rising unemployment and income inequality in the United States? Richard Katz and Robert Lawrence argue that other factors are at fault. Perhaps, says Michael Spence -- but the overarching effects of globalization cannot be denied.
Does the current financial crisis resemble Japan's "lost decade" of the 1990s? It may be even worse, argues Robert Madsen. Not so, replies Richard Katz.
The financial crisis of 2008 is not a replay of Japan’s “lost decade” of the 1990s. The current crisis is the result of correctable policy mistakes rather than deep structural flaws in the economy.
Richard Katz and Peter Ennis's update to their March/April 2007 essay "How Able Is Abe?"
Shinzo Abe has had a tough act to follow since succeeding the charismatic Junichiro Koizumi as Japan's prime minister. Abe has already shown himself to be adept in the field of foreign affairs, and Tokyo's influence is likely to increase with him at the helm. But it remains uncertain whether he can keep the momentum going on the reforms needed to stave off economic stagnation.
It is hard to be optimistic about Japan's economy, given that Tokyo has already frittered away a decade. But a corner has been turned. The Japanese people increasingly realize that without reform the situation will only get worse. This new awareness was the force behind Prime Minister Junichiro Koizumi's election in 2001. The bad news is that it may take another decade to get the economy back on track.