Japan country brief

Overview

Japan is a democratic, constitutional monarchy with a parliamentary government headed by a Prime Minister. Japan maintains an Imperial Family, currently headed by Emperor Akihito. Universal suffrage is limited to citizens of Japan aged 18 years or older. Voting is not compulsory and voting rates vary widely.

Japan's parliament comprises a House of Representatives (Lower House) and a House of Councillors (Upper House). The Lower House has 475 members who are elected for four-year terms, although political conditions frequently see the House dissolved earlier. The Upper House has 242 members who are elected for six-year terms, with 146 House members elected in prefecture-based constituencies and 96 by proportional representation at the national level. One half of the Upper House is dissolved for election at regular three-year intervals.

Executive power is vested in the Cabinet, which comprises the Prime Minister and ministers of state. The Prime Minister is selected from among members of parliament through a vote by both houses of the Diet (parliament). The Prime Minister submits bills to the Diet, reports to the Diet on domestic and foreign issues, and supervises and controls administration.

The Japanese Constitution specifies that the majority of Cabinet members must be elected members of parliament. However, the Prime Minister can appoint non-politicians to the Cabinet and as Special Ministers of State. There is no term limit for prime ministers, although individual parties often have term limits in place under party rules.

Japan's governmental structure has three tiers: national, prefectural and local. There are 47 prefectures and 1,741 other local municipalities. Each tier is governed by elected assemblies. Japan does not have a federal system and the two lower tiers of government are to a large extent fiscally dependent on the national government.

Current parliament

On 22 October 2017, the Liberal Democratic Party (LDP)/Komeito coalition were re-elected for a third consecutive term in the Lower House, maintaining a two-thirds majority. The number of seats in the Lower House were reduced from 475 to 465, due to electoral re-zoning.

House of Representatives (Lower House) numbers (as at November 2017)

Political party

Seats
465

Liberal Democratic Party

283

The Constitutional Democratic Party of Japan

54

Kibo no To-Mushozoku Kurabu [English name to be decided]

51

Komeito

29

The Group of Independents

13

Japanese Communist Party

12

Nippon Ishin (Japan Innovation Party)

11

Liberal Party

2

Social Democratic Party

2

Independents

8

Source: www.shugiin.go.jp 1 November 2017

The LDP/Komeito coalition have held a majority in both houses of the Diet since the June 2013 election. The majority in the Upper House was increased by ten seats at a half-Upper House election in July 2016.

House of Councillors (Upper House) numbers (as at November 2017)

Political party

Seats
242

Liberal Democratic Party and The Party for Japanese Kokoro

125

The Democratic Party and the Shin-Ryokufukai

47

Komeito

25

Japanese Communist Party

14

Nippon Ishin (Japan Innovation Party)

11

Hope Coalition (Kibou)

6

Independents Club

2

Okinawa Whirlwind

2

Independents

5

(Currently confirming)

5

Source: www.sangiin.go.jp 14 November 2017

Economics

Japan's highly industrialised market economy is the third-largest in the world (GDP at market exchange rates).  It was the world's second largest from 1968 until 2009, when it was overtaken by China. Japan has a well-educated, industrious work force and its large, affluent population makes it one of the world's largest consumer markets.

From the 1960s to the 1980s, Japan achieved one of the highest economic growth rates in the world. This growth was led by high rates of investment in productive plant and equipment, the application of efficient industrial techniques, a high standard of education, good relations between labour and management, ready access to leading technologies and significant investment in research and development, an increasingly open world trade framework, and a large domestic market of discerning consumers, which has given Japanese businesses an advantage in their scale of operations.

Manufacturing has been the most remarkable, and internationally renowned feature of Japan's economic growth. Today, Japan is a world leader in the manufacture of electrical appliances and electronics, automobiles, ships, machine tools, optical and precision equipment, machinery and chemicals. However, in recent years Japan has ceded some economic advantage in manufacturing to China, the Republic of Korea and other manufacturing economies. Japanese firms have countered this trend to a degree by transferring manufacturing production to low-cost countries. Japan's services sector, including financial services, now plays a far more prominent role in the economy, accounting for about three quarters of GDP. The Tokyo Stock Exchange is one of the world's foremost centres of finance.

International trade contributes significantly to the Japanese economy, with exports equivalent to approximately 18 per cent of GDP in 2015. Key merchandise exports include vehicles, machinery and manufactured goods. In 2016, Japan's major export destinations were the United States (20.2 per cent), China (17.7 per cent) and the Republic of Korea (7.2 per cent).

Japan has few natural resources and its agricultural sector remains heavily protected. Japan's main imports include mineral fuels, machinery and food. In 2016, leading suppliers of goods imports were China (25.8 per cent), the United States (11.1 per cent) and Australia (5.0 per cent).  Recent trends in Japanese trade and foreign investment have reflected a much greater engagement with China, which overtook the United States as Japan's largest merchandise trading partner in 2007.

Outlook

In the medium term, the Japanese economy faces challenges over its energy policy, as well as external risks including weak economic conditions in Europe. To address these challenges, the Japanese government is encouraging firms to secure stable energy and commodity supplies through increased investment in overseas natural resources. Australia, as well as Papua New Guinea and Indonesia, are a few of the major beneficiaries of this investment.

Economic reform and trade liberalisation will be important in helping Japan cope with these challenges by making its economy more open and flexible. Since his election to office in 2012, Prime Minister Shinzo Abe has pursued a reformist economic agenda, dubbed 'Abenomics', implementing fiscal and monetary expansion as well as elements of structural reform that could liberalise the Japanese economy. Although progress has been made in a number of sectors, including in agricultural reform, continued reform efforts will be needed to revitalise Japan's business environment. The Bank of Japan introduced negative interest rates in February 2016 to encourage spending and investing. The IMF forecasts Japan's economy to grow 0.8 per cent in 2017 and 0.5 per cent in 2018.

The rapid ageing of Japan's population will reduce the size of the workforce and tax revenues, while placing increasing demands on health and welfare expenditure. Labour-market reforms, such as Abe's 'womenomics', are being implemented to increase participation to counter this trend. In April 2014, the Japanese government took measures to increase tax revenues by raising the consumption tax from 5 per cent to 8 per cent. Plans to raise the rate to 10 per cent have now been postponed until 2019.

Foreign Relations

Japan's foreign policy aims to promote a peaceful and stable international community to support an economy highly dependent on international trade and investment, while contributing to international solutions to shared challenges such as environmental protection, terrorism, poverty and infectious diseases.  Japan is currently a non-permanent member of the UN Security Council (2016-2017) and is the second-largest contributor to the UN budget. Japan's official development assistance (ODA) plays an important role in many countries, including in the Indo-Pacific region.

While Japan's constitution limits its military role in international affairs, Japan's Self-Defense Forces contribute actively to UN peacekeeping operations and disaster relief including to Pacific Island Countries.  In September 2015 the Diet passed security reform legislation to give the Self-Defense Forces greater flexibility to contribute to international peace and stability, including by exercising its UN Charter right to collective self-defence.  Japan is also actively engaged in nuclear disarmament and non-proliferation efforts, including its co-development with Australia of the Non-Proliferation and Disarmament Initiative.

The Japan-US alliance is the cornerstone of Japan's foreign policy and national security. Japanese cooperation with the US through the US-Japan Security Treaty has been important to maintaining stability in the region. The US military maintains a presence of approximately 50,000 personnel in Japan under the US-Japan Treaty of Mutual Cooperation and Security of 1960. The US Seventh Fleet is based in Yokosuka and the 3rd Marine Expeditionary Force (III MEF) is based in Okinawa. Plans for the relocation of the Futenma US marine air base in Okinawa have been a longstanding bilateral preoccupation.

Japan describes Australia as its second most important security partner. The Australia-Japan-United States Trilateral Strategic Dialogue is a key security policy mechanism for Japan, Australia and the US.

Good relations with its neighbours are of vital interest to Japan. After the signing of a peace and friendship treaty with China in 1976, bilateral relations developed rapidly. Japan supported China's membership of the World Trade Organization (WTO). Cooperation between Japan and the Republic of Korea (ROK), including over the threat posed by the Democratic People's Republic of Korea (DPRK), is important in ensuring regional stability. A trilateral summit process established in 2008 provides Japan, China and the ROK with a forum for leaders-level dialogue – the sixth such meeting was held in November 2015. Japanese and Chinese leaders last met in Lima in November 2016 in the margins of the Asia-Pacific Economic Cooperation Summit. However, Japan's relationships with China and the ROK are complicated by territorial and historical issues.  A breakthrough deal was reached on the issue of 'comfort women' with ROK on 28 December 2015.

Japan and India elevated their bilateral relationship to a 'special strategic and global partnership' in December 2015, and Prime Minister Modi travelled to Japan to meet Prime Minister Abe and hold a three-day bilateral meeting in November 2016.  The two countries cooperate in many areas in the security field.

Japan has been a member of the Six-Party Talks aimed at de-nuclearising the Korean peninsula, and continues to seek the return of and further information on Japanese citizens abducted by the DPRK.

Reflecting the importance Japan places on the Asia-Pacific region as a source of economic opportunities, its other priority relationships include those with ASEAN members and other regional countries. Japan also supports multilateral initiatives for enhanced dialogue and cooperation in the Asia-Pacific region, including Asia-Pacific Economic Cooperation (APEC), the East Asia Summit (EAS), the G20, the ASEAN Regional Forum (ARF) and ASEAN+3 (Japan, China and ROK). More broadly, Australia and Japan work closely in the United Nations.

Each year, Japan's Ministry of Foreign Affairs produces a 'Diplomatic Bluebook' that summarises its foreign policy over the past year.

Last Updated: 21 November 2017