Commentary

9th August 1998

Japan's Miyazawa in economic rescue act

The challenge facing the new prime minister and his team

By Mervyn de Silva

"Since I am convinced

That Reality is in no way

Real,

How am I to admit

That dreams are dreams?"

The lines belong to the Japanese poet, Saigyo Hoshi, translated by Arthur Waley, best known to western literati as the translator of Chinese poetry. But D. J. Enright who taught English at many Japanese Universities believes that a knowledge of Japanese literature is a "must" in understanding the post-war, post-industrial revolution in Japan.

Yes, we do need to recognise Asia's giant, as an economic power, just as the student of international relations, accepts defeated Germany as an economic superpower. It is a new category, is it not? Economics seems to have dislodged military or military/political power as the most meaningful index.

But right now Japan is in serious trouble, economic distress. So it was no surprise to hear a new finance minister, Kiichi Miyazawa, make this brief statement: "I will do my best for an economic recovery. I would like to take advantage of my experience".

His latest experience did make him a highly qualified candidate for the top post... rescuing two banks. His largest task however is a recovery of the world's second biggest economy. But he chose to be quite modest in presenting his plans, certainly no grand plan.

"We are not looking for original policy - what needs to be done is widely known" and that evidently is Prime Minister Obuchi's strength says the strategist at ANG Baring in Tokyo, Belham Smithers. What of political stability?

Parliamentary strength

Will he have Parliament's support, for his economic and financial reforms? That's the first question, certainly concerning his finance minister Miyazawa, a former prime minister.

The so-called "bridge bank" idea was Miyazawa's. It is quite a simple device evidently to "remove bad debt from banks' balance sheets".

About a week ago, he delivered a one-two punch. He spoke of a "soft landing for the banks". The media pundits — and on high finance each newspaper, and radio/TV station has a ranking expert — prophesied that "the markets would be 'unnerved'. So far not. Perhaps a hurried explanation that Mr. Miyazawa had no intention of guaranteeing a 'soft-landing for the banks' rescued Mr. Miyazawa.

Political blow

The second blow was decidedly political - and that means the Diet, of course, in this instance, the Upper House. The Upper House snubbed Prime Minister Obuchi by voting for Naoto Khan, leader of the Democratic Party. He has been picked by political affairs analysts as well as public opinion pollsters as the country's most popular politician.

However, we need to bear in mind that the lower house has far more clout, in the age of women's liberation and woman power, readers need to note that Prime Minister Obuchi's Cabinet has only one woman, and she had to be satisfied with the Posts Ministry. But Seiko Noda is only 37.

While China races to reform, Japan won't reform was the provocative prediction for 1998 by the Economist. Why this sharp difference between Asia's giants?

China enters 1998 with a spring in its step...", said the journal. In Japan, the bureaucracy is all powerful though most Asian observers of the economic superpower believe that the bureaucracy has been crushed - the secret of the Japanese miracle! Wrong.

Hulftsdorp Hill

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