A few days ago the Japanese Prime Minister, Shinzo Abe, won re-election for a fourth term. His party, the Liberal Democrats won 284 of the 465 seats in the lower house of the Diet. The junior coalition partner, Komeito, won a further 29 seats, giving Abe control of two-thirds of the lower house’s seats. This is important, since it allows Abe to press for a revision of the Japanese constitution.
Recent months have been worrying for Japan’s national security: North Korea’s leader has threatened to “sink” Japan and has tested two missiles over Japanese airspace; China is becoming increasingly assertive in East Asia and its President, Xi Jinping, has promised that China would be “moving closer to centre stage”.
These events have given some strength to calls for article 9 of the Japanese Constitution under which the country renounces the right of war to resolve international disputes and forswears the possession of ground, naval and air forces for that purpose. Whether or not Abe is able to change the constitution, his re-election will at least see further debate on the topic and Japan’s ability to defend itself and work with its allies.
Aside from the security issues facing the country, the other, potentially existential, threat Abe will have to deal with is Japan’s demographic malaise: for decades the Japanese have not been having enough babies to replace themselves. This lack of births has made itself felt in the population decline which Japan has experienced since 2007: in the last 10 years the country has seen its population shrink by 1.2 million people to 126.5 million. Last year, according to the Statistics Bureau of Japan, the natural population growth was negative to the tune of nearly 300,000 people; that is, there were 300,000 more deaths than births in the land of the rising sun.
Now, Japan is not alone in having a low fertility rate and indeed in having a negative natural growth rate. The difference is that Japan has not turned to large scale immigration to mask this decline. Last year, even with immigration, the population shrank by over 160,000 people. By 2060, the Japanese Ministry of Health, Labour and Welfare expects the Japanese population to have fallen by a third to 87 million people. The UNDESA Population Division is slightly more sanguine: it expects the Japanese population to only drop to 103 million. Either way, that drop would be dramatic.
Already the economic indicators for those selling in the Japanese markets are not good. Toyota is planning to halve the number of car models it sells in Japan within 8 years (from 62 down to 30). In 1995-99 over 32.3 million passenger vehicles were sold in Japan. In 2010-2014 that number had fallen to 24.5 million. Obviously Toyota is not confident that that trend will reverse in the coming years.
Aside from fewer consumers, a lower population means fewer taxpayers, which is a problem exacerbated by Japanese longevity: Japan has the highest life expectancy in the world. This means that a shrinking population will be made up of larger numbers of elderly dependents. This in turn puts pressure on health and pension systems.
So, it’s not surprising that Prime Minister Abe announced that:
“This election was about chiefly the North Korea threat and also about the declining birth rate … if we don’t do something now, it will be too late.”
Abe called the demographic decline “the biggest challenge” for economic growth going forward. But what to do about it? Increasing productivity will help. Increasing immigration will go down well in liberal parts of the West but is politically unpopular in Japan. The best answer to Japan’s issues is to reverse its natural population decline. Doing so means Japanese embracing marriage and children (and therefore each other) more than they are currently doing, or have been doing for the past 50 years. A failure to do so will see demographic, economic and military decline for the world’s third-largest nation. Something that Pyongyang and Beijing would like to see, but that the rest of us would probably not.