Japan in 1992: Just Another Aging Superpower?

Abstract

A tumultuous year ended for Japan as 1992 drew to a close. The ruling Liberal Democratic Party (LDP) was able, with only mild exaggeration, to claim a victory in July elections to House of Councillors, but by fall party was engulfed in scandal and factional uproar. The Japanese economy fared even worse as most serious recession since oil shock of 1974 led to a collapse of stock market. A belated bailout plan brought only modest relief, coming amid concerns about viability of overexposed financial institutions and long-term structural changes in economy. In contrast, Tokyo's performance in foreign policy was relatively vigorous. In June Diet finally passed a law to allow Japan's Self-Defense Forces (SDF) to participate in United Nations peace-keeping operations (PKO), and by October Japanese troops were in Cambodia. Emperor Akihito became first Japanese emperor to visit China, and relations warmed with Korea, Taiwan, Australia, and Association of Southeast Asian Nations (ASEAN). Nevertheless, Japan remained cautious outside of Asia and concerned about new Clinton administration in United States. While most Japanese commentators remained relatively sanguine about prospects for economic recovery and skeptical that fundamental political change was at hand, some foreign observers took a more dramatic view. The Japan financial editor of Economist (London) predicted that financial instability would lead to breakup of LDP. A new conservative party, which would be supported by salaried workers in cities, would bring about the lower tax rates, cheaper housing and longer leisure hours U.S. trade negotiators have long argued for, at cost of job-for-life