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Japan

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Japan country brief

Overview

Japan is a democratic, constitutional monarchy with a parliamentary government headed by a Prime Minister. Japan’s Prime Minister since 2012, Abe Shinzo is Japan’s longest serving Prime Minister. Japan maintains an imperial family, currently headed by Emperor Naruhito. The accession of Emperor Naruhito on 1 May 2019 marked the beginning in Japan of the Reiwa (translated as 'beautiful harmony') Era.

Universal suffrage is limited to citizens of Japan aged 18 years or older. Voting is not compulsory and voting rates vary widely.

Japan's parliament is known as the Diet. It comprises a House of Representatives (Lower House) and a House of Councillors (Upper House). The Lower House has 465 members who are elected for four-year terms, although political conditions frequently see the House dissolved earlier. The Upper House has 242 members who are elected for six-year terms, with 146 House members elected in prefecture-based constituencies and 96 by proportional representation at the national level. One half of the Upper House is dissolved for election at regular three-year intervals.

Executive power is vested in the Cabinet, which comprises the Prime Minister and Ministers of State. The Prime Minister is selected from among members of the Diet through a vote by both Houses. There is no term limit for Prime Ministers, although individual parties often have term limits in place under party rules. Under the Constitution, the majority of cabinet members must be elected officials. However, the Prime Minister can appoint non-politicians to the cabinet and as Special Ministers of State.

Japan's governmental structure has three tiers: national, prefectural and local. There are 47 prefectures and 1,741 other local municipalities. Each tier is governed by elected assemblies. Japan does not have a federal system and the two lower tiers of government are to a large extent fiscally dependent on the national government.

Current parliament

On 22 October 2017, the Liberal Democratic Party (LDP)/Komeito coalition were re-elected for a third consecutive term in the Lower House, maintaining a two-thirds majority. The number of seats in the Lower House was reduced from 475 to 465, due to electoral re-zoning. The LDP/Komeito coalition have held a majority in both houses of the Diet since the June 2013 election. Their majority in the Upper House decreased by nine seats at a half-Upper House election in July 2019. A Lower House election is due by October 2021.

House of Representatives (Lower House) numbers

Political party Seats 465
Liberal Democratic Party 283
The Constitutional Democratic Party of Japan, Democratic Party For the People, The Reviewing Group on Social Security Policy and the Independent 119
Komeito 29
Japanese Communist Party 12
Nippon Ishin (Japan Innovation Party) 11
The Party of Hope 2
Independents 8
Vacancies 0

Source: www.shugiin.go.jp 17 June 2020

The LDP/Komeito coalition have held a majority in both houses of the Diet since the June 2013 election. The majority in the Upper House was increased by ten seats at a half-Upper House election in July 2016.

House of Councillors (Upper House) numbers

Political party Seats 245
Liberal Democratic Party and Vocie of the People 113
Constitutionalist Democratic Party, People's Party, New Ryokufukai, and the Social Democrats 60
Komeito 28
Nippon Ishin (Japan Innovation Party) 16
Japanese Communist Party 13
Okinawa Whirlwind 2
Reiwa Shinsengumi 2
Hekisuikai 2
Your Party 2
Independents 7

Source: www.sangiin.go.jp 29 Julyy 2020

Economics

Japan's highly industrialised market economy is the third largest in the world (GDP at market exchange rates). It was the world's second largest economy from 1968 until 2009, when it was overtaken by China. Japan has a well-educated domestic work force and its large, relatively affluent population makes it one of the world's largest consumer markets.

Japan's manufacturing strength has been the most remarkable, and internationally renowned feature of Japan's economic growth. Today, Japan is a world leader in the manufacture of automobiles, machine tools, optical and precision equipment, machinery and chemicals. China, the Republic of Korea and other manufacturing economies have been gaining some economic advantage in manufacturing in recent years. Japanese firms have countered by transferring manufacturing production around the world through global value chains and boosting acquisitions of foreign companies. Japan's services sector, including financial services, now plays a far more prominent role in the economy, accounting for about 70 per cent of GDP. The Tokyo Stock Exchange is one of the world's foremost centres of finance.

International trade contributes significantly to the Japanese economy, with exports equivalent to approximately 14.8 per cent of GDP in 2018.

Key merchandise exports include motor vehicles, machinery and manufactured goods.

In 2018, Japan's major goods export destinations were China (19.5 per cent), the United States (19.0 per cent) and the Republic of Korea (7.1 per cent).

Japan has few natural resources and its agricultural sector remains relatively protected, although a long-overdue domestic reform process started in anticipation of recent trade deals, such as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and Japan-European Union Economic Partnership Agreement (JEEPA), both concluded in 2018.

Japan's main imports include mineral fuels, machinery, pharmaceuticals and chemicals. In 2018, leading suppliers of goods imports were China (23.2 per cent), the United States (10.9 per cent) and Australia (6.1 per cent). Japanese trade and foreign investment trends in recent years reflect a much greater engagement with China, which overtook the United States as Japan's largest merchandise trading partner in 2007.

Outlook

Since his election to office in 2012, Prime Minister Abe Shinzo has pursued an economic agenda dubbed 'Abenomics', implementing fiscal and monetary expansion as well as elements of structural reform that could further liberalise the Japanese economy. The measures also aim to address issues around the rapid ageing of Japan's population and declining birthrate, and the reduced workforce and tax revenues that come with this. The government is implementing labour market reforms, such as Abe's 'womenomics', to increase workforce participation to counter these trends. In October 2019, the Japanese government also raised the consumption tax from eight to ten per cent to increase tax revenues. Although progress has been made in a number of sectors, continued reform efforts will be important to revitalise Japan's business environment.

Japan's economy has performed relatively well since 2015 and its GDP grew faster than expected through to the end of the 3Q 2019. However, it has taken a hit from the COVID-19 crisis, recent global trade tensions and world economic slowdown. Japan is now in recession for the first time since 2015, following two consecutive quarters of negative economic growth, and a 2.2 per cent annualised decline in GDP in 1Q 2020 as a result of lower consumption and exports. Unemployment has remained low throughout the crisis at 2.9 per cent (May 2020), a small increase from the 26 year-low of 2.2 per cent in 2019.

Japan's stimulus measures to support the economy through COVID-19 exceed 230 trillion yen ($3.15 trillion), or 40 per cent of GDP. Measures include a universal cash payment to residents, subsidies and loans for businesses, and tax deferrals. Subsidies have also been introduced to encourage reshoring and nearshoring of Japanese production from China.

Foreign relations

Japan's foreign policy aims to promote a peaceful and stable international community to support an economy highly dependent on international trade and investment. It also seeks to contribute to international solutions to shared challenges such as environmental protection, terrorism, poverty reduction, disaster resilience and infectious diseases. Japan is working closely with partners, including Australia, on responses to COVID-19.

Japan was a non-permanent member of the UN Security Council in 2016-2017 and is the third-largest contributor to the UN budget. Japan's official development assistance (ODA) plays an important role in many countries, particularly in the Indo-Pacific region. Japan has been a member of the Human Rights Council since 2017 (until 2022).

While Japan's constitution limits its military role in international affairs, Japan's Self-Defense Forces contribute actively to UN peacekeeping operations and disaster relief, including in the Pacific. In September 2015, the Diet passed security reform legislation to give the Self-Defense Forces greater flexibility to contribute to international peace and stability, including by exercising its UN Charter right to collective self-defence. Japan is also actively engaged in nuclear disarmament and non-proliferation efforts, including its co-development with Australia of the Non-Proliferation and Disarmament Initiative.

The Japan-US alliance is the cornerstone of Japan's foreign policy and national security. Japanese cooperation with the United States through the US-Japan Security Treaty has been important to maintaining stability in the region. The US military maintains a presence of approximately 50,000 personnel in Japan under the US-Japan Treaty of Mutual Cooperation and Security of 1960. The US Seventh Fleet is based in Yokosuka and the 3rd Marine Expeditionary Force (III MEF) is based in Okinawa. Plans for the relocation of the Futenma US marine air base in Okinawa have been a longstanding bilateral preoccupation.

Japan describes Australia as its second most important security partner. The Australia-Japan-United States Trilateral Strategic Dialogue is a key security policy mechanism for Japan, Australia and the United States.

Good relations with its neighbours are of vital interest to Japan. After the signing of a peace and friendship treaty with China in 1976, bilateral relations developed rapidly. Japan supported China's membership of the World Trade Organization (WTO). Cooperation between Japan and the Republic of Korea (ROK), including over the threat posed by the Democratic People's Republic of Korea (DPRK), is important in ensuring regional stability. A trilateral summit process established in 2008 provides Japan, China and the ROK with a forum for leaders-level dialogue — the eighth meeting was held in December 2019. Japanese and Chinese leaders last met bilaterally in Tokyo in June 2019 at the G20 Leaders' Summit. However, Japan's relationships with China and the ROK are complicated by territorial and historical issues. Japan and Russia are also negotiating to resolve a longstanding territorial dispute. 

Japan and India elevated their bilateral relationship to a 'special strategic and global partnership' in December 2015, and Prime Minister Modi and Prime Minister Abe held their last bilateral summit in October 2018. The two countries cooperate in many areas in the security and economic fields.

Reflecting the importance Japan places on the Asia-Pacific region as a source of economic opportunities, its other priority relationships include those with ASEAN members and other regional countries. Japan also supports multilateral initiatives for enhanced dialogue and cooperation in the Asia-Pacific region, including Asia-Pacific Economic Cooperation (APEC), the East Asia Summit (EAS), the G20, the ASEAN Regional Forum (ARF) and ASEAN+3 (ASEAN members plus Japan, China and ROK). More broadly, Australia and Japan work closely in the United Nations.

Each year, Japan's Ministry of Foreign Affairs produces a 'Diplomatic Bluebook' that summarises its foreign policy over the past year.

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