Japan country brief

On this page

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 is known as the Diet. It comprises a House of Representatives (Lower House) and a House of Councillors (Upper House). The Lower House has 465 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 the Diet through a vote by both Houses. There is no term limit for Prime Ministers, although individual parties often have term limits in place under party rules. Under the Constitution, the majority of cabinet members must be elected officials. However, the Prime Minister can appoint non-politicians to the cabinet and as Special Ministers of State.

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 was reduced from 475 to 465, due to electoral re-zoning.

House of Representatives (Lower House) numbers

Political party

Seats
465

Liberal Democratic Party

283

The Constitutional Democratic Party of Japan

54

The Party of Hope

51

Komeito

29

The Group of Independents

14

Japanese Communist Party

12

Nippon Ishin (Japan Innovation Party)

11

Liberal Party

2

Social Democratic Party

2

Independents

7

Source: www.shugiin.go.jp 16 January 2018

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

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

The Party of Hope

3

Independents Club

2

Okinawa Whirlwind

2

Voice of the People

2

Independents

5

Source: www.sangiin.go.jp 16 January 2018

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.

Japan achieved very high rates of economic growth from the 1950s to the 1980s. 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 automobiles, machine tools, optical and precision equipment, machinery and chemicals. Japan has, however, ceded some economic advantage in manufacturing to China, the Republic of Korea and other manufacturing economies. Japanese firms have countered by transferring manufacturing production around the world through global value chains and boosting acquisitions of foreign companies. Japan's services sector, including financial services, now plays a far more prominent role in the economy, accounting for about 70 per cent 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 16.1 per cent of GDP in 2016. 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 relatively protected, although a long-overdue domestic reform process was started in anticipation of recent trade deals, such as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and Japan-European Union Economic Partnership Agreement (JEEPA). Japan's main imports include mineral fuels, machinery, chemicals 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

Reform efforts to date and the broader global economic recovery have ensured the medium-term outlook for the Japanese economy remains positive,  but it faces challenges in the longer-term from an uncertain energy mix and ageing population. Since his election to office in 2012, Prime Minister Shinzo Abe has pursued an 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, continued reform efforts will be needed to revitalise Japan's business environment. The IMF forecasts Japan's economy will grow by 1.2 per cent in 2018 and 0.9 per cent in 2019.

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 was most recently a non-permanent member of the UN Security Council in 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 Da Nang, Vietnam, in November 2017 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.

Japan and India elevated their bilateral relationship to a 'special strategic and global partnership' in December 2015, and Prime Minister Modi and Prime Minister Abe held their last annual, bilateral summit in September 2017. The two countries cooperate in many areas in the security field.

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 (ASEAN members plus 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: 29 January 2018

Australia-Japan Foundation

The Australia-Japan Foundation expands contact and exchange between the peoples of Australia and Japan.

Australia-Japan Foundation

Japan-Australia Economic Partnership Agreement

The Japan-Australia Economic Partnership Agreement (JAEPA) deepens our economic ties now and for years to come.

Economic Partnership: JAEPA

Australia-Japan

Austrade makes it easier for Australian companies to grow their business in Japan.

Austrade: Japan Market Profile