July 11-15, 2018

Japan

Sheila A. Smith, PhD

Senior Fellow for Japan Studies
Council on Foreign Relations

Japan is the US most important ally in Asia. US trade with Japan totaled an estimated $270.7 billion in 2016, and Japan is currently the 4th largest goods trading partner for the US. This alliance is crucial to both nations' economic and political interests, Dr. Sheila Smith pointed out to the Forum. However, Japan faces challenges not just from emerging competition in the region but also from its own demographics as a rapidly aging society. Dr. Smith explored the economic and political impacts of these demographics changes as well as the effects of the rapidly evolving geopolitical environment in Asia on Japan and its relationship with the US.

Japan’s Economy

Japan’s economy has sustained growth at 2% per year over the past 5 years. In response to global competition, Japanese companies have harnessed advanced technologies such as artificial intelligence and robotics to improve productivity and sharpen their competitive edge.

Confronting its demographic challenges is a daunting task because of Japan’s aging population and low fertility rate. Japan’s current population is 127 million. In 2013, there were more deaths than births, and, by 2048, the population will decline to 99 million and to 86 million by 2060. The composition of Japan’s workforce mirrors this trend: by 2065, <10% of the population will be under 15 years of age, while 42% will be over 65. By 2045, there will be a 1:1 ratio of workers to dependents. Japan is slowly opening up its closely managed immigration policy as a way to meet workforce needs.

Japan’s demographics reflect world-wide trends as many countries see a declining ratio of workers to dependents. In the US, the balance is slightly better because immigration helps maintain a more viable worker-to-dependent ratio.

Japan’s Military

Article 9 of Japan’s constitution declares "the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as means of settling international disputes.” Japan has a defense budget that is capped at 1% of Japan's gross domestic product (GDP), which funds the Self Defense Force (SDF) – whose stated mission is "to preserve Japan's peace, independence and safety.” However, as Japan is the world's third-largest economy, 1% of its GDP is $55.9 billion, making it the world's sixth-best funded army and its naval defense forces are considered one of the world's most capable. In comparison, the US invests $598 billion in defense, while China’s military spending in 2018 is about $141 billion.

The Japanese public is divided over its future military strategy. Some argue, “You can’t build peace with weapons,” while others view the threats from China and North Korea as a harbinger that it is time to “rethink the constitutional limit on military spending.”

Japan and North Korea

Direct threats to Japan are the missile and weapons of mass destruction capabilities of North Korea. North Korea’s newest missiles can reach not only Japan but also the US, and its frequency of missile testing has skyrocketed under Kim Jong-Un.

Japan has invested $2-3 billion in defense against ballistic missiles, but this is not sufficient to face North Korea’s increasing threats. Japan is the only country in North Asia that cannot retaliate against a North Korean attack. In response to the changing threat level, Japan may seek to develop retaliatory power and may invest in new land-based systems to respond to attacks.

Japan and China

China’s military modernization has changed Japan’s defense needs. The Chinese have brandished their air and naval capabilities with increasing military exercises near Japanese waters. The Chinese dispute Japan’s claim to the Senkaku Islands and created the "East China Sea Air Defense Identification Zone," which includes the Senkaku Islands.

The growing presence of Chinese vessels in Japanese waters has prompted Japan’s increased investment in intelligence, surveillance, and reconnaissance capabilities. Japan’s SDF is responding by scrambling to meet Chinese aircraft and monitoring and potentially confronting Chinese forces in Japanese territory.

Japan and the US

Japan was able to rebuild itself after WW2 into a modern technology and manufacturing giant based on the infrastructure developed by the US and support from the International Monetary Fund and World Bank. Japan is a strategic economic, military, and political partner for the US and wants the US to be active and engaged in Asia. Currently, there are 140,000 US military in the region with more than 50,000 of them in Japan, making Japan a critical military ally. But Japan also confronts two challenges similar to those facing the US: the need to compete more effectively in global commerce, and the necessity to manage its demographics challenges.

Japanese industry engages substantial manufacturing operations in the US. Its Foreign Direct Investments in the US are greater than those from Canada. Japan is the second largest owner of US debt. Because of these interdependences, Japan wants to deepen and strengthen its partnership with the US.

But Japan has received mixed signals from the US. Prime Minister Abe worked hard to implement the Trans-Pacific Partnership (TPP); therefore, the US withdrawal from TPP was disruptive. This action, as well the subsequent imposition of US tariffs, has Japan concerned about the continuing US role in the region.

These reservations about US intentions are significant because growing threats in the region emphasize that the US-Japan relationship is critical to Japanese and global security. Article Five of the U.S.-Japan Security Treaty obligates the US to assist in the defense of Japan, and the US and Japan continue to upgrade how they will respond to any threat. Japan has not been a direct target of aggression until now.

During the Japan-US Summit between President Trump and Prime Minister Shinzō Abe in February 2017, North Korea launched missiles toward Japan. For the first time, Japan was the target of aggression. In response, President Trump endorsed Article 5 and pledged full US support to Japan. Now Japan, with US support, needs to be able to fight a war if necessary. Japan depends on the US to lead in sustaining the security of the region.

Discussion

Tom Finneran (Moderator): As tensions rise, is East Asia becoming the next hot spot like the Middle East?

Dr. Smith: There are significant geopolitical differences between the Mideast and East Asia. First, the US relies on its Asian allies to support a US military presence in the region. Second, Japan is the world’s third largest economy so it plays a major role in global commerce and is a key strategic partner with the US in maintaining security in the region.

Meanwhile, Japan and other Asian nations worry about China’s spreading influence and aggressive policies in the region. In the past, 25% of Japan’s foreign aid went to China to help it progress in the post-WW2 era. But as Chinese policies shifted to a more aggressive stance, Japan has distanced itself from China.

John Burchett (Google): Do the other Asian countries have the capability to contain China?

Dr. Smith: Today, all of our economies, including the US, China, Japan, Russia, and the EU, are interdependent. Globalization means everyone would get hurt if conflict occurred.  Containment is not an option due to our economic interdependence. It will require collective actions of all the US allies to maintain norms and institutions and rule of law on the open seas. We need a coordinated strategy that boxes China into global values and structures.

Sen. Eduardo Bhatia (PR): What is the domestic future for Japan?

Dr. Smith: Demographic changes are altering the social climate of Japan. The 1980’s generation grew up in boom times with Japan in ascendancy. Today’s generation has grown up in a recessionary economy, with frequent changes of Prime Ministers, and a perception of their neighbors as hostile, rather than as future partners.  The future looks dim for young Japanese. This encourages nationalism and a greater willingness to invest in military expenditures.

The tsunami in 2011 evoked more positive public spirit as people helped one another. In addition, Prime Minister Abe has intentionally sought to change the mindset to a more optimistic, positive vision for the future. After 8 quarters of slow but positive economic growth, the future looks more promising.

Sen. Jonathan Dismang (AR): Are there risks associated with the fact that Japan owns so much US debt (1.061 trillion)?

Dr. Smith: Japan’s Foreign Direct Investment (FDI) is important to America’s economic future. Japan sees the US-Japan relationship as positive and views the US in a positive leadership role. Today, Japan trusts the US. This is why it is so important to be careful when throwing economic bombs, such as tariffs on cars.

Sen. Larry Taylor (TX): If Japan is facing a demographic collapse of the population, from which countries will they attract immigrants?

Dr. Smith: In the boom times of the 1980’s and 1990’s, Japan pursued a managed immigration policy and negotiated limited contracts largely for construction jobs that were filled by workers from Bangladesh and Iran. Today, targeted, limited, and well-defined immigration is allowed. Long-term contracts are being given to Philippine and Malaysian workers to fill healthcare roles, such as care for the elderly and home care. Workers with high-tech skills can get a green card to work in industries if Japan does not have people to fill the role.

Sen. Eli Bebout (WY): Now that the Japanese are perceiving China as a threat, what do they think about all the Chinese students who are studying in the US?

Dr. Smith: Today, fewer Japanese students are studying abroad, they are more timid about coming to the US, while more and more Korean and Chinese students continue to apply. Chinese students are closely supervised by the Chinese government when they are abroad, and this contributes to concerns that some foreign students may be engaging in IP theft or industrial spying. However, it is most important to maintain the exchanges and continue to have students from different countries and cultures become familiar with the US and our norms.

Speaker Biography

Sheila A. Smith

Sheila A. Smith, an expert on Japanese politics and foreign policy, is senior fellow for Japan studies at the Council on Foreign Relations (CFR). She is the author of Intimate Rivals: Japanese Domestic Politics and a Rising China (Columbia University Press, 2015) and Japan's New Politics and the U.S.-Japan Alliance (Council on Foreign Relations, June 2014). Her current research focuses on how geostrategic change in Asia is shaping Japan's strategic choices. In the fall of 2014, Smith began a project on Northeast Asian Nationalisms and Alliance Management.

Smith is a regular contributor to the CFR blog Asia Unbound, and frequent contributor to major media outlets in the United States and Asia. She joined CFR from the East-West Center in 2007, where she directed a multinational research team in a cross-national study of the domestic politics of the U.S. military presence in Japan, South Korea, and the Philippines. She was a visiting scholar at Keio University in 2007-08, where she researched Japan’s foreign policy towards China, supported by the Abe Fellowship. Smith has been a visiting researcher at two leading Japanese foreign and security policy think tanks, the Japan Institute of International Affairs and the Research Institute for Peace and Security, and at the University of Tokyo and the University of the Ryukyus.

Smith is vice chair of the U.S. advisors to the U.S.-Japan Conference on Cultural and Educational Exchange (CULCON), a bi-national advisory panel of government officials and private sector members. She also serves on the advisory committee for the U.S.-Japan Network for the Future program of the Maureen and Mike Mansfield Foundation. She teaches as an adjunct professor at the Asian Studies Department of Georgetown University and serves on the board of its Journal of Asian Affairs. She earned her MA and PhD degrees from the department of political science at Columbia University.

Tom Finneran (Moderator)

John Burchett (Google)

Sen. Eduardo Bhatia (PR)

Sen. Jonathan Dismang (AR)

Sen. Larry Taylor (TX)

Sen. Eli Behout (WY)

Shelia A. Smith

Japan is the US most important ally in Asia. US trade with Japan totaled an estimated $270.7 billion in 2016.

Confronting its demographic challenges is a daunting task because of Japan’s aging population and low fertility rate.

The Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as means of settling international disputes.

The Japanese public is divided over its future military strategy.

Direct threats to Japan are the missile and weapons of mass destruction capabilities of North Korea.

Japan is a strategic economic, military, and political partner for the US and wants the US to be active and engaged in Asia.

 Japanese reservations about US intentions are significant because growing threats in emphasize that the US-Japan relationship is critical to Japanese and global security.

Today, Japan trusts the US. This is why it is so important to be careful when throwing economic bombs, such as tariffs on cars.

CONTACT

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Copyright © 2018 Senate Presidents' Forum. All rights reserved.

July 11-15, 2018

Japan

Sheila A. Smith, PhD

Senior Fellow for Japan Studies
Council on Foreign Relations

Japan is the US most important ally in Asia. US trade with Japan totaled an estimated $270.7 billion in 2016, and Japan is currently the 4th largest goods trading partner for the US. This alliance is crucial to both nations' economic and political interests, Dr. Sheila Smith pointed out to the Forum. However, Japan faces challenges not just from emerging competition in the region but also from its own demographics as a rapidly aging society. Dr. Smith explored the economic and political impacts of these demographics changes as well as the effects of the rapidly evolving geopolitical environment in Asia on Japan and its relationship with the US.

Japan is the US most important ally in Asia. US trade with Japan totaled an estimated $270.7 billion in 2016.

Japan’s Economy

Japan’s economy has sustained growth at 2% per year over the past 5 years. In response to global competition, Japanese companies have harnessed advanced technologies such as artificial intelligence and robotics to improve productivity and sharpen their competitive edge.

Confronting its demographic challenges is a daunting task because of Japan’s aging population and low fertility rate. Japan’s current population is 127 million. In 2013, there were more deaths than births, and, by 2048, the population will decline to 99 million and to 86 million by 2060. The composition of Japan’s workforce mirrors this trend: by 2065, <10% of the population will be under 15 years of age, while 42% will be over 65. By 2045, there will be a 1:1 ratio of workers to dependents. Japan is slowly opening up its closely managed immigration policy as a way to meet workforce needs.

Confronting its demographic challenges is a daunting task because of Japan’s aging population and low fertility rate.

Japan’s demographics reflect world-wide trends as many countries see a declining ratio of workers to dependents. In the US, the balance is slightly better because immigration helps maintain a more viable worker-to-dependent ratio.

Japan’s Military

Article 9 of Japan’s constitution declares "the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as means of settling international disputes.” Japan has a defense budget that is capped at 1% of Japan's gross domestic product (GDP), which funds the Self Defense Force (SDF) – whose stated mission is "to preserve Japan's peace, independence and safety.” However, as Japan is the world's third-largest economy, 1% of its GDP is $55.9 billion, making it the world's sixth-best funded army and its naval defense forces are considered one of the world's most capable. In comparison, the US invests $598 billion in defense, while China’s military spending in 2018 is about $141 billion.

The Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as means of settling international disputes.

The Japanese public is divided over its future military strategy. Some argue, “You can’t build peace with weapons,” while others view the threats from China and North Korea as a harbinger that it is time to “rethink the constitutional limit on military spending.”

The Japanese public is divided over its future military strategy.

Japan and North Korea

Direct threats to Japan are the missile and weapons of mass destruction capabilities of North Korea. North Korea’s newest missiles can reach not only Japan but also the US, and its frequency of missile testing has skyrocketed under Kim Jong-Un.

Direct threats to Japan are the missile and weapons of mass destruction capabilities of North Korea.

Japan has invested $2-3 billion in defense against ballistic missiles, but this is not sufficient to face North Korea’s increasing threats. Japan is the only country in North Asia that cannot retaliate against a North Korean attack. In response to the changing threat level, Japan may seek to develop retaliatory power and may invest in new land-based systems to respond to attacks.

Japan and China

China’s military modernization has changed Japan’s defense needs. The Chinese have brandished their air and naval capabilities with increasing military exercises near Japanese waters. The Chinese dispute Japan’s claim to the Senkaku Islands and created the "East China Sea Air Defense Identification Zone," which includes the Senkaku Islands.

The growing presence of Chinese vessels in Japanese waters has prompted Japan’s increased investment in intelligence, surveillance, and reconnaissance capabilities. Japan’s SDF is responding by scrambling to meet Chinese aircraft and monitoring and potentially confronting Chinese forces in Japanese territory.

Japan and the US

Japan was able to rebuild itself after WW2 into a modern technology and manufacturing giant based on the infrastructure developed by the US and support from the International Monetary Fund and World Bank. Japan is a strategic economic, military, and political partner for the US and wants the US to be active and engaged in Asia. Currently, there are 140,000 US military in the region with more than 50,000 of them in Japan, making Japan a critical military ally. But Japan also confronts two challenges similar to those facing the US: the need to compete more effectively in global commerce, and the necessity to manage its demographics challenges.

Japan is a strategic economic, military, and political partner for the US and wants the US to be active and engaged in Asia.

Japanese industry engages substantial manufacturing operations in the US. Its Foreign Direct Investments in the US are greater than those from Canada. Japan is the second largest owner of US debt. Because of these interdependences, Japan wants to deepen and strengthen its partnership with the US.

But Japan has received mixed signals from the US. Prime Minister Abe worked hard to implement the Trans-Pacific Partnership (TPP); therefore, the US withdrawal from TPP was disruptive. This action, as well the subsequent imposition of US tariffs, has Japan concerned about the continuing US role in the region.

 Japanese reservations about US intentions are significant because growing threats in emphasize that the US-Japan relationship is critical to Japanese and global security.

These reservations about US intentions are significant because growing threats in the region emphasize that the US-Japan relationship is critical to Japanese and global security. Article Five of the U.S.-Japan Security Treaty obligates the US to assist in the defense of Japan, and the US and Japan continue to upgrade how they will respond to any threat. Japan has not been a direct target of aggression until now.

During the Japan-US Summit between President Trump and Prime Minister Shinzō Abe in February 2017, North Korea launched missiles toward Japan. For the first time, Japan was the target of aggression. In response, President Trump endorsed Article 5 and pledged full US support to Japan. Now Japan, with US support, needs to be able to fight a war if necessary. Japan depends on the US to lead in sustaining the security of the region.

Discussion

Tom Finneran (Moderator): As tensions rise, is East Asia becoming the next hot spot like the Middle East?

Dr. Smith: There are significant geopolitical differences between the Mideast and East Asia. First, the US relies on its Asian allies to support a US military presence in the region. Second, Japan is the world’s third largest economy so it plays a major role in global commerce and is a key strategic partner with the US in maintaining security in the region.

Meanwhile, Japan and other Asian nations worry about China’s spreading influence and aggressive policies in the region. In the past, 25% of Japan’s foreign aid went to China to help it progress in the post-WW2 era. But as Chinese policies shifted to a more aggressive stance, Japan has distanced itself from China.

John Burchett (Google): Do the other Asian countries have the capability to contain China?

Dr. Smith: Today, all of our economies, including the US, China, Japan, Russia, and the EU, are interdependent. Globalization means everyone would get hurt if conflict occurred.  Containment is not an option due to our economic interdependence. It will require collective actions of all the US allies to maintain norms and institutions and rule of law on the open seas. We need a coordinated strategy that boxes China into global values and structures.

Sen. Eduardo Bhatia (PR): What is the domestic future for Japan?

Dr. Smith: Demographic changes are altering the social climate of Japan. The 1980’s generation grew up in boom times with Japan in ascendancy. Today’s generation has grown up in a recessionary economy, with frequent changes of Prime Ministers, and a perception of their neighbors as hostile, rather than as future partners.  The future looks dim for young Japanese. This encourages nationalism and a greater willingness to invest in military expenditures.

The tsunami in 2011 evoked more positive public spirit as people helped one another. In addition, Prime Minister Abe has intentionally sought to change the mindset to a more optimistic, positive vision for the future. After 8 quarters of slow but positive economic growth, the future looks more promising.

Sen. Jonathan Dismang (AR): Are there risks associated with the fact that Japan owns so much US debt (1.061 trillion)?

Dr. Smith: Japan’s Foreign Direct Investment (FDI) is important to America’s economic future. Japan sees the US-Japan relationship as positive and views the US in a positive leadership role. Today, Japan trusts the US. This is why it is so important to be careful when throwing economic bombs, such as tariffs on cars.

Today, Japan trusts the US. This is why it is so important to be careful when throwing economic bombs, such as tariffs on cars.

Sen. Larry Taylor (TX): If Japan is facing a demographic collapse of the population, from which countries will they attract immigrants?

Dr. Smith: In the boom times of the 1980’s and 1990’s, Japan pursued a managed immigration policy and negotiated limited contracts largely for construction jobs that were filled by workers from Bangladesh and Iran. Today, targeted, limited, and well-defined immigration is allowed. Long-term contracts are being given to Philippine and Malaysian workers to fill healthcare roles, such as care for the elderly and home care. Workers with high-tech skills can get a green card to work in industries if Japan does not have people to fill the role.

Sen. Eli Bebout (WY): Now that the Japanese are perceiving China as a threat, what do they think about all the Chinese students who are studying in the US?

Dr. Smith: Today, fewer Japanese students are studying abroad, they are more timid about coming to the US, while more and more Korean and Chinese students continue to apply. Chinese students are closely supervised by the Chinese government when they are abroad, and this contributes to concerns that some foreign students may be engaging in IP theft or industrial spying. However, it is most important to maintain the exchanges and continue to have students from different countries and cultures become familiar with the US and our norms.

Speaker Biography

Sheila A. Smith

Sheila A. Smith, an expert on Japanese politics and foreign policy, is senior fellow for Japan studies at the Council on Foreign Relations (CFR). She is the author of Intimate Rivals: Japanese Domestic Politics and a Rising China (Columbia University Press, 2015) and Japan's New Politics and the U.S.-Japan Alliance (Council on Foreign Relations, June 2014). Her current research focuses on how geostrategic change in Asia is shaping Japan's strategic choices. In the fall of 2014, Smith began a project on Northeast Asian Nationalisms and Alliance Management.

Smith is a regular contributor to the CFR blog Asia Unbound, and frequent contributor to major media outlets in the United States and Asia. She joined CFR from the East-West Center in 2007, where she directed a multinational research team in a cross-national study of the domestic politics of the U.S. military presence in Japan, South Korea, and the Philippines. She was a visiting scholar at Keio University in 2007-08, where she researched Japan’s foreign policy towards China, supported by the Abe Fellowship. Smith has been a visiting researcher at two leading Japanese foreign and security policy think tanks, the Japan Institute of International Affairs and the Research Institute for Peace and Security, and at the University of Tokyo and the University of the Ryukyus.

Smith is vice chair of the U.S. advisors to the U.S.-Japan Conference on Cultural and Educational Exchange (CULCON), a bi-national advisory panel of government officials and private sector members. She also serves on the advisory committee for the U.S.-Japan Network for the Future program of the Maureen and Mike Mansfield Foundation. She teaches as an adjunct professor at the Asian Studies Department of Georgetown University and serves on the board of its Journal of Asian Affairs. She earned her MA and PhD degrees from the department of political science at Columbia University.

July 11-15, 2018

Japan

Sheila A. Smith, PhD

Senior Fellow for Japan Studies
Council on Foreign Relations

Japan is the US most important ally in Asia. US trade with Japan totaled an estimated $270.7 billion in 2016, and Japan is currently the 4th largest goods trading partner for the US. This alliance is crucial to both nations' economic and political interests, Dr. Sheila Smith pointed out to the Forum. However, Japan faces challenges not just from emerging competition in the region but also from its own demographics as a rapidly aging society. Dr. Smith explored the economic and political impacts of these demographics changes as well as the effects of the rapidly evolving geopolitical environment in Asia on Japan and its relationship with the US.

Japan is the US most important ally in Asia. US trade with Japan totaled an estimated $270.7 billion in 2016.

Japan’s Economy

Japan’s economy has sustained growth at 2% per year over the past 5 years. In response to global competition, Japanese companies have harnessed advanced technologies such as artificial intelligence and robotics to improve productivity and sharpen their competitive edge.

Confronting its demographic challenges is a daunting task because of Japan’s aging population and low fertility rate. Japan’s current population is 127 million. In 2013, there were more deaths than births, and, by 2048, the population will decline to 99 million and to 86 million by 2060. The composition of Japan’s workforce mirrors this trend: by 2065, <10% of the population will be under 15 years of age, while 42% will be over 65. By 2045, there will be a 1:1 ratio of workers to dependents. Japan is slowly opening up its closely managed immigration policy as a way to meet workforce needs.

Confronting its demographic challenges is a daunting task because of Japan’s aging population and low fertility rate.

Japan’s demographics reflect world-wide trends as many countries see a declining ratio of workers to dependents. In the US, the balance is slightly better because immigration helps maintain a more viable worker-to-dependent ratio.

Japan’s Military

Article 9 of Japan’s constitution declares "the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as means of settling international disputes.” Japan has a defense budget that is capped at 1% of Japan's gross domestic product (GDP), which funds the Self Defense Force (SDF) – whose stated mission is "to preserve Japan's peace, independence and safety.” However, as Japan is the world's third-largest economy, 1% of its GDP is $55.9 billion, making it the world's sixth-best funded army and its naval defense forces are considered one of the world's most capable. In comparison, the US invests $598 billion in defense, while China’s military spending in 2018 is about $141 billion.

The Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as means of settling international disputes.

The Japanese public is divided over its future military strategy. Some argue, “You can’t build peace with weapons,” while others view the threats from China and North Korea as a harbinger that it is time to “rethink the constitutional limit on military spending.”

The Japanese public is divided over its future military strategy.

Japan and North Korea

Direct threats to Japan are the missile and weapons of mass destruction capabilities of North Korea. North Korea’s newest missiles can reach not only Japan but also the US, and its frequency of missile testing has skyrocketed under Kim Jong-Un.

Direct threats to Japan are the missile and weapons of mass destruction capabilities of North Korea.

Japan has invested $2-3 billion in defense against ballistic missiles, but this is not sufficient to face North Korea’s increasing threats. Japan is the only country in North Asia that cannot retaliate against a North Korean attack. In response to the changing threat level, Japan may seek to develop retaliatory power and may invest in new land-based systems to respond to attacks.

Japan and China

China’s military modernization has changed Japan’s defense needs. The Chinese have brandished their air and naval capabilities with increasing military exercises near Japanese waters. The Chinese dispute Japan’s claim to the Senkaku Islands and created the "East China Sea Air Defense Identification Zone," which includes the Senkaku Islands.

The growing presence of Chinese vessels in Japanese waters has prompted Japan’s increased investment in intelligence, surveillance, and reconnaissance capabilities. Japan’s SDF is responding by scrambling to meet Chinese aircraft and monitoring and potentially confronting Chinese forces in Japanese territory.

Japan and the US

Japan was able to rebuild itself after WW2 into a modern technology and manufacturing giant based on the infrastructure developed by the US and support from the International Monetary Fund and World Bank. Japan is a strategic economic, military, and political partner for the US and wants the US to be active and engaged in Asia. Currently, there are 140,000 US military in the region with more than 50,000 of them in Japan, making Japan a critical military ally. But Japan also confronts two challenges similar to those facing the US: the need to compete more effectively in global commerce, and the necessity to manage its demographics challenges.

Japan is a strategic economic, military, and political partner for the US and wants the US to be active and engaged in Asia.

Japanese industry engages substantial manufacturing operations in the US. Its Foreign Direct Investments in the US are greater than those from Canada. Japan is the second largest owner of US debt. Because of these interdependences, Japan wants to deepen and strengthen its partnership with the US.

But Japan has received mixed signals from the US. Prime Minister Abe worked hard to implement the Trans-Pacific Partnership (TPP); therefore, the US withdrawal from TPP was disruptive. This action, as well the subsequent imposition of US tariffs, has Japan concerned about the continuing US role in the region.

 Japanese reservations about US intentions are significant because growing threats in emphasize that the US-Japan relationship is critical to Japanese and global security.

These reservations about US intentions are significant because growing threats in the region emphasize that the US-Japan relationship is critical to Japanese and global security. Article Five of the U.S.-Japan Security Treaty obligates the US to assist in the defense of Japan, and the US and Japan continue to upgrade how they will respond to any threat. Japan has not been a direct target of aggression until now.

During the Japan-US Summit between President Trump and Prime Minister Shinzō Abe in February 2017, North Korea launched missiles toward Japan. For the first time, Japan was the target of aggression. In response, President Trump endorsed Article 5 and pledged full US support to Japan. Now Japan, with US support, needs to be able to fight a war if necessary. Japan depends on the US to lead in sustaining the security of the region.

Discussion

Tom Finneran (Moderator): As tensions rise, is East Asia becoming the next hot spot like the Middle East?

Dr. Smith: There are significant geopolitical differences between the Mideast and East Asia. First, the US relies on its Asian allies to support a US military presence in the region. Second, Japan is the world’s third largest economy so it plays a major role in global commerce and is a key strategic partner with the US in maintaining security in the region.

Meanwhile, Japan and other Asian nations worry about China’s spreading influence and aggressive policies in the region. In the past, 25% of Japan’s foreign aid went to China to help it progress in the post-WW2 era. But as Chinese policies shifted to a more aggressive stance, Japan has distanced itself from China.

John Burchett (Google): Do the other Asian countries have the capability to contain China?

Dr. Smith: Today, all of our economies, including the US, China, Japan, Russia, and the EU, are interdependent. Globalization means everyone would get hurt if conflict occurred.  Containment is not an option due to our economic interdependence. It will require collective actions of all the US allies to maintain norms and institutions and rule of law on the open seas. We need a coordinated strategy that boxes China into global values and structures.

Sen. Eduardo Bhatia (PR): What is the domestic future for Japan?

Dr. Smith: Demographic changes are altering the social climate of Japan. The 1980’s generation grew up in boom times with Japan in ascendancy. Today’s generation has grown up in a recessionary economy, with frequent changes of Prime Ministers, and a perception of their neighbors as hostile, rather than as future partners.  The future looks dim for young Japanese. This encourages nationalism and a greater willingness to invest in military expenditures.

The tsunami in 2011 evoked more positive public spirit as people helped one another. In addition, Prime Minister Abe has intentionally sought to change the mindset to a more optimistic, positive vision for the future. After 8 quarters of slow but positive economic growth, the future looks more promising.

Sen. Jonathan Dismang (AR): Are there risks associated with the fact that Japan owns so much US debt (1.061 trillion)?

Dr. Smith: Japan’s Foreign Direct Investment (FDI) is important to America’s economic future. Japan sees the US-Japan relationship as positive and views the US in a positive leadership role. Today, Japan trusts the US. This is why it is so important to be careful when throwing economic bombs, such as tariffs on cars.

Today, Japan trusts the US. This is why it is so important to be careful when throwing economic bombs, such as tariffs on cars.

Sen. Larry Taylor (TX): If Japan is facing a demographic collapse of the population, from which countries will they attract immigrants?

Dr. Smith: In the boom times of the 1980’s and 1990’s, Japan pursued a managed immigration policy and negotiated limited contracts largely for construction jobs that were filled by workers from Bangladesh and Iran. Today, targeted, limited, and well-defined immigration is allowed. Long-term contracts are being given to Philippine and Malaysian workers to fill healthcare roles, such as care for the elderly and home care. Workers with high-tech skills can get a green card to work in industries if Japan does not have people to fill the role.

Sen. Eli Bebout (WY): Now that the Japanese are perceiving China as a threat, what do they think about all the Chinese students who are studying in the US?

Dr. Smith: Today, fewer Japanese students are studying abroad, they are more timid about coming to the US, while more and more Korean and Chinese students continue to apply. Chinese students are closely supervised by the Chinese government when they are abroad, and this contributes to concerns that some foreign students may be engaging in IP theft or industrial spying. However, it is most important to maintain the exchanges and continue to have students from different countries and cultures become familiar with the US and our norms.

Speaker Biography

Sheila A. Smith

Sheila A. Smith, an expert on Japanese politics and foreign policy, is senior fellow for Japan studies at the Council on Foreign Relations (CFR). She is the author of Intimate Rivals: Japanese Domestic Politics and a Rising China (Columbia University Press, 2015) and Japan's New Politics and the U.S.-Japan Alliance (Council on Foreign Relations, June 2014). Her current research focuses on how geostrategic change in Asia is shaping Japan's strategic choices. In the fall of 2014, Smith began a project on Northeast Asian Nationalisms and Alliance Management.

Smith is a regular contributor to the CFR blog Asia Unbound, and frequent contributor to major media outlets in the United States and Asia. She joined CFR from the East-West Center in 2007, where she directed a multinational research team in a cross-national study of the domestic politics of the U.S. military presence in Japan, South Korea, and the Philippines. She was a visiting scholar at Keio University in 2007-08, where she researched Japan’s foreign policy towards China, supported by the Abe Fellowship. Smith has been a visiting researcher at two leading Japanese foreign and security policy think tanks, the Japan Institute of International Affairs and the Research Institute for Peace and Security, and at the University of Tokyo and the University of the Ryukyus.

Smith is vice chair of the U.S. advisors to the U.S.-Japan Conference on Cultural and Educational Exchange (CULCON), a bi-national advisory panel of government officials and private sector members. She also serves on the advisory committee for the U.S.-Japan Network for the Future program of the Maureen and Mike Mansfield Foundation. She teaches as an adjunct professor at the Asian Studies Department of Georgetown University and serves on the board of its Journal of Asian Affairs. She earned her MA and PhD degrees from the department of political science at Columbia University.