Japan looks for answers as China surges past

Japan’s GDP slump, and news that China’s economy is now bigger, will intensify the search for answers on turning around the economy.

To some, the answer lies offshore. Not in the traditional sense of exporting cars and televisions, but in bringing in new workers from Japan’s rapidly developing neighbours.

The Japanese are good at finding reasons why immigration won’t work, pointing to racial disharmony, problems with integration and culture shock among residents and immigrants. This public view is broadly reflected in government policy.

However, The Australian spoke this week to Hirohiko Nakamura, one of a minority of Japanese politicians who believe in dramatically increasing immigration.

Mr Nakamura, who hails from the conservative leaning Liberal Democratic Party, said Japan’s population was on track to drop from 127 million to just 90 million in the next 45 years, by which time almost 40 per cent would be aged over 65.

“We are already in a state of absolute manpower shortage. It is inevitable that we must take in immigrants to save such a critical situation,” he said.

“We should move towards a 21st-century Japan with a global and multicultural society.”

He believes immigration from Asia would be beneficial throughout the economy, not just in specific sectors. “What’s needed first for Japanese economic growth is securing an unparalleled amount of new labour. The Japanese youth need to learn from the youth of other parts of Asia about diligence and the motivation to live a wealthy life,” he said.

These are strong words in Japan where, according to Mr Nakamura, the many opponents of immigration fall into two camps: believers in Japan’s racial “purity”, and those with more basic concerns about integrating newcomers and perhaps safeguarding their own jobs.

Through the Diet (parliament) Members League to Promote the International Exchange of Human Resources, Mr Nakamura and about 80 other MPs are trying to shift attitudes to immigration.

With a low birth rate and a stalled economy plagued by deflation, immigration is becoming an economic issue as well as a social one.

Since assuming office in June, Prime Minister Naoto Kan has watched as his options for reviving the economy have disappeared.

Japan’s burgeoning public sector debt, and Mr Kan’s pledge for fiscal consolidation, probably rules out another large Keynesian stimulus package. Rates have been at near zero levels since the global financial crisis, but companies remain reluctant to borrow to expand capacity. And now the strong yen is reducing export earnings, applying a further brake on the economy, which grew by a dismal 0.4 per cent in the June quarter, compared to 4.4 per cent in the previous quarter.

Despite the economic gloom, the argument in Japan is not about how fast to grow the population, as in Australia, but whether to grow at all. The former head of the Tokyo Immigration Bureau, Sakanaka Hidenori, summed up the dilemma in a 2007 essay in which he says Japan must choose between big and small options.

The small option, he says, involves accepting a steep population decline to perhaps 80 million. The trade off for a peaceful and less environmentally damaging lifestyle would be accepting higher taxes and lower benefits.

Mr Hidenori is honest enough to concede that emotionally he favours the small option, but he argues Japan won’t be given the choice. An influx of immigration from China and other rapidly expanding Asian neighbours would prove difficult to control if Japan puts up the drawbridge, he says.

Implementing the big option, though, will not be easy. “The country would need to accept over 20 million immigrants during the next 50 years. Before welcoming such an unprecedented influx, Japan would need to build a national consensus that new arrivals would be welcomed as friends and contributors to Japanese society,” he says. He admits there would be social, environmental and energy costs, but concludes the tide of globalisation is irresistible.

To address labour shortages, Japan has introduced a short-term internship program for unskilled labourers and a scheme to attract foreign nurses. However, both have significant flaws. Under the first program, some trainees have been ruthlessly exploited and effectively worked to death, while the insistence on having nurses pass an arcane and complicated Japanese exam has crippled the effectiveness of the second.

Mr Nakamura said the failures of such schemes were often unjustly blamed on the workers, making his task even harder.

The process of integrating Japan’s Korean community — its most established migrant group — has also been difficult. The Korean-Japanese community, who were originally brought to Japan as forced labourers, cannot vote and must register as aliens unless they become naturalised Japanese, a process some resist because it involves relinquishing their Korean citizenship.

Moves to reintegrate Japan’s South American diaspora to provide extra factory workers have been similarly difficult, so perhaps a fresh approach is needed.

While the government resists meaningful change, cold economic reality may force its hand. Japan remains proud of its economic successes. Its relegation by China this week was too sensitive for some Japanese newspapers to report; several reported only a dry summary of the GDP numbers with scant reference to being usurped by the dragon on their doorstep. Many Japanese won’t be prepared to settle for the economic irrelevance of Hidenori’s small option, and using economic arguments to change people’s views might prove easier than expected.