Return of Japan? Transformation of the balance of power in the Asian theatre

Abstract

Since in the early seventies after the Japanese economy had been rebuilt from the destruction of WWII and had become competitive based on preeminent manufacturing and infrastructure, high technological advancement, networked production and distribution networks, Japan has been considered the leading power base in Asia from the early 1970’s. After an initial competitive phase with the US, Japan and the U.S. have maintained a long standing economic and political relationship. However, the continued outsourcing of US manufacturing to low cost countries, specifically to China, an evolving balance of power can be clearly observed since China’s opening up to foreign trade and investment and implementing free-market reforms in 1979. This article examines the economic developments over the last two decades (2000-2019), coincident with China’s joining the World Trade Organization (as well as the dot.com bubble and the 2008 Recession) and its rise in economic and political might to determine how Japan’s role may develop in the future. The article begins with an examination of political power theory and moves to specific economic indicators over the time period in question (2000-2019) as well as drawing on current political and economic developments from the Belt and Road Initiative (BRI) to the lackluster Japanese economic growth and development and increase in debt/GDP. The text contrasts the US theoretical model (Kindleberger, Krasner & Gilpin), which represents a field balanced by hegemonic stability, as opposed to the UK model (Cohen, Strange) which is based more on a framework of cooperation and a more theoretical examination of power. It is posited that national power has increasingly ceded to global corporate power (Stopford, Henley, Strange). Against this theoretical background the economic indicators of the region are examined from 2000-2019. The analysis carried out in the study is based on several research methods: a critical analysis of the literature, a descriptive method, and a method of inference based on statistical data. Trade and FDI flows in the region are presented and examined to make assumptions on the waxing or waning influence of the players. It was found that there is neither specific evidence that Japan will recede in relative importance nor garner increased relevance. Finally, there is an ensuing discussion of geopolitical factor which are analyzed within the current developmental context, which have the potential to greatly influence future economic and political power in the region, and beyond. Specific policy measures are beyond the scope of this paper.