You are here: Home » Opinion » Columns
Business Standard

Shyam Saran: Deja vu in Japan

There is a need for caution while predicting the future based on current trends

Shyam Saran 

A recent visit to Japan and a series of interactions with its politicians, diplomats and business leaders, occasioned an inevitable reflection on the road this remarkable country has travelled in the past two decades. That reflection extended to the need for caution while predicting the future based on current trends, no matter how relentless they may appear.

Japan today is a picture of subdued and understated polity. Inevitable, perhaps, after nearly 20 years of depressed or even negative economic growth, a rapidly aging and declining population, the reluctance to embrace any significant structural reforms and the still pervasive hierarchical institutional patterns and ways of thinking. Behind the bright lights, the sense of order and neatness, and the almost obsessive pride in the quality of Japanese products and services, there lurks a premonition of inevitable decline. This colours Japan’s relations with the rest of the world.

And yet how different this picture appears compared to the late 80s, when one was an admiring witness to a “Japan Which Can Say No!”. This was the period of “Yendaka”, reflecting the muscular rise of the Japanese yen, the domination of the world financial and banking system by powerful Japanese banks and financial houses, and fears that Japan’s export-driven economy was “hollowing out” the US and the European industry. There was acknowledgement of the almost mythical ascendancy of Japanese corporations, whether in steel or electronics, automobiles or precision machinery. Japan was portrayed as a predatory economy, playing by its own rules, a modern capitalist market system grafted on to a highly disciplined, almost robotic workforce still steeped in feudal culture. Remember the hand wringing when the iconic Rockfeller Centre in New York became a bauble for a Japanese owner? Or the shock at the news that a priceless Van Gogh, acquired by a Japanese buyer for $46 million, now graced a Japanese corporate boardroom? There was a blustery confidence in the air in Tokyo those days, a sense that nothing could prevent Japan’s emergence as Number One in the world.

The well-known Japanese statesman, Saburo Okita, made famous the theory of the “flying geese pattern”, in which the lead goose, Japan, would pull other Asian countries along, through trade and investment, towards a higher but, nevertheless, hierarchical growth trajectory. The unspoken assumption was that this would eventually consolidate Japan’s political leadership of Asia. I remember asking Okita whether India would fit into this vision. His reply? Asia, for Japan, stopped at the borders of Myanmar in a brand new and benign version of the old Asian Co-prosperity Sphere, drawing upon East Asian affinities and cultural particularities, especially respect for hierarchy. Indians were outside the pale.

And then, as we stepped into the last decade of the millennium, the bubble burst and the Japanese economic machine came to a grinding halt. Twenty years later, there is no turnaround in sight. There have been interludes of attempted reform and occasional assertions of Japan’s claim to leadership in Asia and beyond. After all, the country remains the second-largest economy in the world. Its technological excellence is universally admired. It possesses one of the world’s strongest conventional military forces. Japan’s initial response to a rising China was to try and co-opt it through generous doles of aid and massive investment. When expectations in this regard were belied, there was a phase of confronting China, with a refusal to accept Chinese pre-eminence in the region. In the first half of this current decade, this led to a new interest in emerging India, including a closely coordinated diplomatic offensive to gain a permanent seat in the UN Security Council. Japan took the initiative, with US encouragement, to organise a “quadrilateral” of four democracies — India, Japan, Australia and the US — to anchor a new security architecture in Asia. These initiatives have today run aground. One senses a feeling among a section of Japanese policy-makers that China’s emergence at the top of the Asian pile is inevitable. Interest in India, however, remains strong. There are voices, particularly in business and industry, pushing the government to consolidate and upgrade the growing partnership with India, as a means of injecting a new dynamism into Japan’s stagnating economy and helping it retain sufficient room for manoeuvre in the region. Nowhere was this more evident than in the interaction organised during my visit, at the initiative of a respected Japanese industry association, to explore India-Japan collaboration in civil nuclear energy, a hitherto taboo subject for a country wedded to the Nuclear Non-Proliferation Treaty.

But what struck me as I headed back home were the parallels in the world’s response to Japan’s dramatic rise in the 80s and to China’s even more spectacular rise today. The anxieties that China’s emergence is generating today are no different from those provoked by Japan then. Some of the complacent self-confidence, even arrogance, that afflicted Japanese attitudes then may be glimpsed in China’s touchy nationalism today. Japan’s sense of inevitable destiny as a pre-eminent power, based on its peculiar brand of social and economic development, is echoed today in China’s faith in its model of socialist statism with market characteristics. Japan’s rise came to an abrupt end and reversal. The US reinvented itself, the Cold War was over and the unilateral, unipolar moment was all over the place. The suddenness with which the Japanese moment turned sour, just as the unipolar moment appears destined to do today, brings to mind historian Niall Ferguson’s cautionary warning: “When thing go wrong in a complex system, the scale of disruption is nearly impossible to anticipate.” And so, too, the speed of collapse. One could add to this list the contrary prospect for resurgence and revitalisation of economies, as the US has demonstrated time and again. And as Indians, we are not immune to these same largely inexplicable forces of history. There is no inevitability about India’s rise in linear progression either.

So, let us not hold our breath.

The author was India’s Foreign Secretary and until recently the Prime Minister's Special Envoy

First Published: Wed, April 21 2010. 00:55 IST