Japan under Suga

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The author explores the current situation in Japan under Suga. She analyses the challenges of the current regime and the instability and dives deeper into the story of Abenomics and the path of the economy.

Following Shinzo Abe’s relinquishment as Japan Prime Minister on the 28th of August, Japan has been in pursuit of a new leader. Having been in office for eight years, Abe had prided himself in the assertive foreign policies and the proactive defense, departing from the long-lasting postwar pacifism. Today, prompted by illness, Abe has left office with Yoshihide Suga as his successor. 

In light of no better alternatives, the faction leaders of the Liberal Democratic Party (LDP), which currently dominates in the House of Representatives, have chosen Suga who, until now, has been administering the Japanese political stage through backdoor dealings. Stepping out of the shadows, Mr. Suga will inherit every challenge that has been faced by Abe. The coronavirus pandemic and its accompanying economic woes, the fate of the Tokyo Olympic Games, and Japan’s diplomatic ties with the US and China, are all at stake at the outset of this decade.

Before Abe’s rule, Japanese political stage had seen six prime ministers in six years. With Suga taking over the rains, the analysts fret over a return to the revolving door leadership – Japan might be walking a tightrope both at home and abroad.

Follow-up to Abenomics

As foreseen by the East Asian experts, Suga might follow the domestic political line, continuing the one of Abe’s, especially in conjunction to the economic sphere. Mr. Suga’s promise to “further enhance Abenomics” is in line with the predicted unaltered intensity of monetary easing, fiscal stimulus measures, and the consumption tax rate. Similarly, Suga is unlikely to depart from the carefully preserved relationship with the Bank of Japan, preserved by Abe. 

What is more, following the pandemic outbreak, Abe promoted digitization to help those in need on the federal and local levels, to better navigate the online application systems – which is anticipated to remain a top priority for Suga.

Even with that in mind, the political experts are continuously hesitant to exclude the possibility of evasive independent actions of the new leader. Reckoning with Suga’s past – growing up as a son of a strawberry farmer in Akita prefecture – new economic policies, aimed at strengthening local businesses, might be on the cards. In his promises, Suga put forth a new program oriented at those with poor profitability and small enterprises: people would select which local governments would receive their residential tax. A regulatory reform necessary to carry out the program, along with cheaper communication fees Suga has been strongly advocating for, are potential deviations from the foregoing economic policies.

Although seemingly promising, this new take on the Japanese economy might bring uncalled-for results. In a move to lower the prices of the communication fees, Suga may pressure telecommunications firms to bring down mobile phone rates by as much as 40 percent, which, in turn, might defeat the government’s 2% inflation target. In the same manner, another consumption tax increase will possibly decrease the ability to save, further lowering the level of investments, and effectively slowing down economic growth. Although he assured it would not happen within the next ten years, the pandemic might be a catalyst for faster and more drastic economic changes.

Beijing Talks

One of the earliest tests of Suga’s political qualities may however come from abroad. Up to the present, Japan was in a secure position in relation to China. Simultaneously, Abe advocated for the integration of the island’s economy with those of its Asian neighbors.

Playing along the expert predictions, Suga might seek for a stable political balance with China so as not to compromise Japanese interests. He intends to focus on the diplomatic ties that have been beneficial for Japan in terms of foreign security, including those with Australia and India. Multilateral trade agreements, including some with the European Union and the Comprehensive and Progressive Agreement for a Trans-Pacific Partnership (CPTPP), were instrumental in Abe’s diplomatic undertakings.As predicted, Suga will now build upon that foundation, negotiating similar deals with the Southeast Asia, India, and Australia in order to reduce Japan’s reliance on Chinese supply chains.

It is not China, but rather the pandemic that occurs to be playing the bad cop. Knowing that any aggressive move regarding the long-lasting concerns, such as disputes around the South and East China seas, might bring Japan closer to the US, China may concede. A decisive role in the Japanese international relations is after all played by Covid-19 that intensified insecurity along China’s periphery. This includes crises in the Himalayas and the South China Sea, and the undermined Trump’s presidency. In effect, uncertainty might loom large within the US-Japan relationship, especially as the approaching US presidential election is probable to add fuel to the fire.

Make Japan Great Again

While Abe succeeded in maintaining a stable relationship with President Trump, Suga will be the one to newly establish and cement that with whoever wins the U.S. presidential race. This extends as far as holding in checks the increasing Chinese influence, with special attention to the East China Sea, and containing the North Korean nuclear arsenal that Abe took a hard line against. Although a right-hand of Abe, Suga’s reign does not guarantee the same resolve in the political interactions with two main potential Asian aggressors.

As of now, Suga has vowed to respect the alliance with the United States as the cornerstone of Japan’s diplomacy and security. Moreover, he intends to advance a free and open Indo-Pacific region in the face of China’s potential growing aggression. Yet, considering his unknown diplomatic skills and the fact that he has never served as a foreign or a defense minister, prefiguring a Suga administration is hardly possible. The experts on East Asia emphasize the plausible resemblance of Suga’s reign to the policies of Abe administration, given his “vital role in helping Abe govern.”

The unforeseen abrupt changes in the global political arena combined with the consequences of the pandemic, visibly inhibit Suga’s political maneuvers and hence, impact the diplomatic relations of Japan. The next Japanese leader is expected to proceed on three fronts: fostering the relationship with the US and stabilizing the situation with China without investing too much, while at the same time cultivating versatile alliances that would serve as a fallback.

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Article taken from Tra i Leoni n. 92, October 2020. You can read the whole edition here.