Author’s Response: Positioning Japan’s State in a New Regional Reality

I deeply appreciate the insightful and inspiring reviews of Japan’s New Regional Reality: Geoeconomic Strategy in the Asia-Pacific in this book review roundtable by four of the most distinguished scholars in the field. These reviews are encouraging as they all highlight the continued importance of Japan’s engagement in the Asia-Pacific as the third-largest economy in the world, when many others seem to have either forgotten or dismissed Japan’s geoeconomic agency. This roundtable (and the book’s publication) is quite timely as Shinzo Abe, Japan’s longest-governing postwar prime minister (December 2012–September 2020), just stepped down in September. Abe is viewed as the architect of Japan’s active foreign economic policy. It is thus an opportune time to take stock of the new reality that has emerged for the country while it has been in the shadows of China’s rapid rise for the last two decades. The reviewers’ helpful comments and intriguing discussions have led me to reflect further on how to position Japan’s foreign economic policy within regional dynamics and contemplate how the government can successfully execute its proactive strategy.

Regional Dynamics

Japan’s New Regional Reality presents Japan’s state-led liberal strategy and examines vital factors that shifted Japan’s engagement with the Asia-Pacific away from the mercantilist foreign economic policies of the past. The reviewers, in one way or another, have asked whether this new strategy is effective. In assessing how Asian neighbors have received Japan’s strategic endeavors, T.J. Pempel is understandably dubious that “countries in the region are anxious to accept Japan’s leadership in forging a region-wide rules-based liberalism.” While it is worrisome to observe the stalled free-trade negotiations between Japan and South Korea and their recent trade conflict over high-tech materials, I see three factors working in favor of Japan taking the lead in facilitating the rules-based liberal economic order in East Asia. First, practices supporting high standards are welcomed by advanced economies in the region such as South Korea as Korean businesses operate and expand their own supply and production networks in Asia. We see the convergence of interests between South Korea and Japan in support of a new generation of investment agreements—for example, through the China-Japan-Korea trilateral investment agreement negotiations that successfully concluded in 2012.¹ Even China and Japan, as two major creditor countries in the region, have collaborated closely to lead the Chiang Mai Initiative, despite their heightened tensions in other domains.²

Second, Shihoko Goto asserts that, due to its own development experience, Japan has a unique role to play as a mediator of the economic change occurring throughout the region. I fully agree with her observation, which is another way to position Japan’s state-led liberal strategy. Unlike the United States, which tends to demand liberalization and rapid economic change, Japan, drawing on its own experience as a late industrializer, understands the difficulty of this process. For generations, the Japanese government has accumulated experiences—both successful and painful—on how to respond and adjust to liberalization pressures. Therefore, Japan is much more willing to allow time and space for emerging economies in the region to embrace the liberal order. Finally, and in contrast to both China’s “in your face” economic presence in Southeast Asia through its Belt and Road Initiative and recent U.S. disengagement by the Trump administration, Japan’s embrace of regional institutions and economic outreach has made the country a welcome regional leader. In the annual survey conducted by ASEAN Studies Centre at the ISEAS–Yusof Ishak Institute in Singapore, Japan received the highest marks as a trustworthy country, with 61.2% of ASEAN elite respondents saying that they are either confident or very confident that Japan “will do the right thing to contribute to global peace, security, prosperity and governance.” Among those who trust Japan, the majority (51%) have reasoned that Japan “is a responsible stakeholder that respects and champions international law.”³

Despite the solid position Japan has cultivated in regional...