Japan

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Have the US and its allies in Asia reached a tipping point in their relations with China? The question posed by US China scholar, David Lampton, in a speech in Shanghai in March looks disturbingly prescient after a whirl of diplomatic and security offensives in recent weeks in the region.

The US and Japan substantially upgraded their defence alliance in a high profile summit meeting in Washington earlier this month. Japan, in turn, held its first naval exercises with Vietnam and the Philippines in the South China Sea. This week, the US announced (and then later denied) it would station B-1 bombers in northern Australia, also with an eye on balancing China in the region.

Then, just in time for John Kerry’s weekend visit to Beijing, the Pentagon made it known it was contemplating limited military options in the form of naval patrols and surveillance flights in contested areas in the South China Sea to reinforce its opposition to Chinese actions. Read more

Obama seeks to cement Japan ties
Siona Jenkins, Gideon Rachman and Lindsay Whipp discuss the Japanese prime minister’s visit to Washington as the US seeks to cement defence and trade ties with Japan, a key ally in its bid to push back against growing Chinese influence in Asia.

By Richard McGregor

Shinzo Abe’s visit to the US this week is by any measure a significant moment. Japan’s prime minister will with President Barack Obama consecrate revised guidelines for the US-Japan security treaty, described by one close observer of Japan as the longest surviving alliance between great powers “since the 1648 Peace of Westphalia”.

The pair will also oversee the final negotiations of one of the largest trade pacts in two decades that will bring together 12 Asia-Pacific countries. Finally, Mr Abe will become the first Japanese leader to address a joint session of Congress.

In a week of landmarks, then, it may be surprising that much of the focus ahead of Mr Abe’s visit is whether he will “apologise” for Japan’s role in the second world war, which ended in Tokyo’s crushing defeat nearly 70 years ago. Read more

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Japan’s snap elections
Shinzo Abe’s decision to call snap elections only two years into his term perplexed many people. Was it simply cover for a U-turn on a planned rise in consumption tax or was the prime minister seeking a renewed mandate for more radical measures to kick-start growth? Ben Hall discusses what the elections mean for the future of the world’s third-largest economy with Ben McLannahan and David Pilling.

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  • Drunken and boorish behavior, cellphones, crying children and reclining seats have all led to episodes of flight rage. But a bag of macadamia nuts? (New York Times)

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Shinzo Abe launching his election campaign on Tuesday  © EPA

The ink is barely dry on the first estimate of Japan’s gross domestic product from July to September, which suggested that the world’s third-largest economy shrank an annualised 1.6 per cent over the period. Combined with the 7.3 per cent annualised fall in the three months after the tax increase in April, it implied that Japan had tipped into yet another technical recession – its fourth since the Lehman crisis. Read more

The crew that was dead set against raising consumption tax in Japan will be feeling vindicated. The economy unexpectedly fell back into recession in the third quarter, contracting 0.4 per cent quarter on quarter, or 1.6 per cent on an annualised basis. That makes it highly unlikely that prime minister Shinzo Abe will push ahead with a second round of VAT hikes, from 8 per cent to 10 per cent, after the first increase from 5 per cent in April. At least for now.

Here are seven charts showing the worrying side of Abenomics, and some reasons to be hopeful. Read more

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What hopes for detente between Japan and China?
What are the prospects for some form of detente between Japan and China? Ahead of next week’s Apec summit, where leaders of the two countries are expected to meet, Ben Hall discusses the reasons for the strained relations between the two countries with Beijing bureau chief Jamil Anderlini and David Pilling, Asia editor.

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By Gideon Rachman

In 1990 Kenichi Ohmae, a management consultant, published a book called The Borderless World, whose title captured the spirit of globalisation. Over the next almost 25 years developments in business, finance, technology and politics seemed to confirm the inexorable decline of borders and the nation states they protected.

Japan’s Government Investment Pension Fund, the world’s largest pool of publicly managed pension assets, is poised to make a change to its investment strategy that has equity markets salivating. Indications are that a review of its allocation guidelines, expected to be wrapped up next month, will raise the percentage of the fund’s roughly Y127tn ($1.3tn) portfolio that is dedicated to Japanese stocks, while reducing holdings of Japanese bonds.

The GPIF’s current guidelines are risk-averse by global standards, with the majority of the model portfolio dedicated to low-yielding Japanese public debt and just 12 per cent given over to domestic equities. Under the new guidelines, the equity level looks likely to rise to 20 per cent – a change that could send trillions of yen flowing into the Topix, the Nikkei and other Japanese share indices. And as of this week, key investment decisions will be made by the fund’s investment board, rather than Takahiro Mitani, its president. Read more

By Gideon Rachman
Atlanta coined the catchphrase that it was the city that was “too busy to hate”. During the past 30 years, the countries of Asia have informally adopted that slogan and transferred it to a whole continent. Since the end of the 1970s, the biggest Asian nations have forgotten about fighting each other – and concentrated on the serious business of getting rich. The results have been spectacular. But there are now alarming signs that East Asia’s giants are pursuing dangerous new priorities, and diverting their energy into angry nationalism and territorial disputes.

Obama’s state visit to Japan
This week, we look at Japan, where President Barack Obama is concluding a state visit. The US leader and Prime Minister Shinzo Abe have vital business to discuss, from Japan’s delicate and rather dangerous relationship with China, to the state of the Japanese economy and hopes for a major new trade deal. David Pilling, Asia editor, and Lindsay Whipp, former Tokyo correspondent, join Gideon Rachman to discuss