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Power in the international system is no longer defined strictly by military might. Economic strength has become a means of achieving international clout, as proven by the small, but determined, Japan.


Japan dedicates less than 1 percent of its gross domestic product (GDP) to military spending, yet is one of the most powerful and influential states in the Asian region and around the globe. Japan has created its position of power by utilizing its most valuable resource—an industrious and inventive population—to become one of the world’s most important economies and a primary producer of technology, automobiles, and electronics. Despite its relatively small size, Japan proudly boasts the world’s third-largest economy.

Traditionally, Japan has enjoyed a close relationship with the United States since World War II, but recently Japan has embraced a more regional approach to foreign policy, striving to deepen ties economically and politically with its fellow Asian neighbors. Much of this shift has to do with a seeming lack of interest in the region on the part of the United States and an increasing prominence of China in economic and political affairs. While Japan does not show any indication of abandoning its US ties, it is clear that in the years to come Japan will be a key player in shaping a new, closer Asia.

Recently, Japan has encountered several obstacles that have challenged its economy and influence. An aging population has cast a shadow over the prospects for continued prosperity, as social welfare costs are expected to rise dramatically in coming years. Domestically, Japan’s economy has slowed and the government has yet to devise a successful strategy for reinvigoration, contributing to fears of an uncertain future. Also, the rise of China has added new dynamic considerations to both Japan’s domestic and foreign policies, forcing a change in Japan’s approach to international affairs.

Historically, Japan’s foreign policy has been guided by economic pursuits and principles. The Yoshida Doctrine allowed Japan to enjoy guaranteed military protection from the United States, thereby freeing up capital, manpower, and technology to produce one of the world’s most advanced economies and strongest trading partners. Japan has been able to use its economy as a tool for achieving its various foreign policy objectives.

Japan is typically reluctant to take hard-lined positions on issues of foreign policy, partly to avoid upsetting the US-Japan relationship and partly to avoid resurrecting anti-Japanese sentiments in certain parts of Asia. Within Asia, Japan has a rocky past with some of its neighbors, such as China and Korea, due to its time as an imperial power in the late 19th and early 20th centuries. Since the turn of the millennium, Japan has refocused its foreign policy ambitions on deepening regional integration and improving its relations with other Asian states.

The rise of Asian states such as China and India has caused Japan to have a renewed interest in Asian regional integration. Japan is one of two Asian countries to be a member of the Organisation for Economic Co-operation and Development, and is actively involved in the G-8, Association of Southeast Asian Nations (ASEAN), Asia-Pacific Economic Cooperation, the World Trade Organization (WTO), and various United Nations programs. In an effort to further enhance regional cooperation, Japan has launched several new initiatives for Free Trade Agreements (FTAs) and Economic Partnership Agreements (EPAs) with ASEAN states, South Korea, and India.

The impetus for tighter regional cooperation began soon after the Asian financial crisis of 1997, when ineffective International Monetary Fund policies and lack of US aid led many Asian states to rely on each other instead of “Western” outlets. Japan’s current motivation for increasing regional interaction is twofold. One is to ensure greater stability and cooperation economically. Japan has a long history of trade with the rest of Asia, and now that China has replaced the United States as Japan’s largest trading partner in terms of both exports and imports, the importance of Asia for Japan will only grow. The other aspect of increased regional integration is a desire for increased security assurances. With US foreign policy currently focused on other regions of the globe, Japan, along with the rest of Asia, has begun to seek stronger ties with neighboring states to reduce the risk of potential conflict.

Japan views Asia as the future center for growth economically and politically. In accordance with this view, Japan’s foreign policies are intended to incorporate Japan as a leader in regional integration. As a leader, Japan will be able to maintain its position of influence in spite of the changing regional dynamics.

The emergence of China onto the world stage has changed the dynamics of international relations for many countries. For Japan in particular, relations with China are increasingly important and especially complicated. Japan’s history with China is long, complex, and at times brutal. Many issues, such as Japanese war crimes against the Chinese and the Yasukuni Shrine, are not resolved and contribute to the often “cool” political relations between Japan and China. Politically, many of Japan’s former prime ministers did not view Sino-Japanese relations as a priority. Former Prime Minister Junichiro Koizumi in particular did more harm to relations than good with his regular visits to the Yasukuni Shrine.

Japan is very aware of the importance of China for its foreign policy. Cooperation with China is instrumental for Japan to achieve other political objectives, such as successful resolution of the six-party talks with North Korea. Additionally, because of China’s relative opacity regarding its own foreign policy goals and desires, Japan wishes to strengthen ties so as to ensure that Chinese ambitions do not include military aspirations against Japanese territory. As China’s economic boom continues, increasing China’s need and consumption of energy, there is concern that competition for energy resources may arise between Japan and China.

Another primary foreign policy objective of Japan is reaching a successful conclusion of the six-party talks with North Korea. For Japan, successful conclusion means a denuclearized North Korea and resolution of the abduction of several Japanese citizens by North Korea. Denuclearization of North Korea is critical to Japanese national security, particularly since North Korea has already demonstrated that it has missiles capable of reaching Japanese territory. Japan is very weak militarily, relying on the United States for its national security and nuclear umbrella, and so allowing a rogue state with such a close proximity as North Korea to obtain nuclear weapons is seen as a very great threat to national security.

The United States and Japan still enjoy a special relationship, as the two have since the end of World War II. Even though Japan’s foreign policy has taken a more regional direction, most officials in Japan continue to assert that Japan’s relationship with the United States is the most important relationship it has. Japan is the United States’ closest ally in Asia, and its foreign policy initiatives with the United States are intended to keep this “special relationship” special.

Upon its surrender in 1945, Japan came under US occupation, which ended in 1952 with the San Francisco Peace Treaty. During that time, the United States drafted a new democratic constitution for Japan under which Japan was assigned the role of a “pacifist actor” within the international community. Since then, Japan has made several revisions and interpretations of its rights to military power and maintains small Self-Defense Forces (SDF).

Article IX of the Japanese constitution expressly states that Japan must renounce its rights to the use of force, and the “right of belligerency of the state [Japan] will not be recognized.” Consequently, Japan entered into a security arrangement with the United States in 1952 at the end of the US occupation that allowed for a continued US presence in Japan. The United States agreed to defend Japan and intervene in any domestic affairs for which Japan requested assistance. Japan also created a small military force for handling matters of self-defense without requiring the aid of the United States, but these forces are not large enough to obviate the security treaty.

Changing global circumstances have cause Japan to reexamine Article IX with the scrutiny of a modern eye. Several times, Japanese government officials have discussed amending the constitution to allow for greater use of military force. Japan has expanded its military capabilities to allow it to send troops in support of UN peacekeeping missions, as well as created provisions for the use of weapons by those troops for their own self-defense. While an actual amendment has yet to come to fruition, subsequent pressure by the United States for Japanese military support and concerns for its own national security have caused for looser interpretations of Article IX and the definition of collective self-defense.

Japan’s SDF are part of the Ministry of Defense (it was the Japan Defense Agency until January 7, 2007). The SDF maintains air, maritime, and ground forces. The number of troops is currently around 270,000—which is very small when compared to military might of China and the two Koreas. This limited size prohibits the extent of operations that Japan can engage in, and should Japan try to increase the size of its forces again, it may generate fear and suspicion among its neighbors.

Consequently, Japan’s military capabilities are limited to domestic defense and participation in UN-authorized missions. Japan began sending troops as a part of UN peacekeeping operations in 1992 and most recently supplied support in the Indian Ocean for US operations in Iraq and Afghanistan. Within Japan there has been great controversy over the legality of sending Japanese ships to the Indian Ocean, with some arguing that the operation falls beyond the scope of the United Nations and instead is direct support for US military action.

Japan is still the only country in the world to have ever been attacked by nuclear weapons. Knowing the destructive capabilities of nuclear weapons firsthand, Japan has admitted to having a particular aversion to nuclear weapons. This attitude, combined with the limits placed on its military capabilities by Article IX, has forced Japan to rely on the Seventh Fleet of the United States for its nuclear protection.

Strategically, experts argue that there is little value in Japan pursuing a nuclear weapons program. Even though Japan could obtain the necessary resources and certainly has the technological capacity to construct nuclear weapons, it would gain little benefit from possessing them. The small size of Japan, with its concentrated population centers, would void the principle of mutual destruction since an aggressor could eliminate much of Japan’s population and infrastructure in a first strike.

The primary threats for Japan involve its neighbors. North Korea, as a rogue state, is highly unpredictable and has possession of missiles capable of reaching Japan. While North Korea is not yet a nuclear power, it has made clear its intentions of becoming one. A nuclear North Korea would dramatically change Japan’s security situation, possibly forcing a revision of Article IX.

The other possible threat to Japanese security is China. Although the two states currently enjoy strong economic relations, abating the concern that China would launch an attack on Japan, Sino-Japanese relations have historically run hot and cold and will likely continue to do so—at least politically—for years to come. China would not likely directly attack Japan, but should conflict arise over the status of Taiwan, Japan may find itself drawn into a military conflict.

Japan’s economy assisted in the development of the “Asian miracle” economic model that afforded it rapid growth and high levels of productivity throughout most of the 20th century. Japan currently runs a trade surplus, with its primary exports being automobiles, technology, and other electronics such as computers. Since it lacks many resources of its own, Japan is highly dependent on fuel and food imports.

Japan is one of the few Asian states that were never under colonial rule. Following World War II, the US occupation and security treaty allowed Japan to focus almost entirely on its economic development without concern for military buildup. The Korean War helped kick-start Japan’s economy as it began producing mass consumption items for US troops stationed in Japan. Through the 1950s Japan was a heavy producer of mass consumption items and emerged as a successful exporter. As costs of production rose within Japan, Japanese businesses began investing in the Asian region and moving parts of production to cheaper destinations, allowing the domestic market to continue progress into more advanced technology and goods production.

Throughout the 1960s and 1970s, Japan continued the success of its export-led growth model and took on more massive industrial ventures like shipbuilding and automobiles. By the 1980s, Japan was a major economic power and has remained such despite two major economic shocks in the 1990s: the bursting of a real estate bubble in 1990 and the Asian Financial Crisis in 1997. Currently, Japan is no longer growing at the same accelerated rates of the 20th century, but rather is growing more at the rate of a developed country—not a developing one.

For many years Japan was the world’s second-largest economy just after the United States, but it now comes in third after China. Sluggish economic growth has generated concerns about the vitality of the Japanese market and its sustainability into the future. Since the turn of the millennium, Japan has engaged in expansive monetary policies and fiscal policies to try to reignite its economy and has encountered only limited success. There are several reasons why Japan has not been able to reclaim its former growth.

One reason is simple maturation of the market and a need to shift to a new economic model. Japan’s export-led growth model did wonders for bringing in capital and technology at a time when Japan did not have many resources to utilize. Japan has now outgrown this model and must apply its ingenuity toward modifying the model for growth in a new world order. China’s sizeable economy and lower production costs have created an environment where export-led growth is best suited for China rather than Japan. Japan now faces challenges of increasing domestic consumption while continuing strong exports to pay for the debt that it has accumulated.

Another factor hampering Japan’s growth is its aging population. Japan has repeatedly cut its budget for public spending, yet with each passing year it must simultaneously increase its spending on social welfare as more citizens become dependent on the system. The aging population also means that the available work force is declining, contributing to the slowing of the economy. Interestingly enough, Japan’s per capita productivity has increased while actual productivity has slowed because of the changes to the work force demographics.

Japan’s primary economic aspiration is reinvigoration through Asian engagement. China’s presence has changed global trade dynamics and has greatly impacted trade opportunities for the Asian community. Asia as a region is growing stronger economically, and thus Japan finds that there is potential for it to grow with the region—or risk being left behind and left out.

The ardent pursuit of FTAs and EPAs within Asia are potential conduits for Japanese economic growth, breaking down barriers between Japan and its trading partners. Japan has already concluded EPA negotiations with Singapore, Brunei, Malaysia, Thailand, Indonesia, and the Philippines; Japan is currently negotiating an overarching EPA with ASEAN as well as an EPA with South Korea. Japan has been able to maintain its position as a producer of mostly technical and advanced technology goods, with the less complicated aspects of manufacturing being moved to states where the labor skill level is still low.

Japan is most competitive in complex and technical industrial sectors. During the 1960s and 1970s, Japan was a major producer of chemicals and heavy industry, such as shipbuilding; these industries accounted for nearly 43.1 percent of GDP during the 1970s. Rising oil prices of the 1970s caused Japan to shift its industrial production in the 1980s to high-value-added, technology-based industry. Simultaneously, Japan began broadening its tertiary (services, retail, wholesale, etc.) sector. The technology boom followed shortly thereafter, allowing Japan to become a juggernaut in electronics, computers, and biotechnology. In 2000, tertiary services accounted for over 70 percent of Japan’s GDP.

There are several industrial sectors that have particular importance for Japan. Its major industries include automobiles, steel, heavy electrical equipment, semiconductors, telecommunications equipment, and processed foods. The automobile industry is a critical component of Japan’s economy, and presently Japan is one of the world’s leaders in automobile production and export.

Japan’s fishing industry is currently one of the largest in the world. However, the industry is coming under strain due to concerns of the overfishing of certain species, such as tuna. The fishing industry is very important to Japan, where fish is one of the primary foods consumed by the population. Because of its importance, Japan’s Ministry of Agriculture, Forest, and Fisheries has announced a new plan for fishing that focuses on the sustainability of Japan’s fishing practices.

Japan’s primary trading partners are located in Asia. In 2007, China replaced the United States as Japan’s primary trading partner both in terms of exports and imports. According to Japan External Trade Organization, China comprised 17.7 percent of all of Japan’s trade in 2007. After China, the United States is Japan’s second largest trading partner, followed by Hong Kong, South Korea, and Taiwan.

Having defeated Japan during World War II, the United States wrote a new constitution for the country, changing it from an imperial power to a democracy. Japan’s government is divided into three branches: executive, legislative, and judicial. However, the role of each of these branches differs from their US counterparts. Japan’s government is parliamentary in structure, so the population does not elect the prime minister, but rather elects a majority party. There are several parties in Japan, but the most significant players are the Liberal Democratic Party (LDP) and the Democratic Party of Japan (DPJ).

The LDP has been the ruling party in Japan almost exclusively since 1955, controlling both the Lower House and Upper House of the National Diet and also controlling the office of the prime minister. Elections in 2007 upset this balance, with the LDP losing control of the Upper House to its principal rival, the DPJ. The LDP is Japan’s most conservative party, and favors amending the military clauses of the constitution and a more liberal economy. The DPJ is a social liberal party that favors some form of economic protection and believes that Japan must wholly embrace its role as a pacifist state.

Frequently, the prime minister has set the tone for Japan’s political influence. Former Prime Minister Junichiro Koizumi, who was in power from 2001 to 2006, set his domestic agenda as a top priority along with maintaining a strong relationship with the United States. Consequently, during his tenure relations with other states faltered particularly in the Asian region. Koizumi was one of the longest-serving prime ministers Japan has seen since Yasuhiro Nakasone’s tenure from 1982 to 1987. Following Koizumi, Japan has had two more prime ministers. Shinzo Abe was prime minister from September 2006 to September 2007, and Yasuo Fukuda held office until fall of 2008. Taro Aso is the present prime minister but may not hold office beyond the next election. The primary opposition party, the Democratic Party of Japan (DPJ) seems poised to take control in the next election.

The prime minster is responsible for controlling all aspects of the executive branch. The power enjoyed by the prime minister has largely depended on the individual holding that position. Koizumi was a very active prime minister and did a great deal to fortify the power of the position in affecting policy. Other prime ministers have been more passive leaders, deferring more power to the Cabinet and the National Diet.

On the surface, Japan’s government is deceptively simple: the two main parties contend with each other for control while the smaller parties form coalitions with them to win seats and effect policy. However, the system is far more complex. Within the two major parties, there exist many factions—“many small parties within a party.” This “party within a party” structure has made gaining party support very difficult, as each faction will attempt to push through its own agenda. Koizumi was able to avoid the factions by speaking directly to the Japanese people, working almost from the outside-in, to push policy in the desired direction. Abe and Fukuda have been less successful in employing this same tactic and instead continue to battle with internal factions.

New parties often form in Japan as a union of several factions or parties who are dissatisfied with their affiliated party or the ruling party. The DPJ, for example, formed in 1998 as a merger of four smaller parties that were dissatisfied with the LDP. Within the DPJ, however, many factions have emerged, and the founding parties’ former leaders head the more prominent ones. The LDP is more factionalized than the DPJ, and more frequently engages in bitter infighting, in spite of Japan’s traditional emphasis on compromise and harmony.

Religion does not play a large role in the lives of most Japanese people. Shinto and Buddhism are the two major religions in Japan and have coexisted, and at times complemented, each other. Most Japanese identify themselves as either Shinto or Buddhist, and sometimes as both. Typically, the average Japanese citizen engages in religious ceremonies for weddings and funerals only, and will visit a temple or shrine on New Year. Local festivals typically have religious origins, and residents generally embrace these events.

Japanese pop culture has become one of Japan’s best “soft” diplomacy tools. Western youth in particular has taken a keen interest in Japanese culture, from anime and manga to fashion and culture. Japan has also found an ally through the exportation of its cuisine, usually in the form of sushi and sashimi. Typically the Japanese government welcomes the cultural exchange that occurs through these venues, believing cultural understanding to be a key component to fostering stronger relations abroad.

Anime and manga are two aspects of Japanese pop culture that have grown more popular around the globe. Anime and manga are styles of Japanese cartooning, and can be animated or in print. The influx of Japanese animation and comics has sparked a new interest among younger generations in Western households in Japan and Japanese culture. From Japan’s perspective, this is an ideal development encouraging future generations to have a positive view of Japan and Japanese culture. The exportation of Japanese pop culture in all forms, beyond anime, is seen as building cultural understanding and improving foreign relations.

Japan’s Agency for Cultural Affairs has advocated that the government either increase support of anime and manga or create the environment for new cultural exports to emerge. This agency is relatively new and strongly advocates the promotion of Japanese culture through better translations of government materials and books. Japan already utilizes the Japan Foundation, which is affiliated with the Ministry of Foreign Affairs, to promote Japanese culture and is encouraging closer coordination between the Cultural Affairs Agency and the Japan Foundation.

While aspects of Japanese popular culture may be generational (anime and manga tend to appeal to younger crowds), Japanese cuisine is a prominent ambassador of Japan’s culture. In the 1970s, there were very few sushi restaurants in the United States, but through increased trade and political interaction, Japanese culture became more prominent in the Untied States in the subsequent years. Now, sushi and other forms of Japanese cuisine are widely accessible and very popular. Some Japanese foods have even been Westernized, such as the “California roll,” which is not a traditional Japanese roll.

Lacking many resources of its own, Japan is very dependent on foreign suppliers for its energy needs. As China and India continue to grow and demand more resources, this translates into increased energy insecurity for Japan. Japan imports just over 5 million barrels of oil per day, and also imports large amounts of natural gas to meet its energy needs.

Roughly 88 percent of Japan’s oil imports come from the Middle East, with the remainder coming mostly from African states. Because of this dependence on Middle Eastern oil, Japan is inextricably tied to the instabilities of the Middle Eastern region. Conflicts in the area frequently affect oil prices and accessibility, indicating high sensitivity within the Japanese economy to the fluctuations in oil availability and costs. Japan is also dependent on the safety and security of the sea-lanes by which this oil travels, namely the Taiwan Strait. A potential conflict in the area of the Taiwan Strait would prove extremely detrimental to Japan, restricting its access to vital energy resources.

Japan has also explored offshore drilling with limited success. The East China Sea possesses a gas field known as Shirakaba (or Chunxiao, according to the Chinese), which Japan and China both wish to access. However, the gas field lies in waters that both states believe they can lay claim to via their exclusive economic zones (EEZs). The EEZs were established in accordance with the United Nations Convention on the Law of the Sea and allow for states to regulate seabed resources that are up to 230 miles from their coastlines. China and Japan each have different interpretations of this boundary, with Japan believing the boundary begins with the state’s coastline, and China believing the zone begins with the continental shelf.

The Shirakaba gas field is estimated to have reserves so large that neither Japan nor China could completely deplete it within fifty years. Still, the two states are unable to reach an agreement that would allow for an exploratory joint venture, and neither is willing to allow unfettered access to the field for the other because of the strategic importance of resources.

Given Japan’s dependence on foreign oil and gas reserves, Japan has reformed its energy policy to focus on economic efficiency to reduce energy costs, while simultaneously exploring new venues for energy security. Japan intends to improve energy consumption efficiency by at least 30 percent by 2030, reduce oil dependency of the transportation sector, increase the use of renewable resources such as solar energy, and increase nuclear power generation to 40 percent by 2030.

Japan’s nuclear power program is viewed as a critical step to reducing Japan’s dependence on foreign energy sources. The first reactor was opened in 1966, and today Japan has 55 reactors that account for roughly a third of the country’s energy supply. Nuclear power is certainly an important component of Japan’s energy program, but it has also met with certain complications. Financing nuclear power and winning public support have at times been challenging and prohibit more widespread use and development of nuclear power.

Please send us your thoughts on the changing global order and the materials offered here. All comments may be reprinted on this Web site and in related materials.

Sources: Japan Ministry of Foreign Affairs, Ministry of Economy, Trade and Industry, Japan’s Nuclear Power Program, BBC, CNN, and others.

This page is part of Rising Powers: The New Global Reality, a project from the Stanley Foundation.

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The global order is changing. The 21st Century will be marked by many competing sources of global power. Across politics, economics, culture, military strength and more, a new group of countries have growing influence over the future of the world:



South Africa
European Union

South Korea


Other Countries

Big issues are also playing a cross-cutting role in this changing global order:


Nuclear Nonproliferation
Nonstate Actors

Global/Regional Systems

And this changing global order has implications for the United States.

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