Embassy of Japan in the United States of America

34th Annual Joint Meeting of Southeast U.S./Japan
& Japan-U.S. Southeast Associations

October 18, 2010
Ichiro Fujisaki

It’s really good to be back in Nashville. It’s great to be back at the Japan-US Southeast Association. Two years ago, we met in Raleigh, North Carolina.

Since then, many things have happened. The expression ‘a sea change’ is not sufficient. We have to make up a new term: ‘an ocean change’.

The U.S. now has a new administration under President Obama. Japan has had three prime ministers since then. The ruling party has switched almost for the first time in 50 years.

In the economic area, all of us have experienced a tough period.

In the political and security fields, the relocation of Futenma marine air base in Okinawa has dominated the scene. We have gone through a particularly delicate period in the last 12 months.

But all in all, we are now heading to a brighter future. I will touch upon where Japan is, what to do, and also would like to talk about our relations with this region.

Asia-Pacific

Asia-Pacific is both a region of hope for economic growth as well as an area which needs more stability. Let us look at some brighter aspects.

China and India’s economies are growing. China’s GDP share in 2009 constitutes 8.6% compared to 3.7% in 2000. India’s 1.4% in 2000 has risen to 2.3%.

Some people compare these developments with that of Japan in the 1960s and 70s. Of course, there are some fundamental differences.

The Japanese population was about 2% of the world population, while China and India added is about 40%.

Japan did not claim itself as a developing country. It instead aspired to be treated as a developed country by becoming a member of the OECD.

Japan developed some of the world’s top class companies, many of which are represented here. This is yet to be seen in China or India.

Japan never experimented with nuclear explosions.

Asia-Pacific remains a promising place for economic growth. The Chinese economy was the first one to recover from the Lehman shock.

Our economies are interdependent. We need their growth, they need our technology. We call our relationship a mutually beneficial strategic partnership.

Let us look at more unclear elements.

North Korea is moving towards a succession. We have to carefully watch how it develops.

China’s continuing military buildup is a source of concern. The announced figure has been 15.7% annually for the last 20 years— Why so much?

Also, their attitude during the last several months has caused some concerns among countries in the region.

The coming election in Myanmar is not promising because Mrs. Aung San Suu Kyi is still under detention.

Against such a backdrop, what can we do?

Revive Japan’s Strength

Japan has to regain its vitality. This is achievable through a strong economic recovery.

The Japanese government is currently initiating a three step plan.

The first, to utilize reserves from the 2010 budget.

The second, to come up with stimulus measures amounting to 5 trillion yen or about 60 billion dollars by making use of a supplementary budget.

The third, to prepare the 2011 budget by putting our ambitious New Growth Strategy into practice.

The difficulty here is to put economic growth on the right path while keeping in mind that we have to adhere to fiscal disciplines. Our government debt is nearing 200% of GDP. An awesome task.

But, without a strong economy, our status in the world will not be recovered. Of course, we have problems, such as our aging society, huge government debt, an exceedingly difficult export environment, and so forth.

Our economy lacks natural resources and we have to rely heavily on imports from abroad in order to produce goods.

Rare earths, most of which must be imported from China to produce motors for hybrid vehicles, are a good example of this.

The Japanese government is accelerating its efforts to take measures to cope with this arising situation.

Second, it is important for Japan to improve its competitiveness at a final-project level. It is strongly desired that Japanese companies will nurture their ability to create a holistic scheme that can be introduced to the world market.

Having said all this, I am not one of those who would like to paint a daunting picture.

Because as I always say, I believe that the economy is the area where a self fulfilling prophecy applies best.

Japanese GDP will be surpassed by China and will become No.3 this year. But, economy should not be determined only by the size of GDP.

We have to look at the content as well. Japan is still No.2 in the following areas:

UN contribution

Gross ODA

FDI to the U.S. (Next only to the U.K.) :

Japan’s FDI to the U.S. is $260 billion (2008), creating 665,000 jobs for American workers (2007), more than half of which (*393,000) are in the auto industry (*includes dealers). Japanese companies are known as good corporate citizens in this country. Southeast states know this best.

International patent applications

Gross R&D

Reconstruction contribution to Iraq, Afghanistan, and Pakistan

Japan is not only No.2 but No.1 in some areas.

No.1 in energy efficiency.

In order to produce a dollar of GDP, the U.S. and EU need to produce twice the amount of CO2 as Japan. China needs to produce 9 times as much.

There are some areas in particular at which Japan excels.

In the global market of high-tech industry, for instance, Japan’s share in the world is 60-80% in core parts used in LCDs, carbon used for making aircrafts, membrane desalination technology, electron microscopes and forging parts of nuclear power reactors.

Besides, if the Japanese economy is bad, why would people in the world rush to buy yen?

The yen has appreciated by about 25% vis-a-vis the dollar in the last two years. The RMB has appreciated only 3% and the euro has depreciated by more than 4%.

It should be noted that excessive fluctuation of the yen can bring about negative effects on Japan’s financial and economic stability.

However, market experts think that the yen is the “flight-to-quality” currency. Such a phenomenon can be explained in the following ways.

First, Japan still has the largest net external assets in the world. Following are the figures for countries with the largest net assets and net debts.

              Net Asset                         Net Debt
No.1      Japan 2.9 trillion USD       US 2.7 trillion USD
No.2      China 1.8 trillion USD       France 510 billion USD
No.3      Germany 1.3 trillion USD    Italy 420 billion USD

Second, the stability of Japanese financial institutions is widely recognized. The number of bankruptcies of financial institutions since 2003 is only one. In the last two years, about 250 American financial institutions have gone broke.

Thus, no sensible observer would write off Japan.

We are a bit like those top students who had an illness for some semesters but now are fixin’ to come back.

And you leaders of the Southeastern States know this best.

Relations with the U.S.

Political and Security Relations

Japan has maintained that its relationship with the U.S. is its cornerstone in diplomacy. This has remained unchanged under successive governments.

In the meeting in N.Y. three weeks ago at which I participated, Prime Minister Kan stated that the Japan –U.S. security alliance should be a public asset in the Asia-Pacific. This was a clear message that we need a U.S. presence in the East Asia region.

It is true that we have come through a winding road regarding the Okinawa marine base relocation issue, but finally the two governments reached an agreement in May to relocate the said base to the northern part of Okinawa.

The new Prime Minister has stated that he will honor this agreement and this was reiterated in the said meeting with President Obama in N.Y. as well.

Of course, we still have to discuss the issue with local authorities in Okinawa so it is too soon to say that the issue is over.

But what we can say is that our two governments are working together in the same direction, which is to implement the May accord.

Economic Relations

On an economic front, I will name two areas above others because they are new projects started under this administration.

High speed railways and nuclear power plants.

I will not go into details. Both of them have the same features: i.e. 7Es. Let me take the example of high speed railway.

This goes for Nuclear Power plants as well.

The U.S. has the largest number of nuclear power plants in the world: 104. But since the Three Mile Island accident, no nuclear power plants have been built in the U.S.

During those 30 years, Japan was the world leader and built 29 plants, almost one per year.

Cultural Relations

In cultural areas, Japan is trying to step up with some projects. I will name only two here.

The first is the cherry blossom festival.

The city of Macon, Georgia is the nation’s number one cherry blossom town.

Nashville started a cherry blossom festival two years ago with the initiative of new Consul General, Mr. Sato.

Washington, D.C. will be celebrating the centennial of the Tidal Basin cherry blossom trees in 2012.

We would like to make it big. We would like to make it nationwide. So please do join us.
The other area is in English language education.

We have an excellent program called JET. We should continue to improve this project.

In order to supplement it, sending a number of Japanese national English language middle school teachers to the U.S. is a project to be considered.

Regional and International Cooperation

In order to stabilize the situation, multilateral institutions have played an important part.

Sanctions against Iran and North Korea.

Some people say these sanctions have little effect.

This is wrong as evident from the difference in economic development of those countries under sanctions and those who are not.

Regional organizations play their part as well.

The ASEAN Regional Forum discussed effectively situations in South China Sea.

We welcome the U.S. participation to the East Asia Summit. This year this will be formerly decided.

Prime Minister Kan stated at the NY meeting that he aims to work for the East Asian Community and we hope that the U.S. should be part of it.

Next month, Japan is hosting the APEC Summit meeting in Yokohama, Japan.

The torch will be carried by the U.S. at next year’s meeting to APEC Hawaii in 2011.

Relations with Southeast States

Now the main issue of the Southeast states.

Eight states have 18% of Japanese total investment into this country. Japan is the number two investor into this country after the U.K., but is by far the No.1 investor in this region.

The Japanese are creating 665,000 jobs in the U.S. About 22.7% of which are in these eight states.

Why so?

Because of the environment, education and hospitality.

I would characterize the allure of the Southeast in one four letter word. A good one: LIFE.

L for labor, excellent and well educated and trained labor.

I for infrastructure. Nationwide, as well as worldwide network of transport is prepared.

F for friendliness. Southern hospitality. You knock on a VIP’s door and do not have to be told, “What can I do for you, you have three minutes to tell me”. Instead, you will be asked if you will take sugar and cream with your coffee or even if you would go for a beer.

E for environment, tax or incentives you name it.

As long as you have these features, you will continue to receive investments.

Japanese businesspeople follow very precisely tax policies and incentives in an employment environment. In other words, they know very well where to put their money.

And I tell you that they are happy here. Please keep it up. Japan will continue to be your friend. Let us continue to work hand in hand for the coming years.

Thank you.

Embassy of Japan in the United States of America 在米国日本国大使館

Embassy of Japan in the United States of America
在米国日本国大使館