2012 Statement


“Challenges in Asia and the World: Democracy, Nationalism and Secularism”
at the Luncheon Hosted by the Japan America Society
of Southern California
and the Los Angeles World Affairs Council
30 November, 2012



Nancy Woo Hiromoto, Chair of the Japan America Society of Southern California,
Terry McCarthy, President of the Los Angeles World Affairs Council,
Doug Erber, President of the Japan America Society of Southern California,
And distinguished guests, ladies and gentlemen,


Good afternoon.

I am delighted to be back in Los Angeles. This is my very first return visit to L.A. since I left nearly five years ago in January of 2008. I would like to express my most sincere gratitude to the Japan America Society of Southern California and the Los Angeles World Affairs Council for co-hosting this occasion and giving me the honor and privilege to speak to you all.


Back in late September when I started preparing for this occasion, Doug was kind enough to ask me if I needed any props. I thought what he had in mind was either a teleprompter or a projector of some kind. In the end, I chose not to ask for anything in particular, although I was attracted to the idea of asking for a chair for my wife Keiko who, in the end, couldn’t make it to L.A. with me. But she sends her best regards to all of you.


Today, I’d like to speak about the challenges confronting the world, and the Asia-Pacific region in particular. While the theme sounds bland on its own, I will try my best to relay stories that relate to you all living in the United States as much as I can. I’d also like to suggest some useful entry points which we may explore as possible solutions to these challenges.


Before going into detail however, let me ask you to note that the views expressed on this occasion are my own and are not to be construed as any official position of the Government of Japan.


(What are the megatrends shaping the future course of our lives?)
To begin my speech, let me ask a question. What do you think are the megatrends which have been shaping our paths, spanning from the end of World War II to the second decade of the 21st century? Or to put it differently, what is the zeitgeist, or spirit of our time?


The first and foremost current or trend is that the maintenance of peace has been given the highest priority in the post-WWII era. Indeed, the United Nations Charter declares in Article 1 that the purpose of the U.N. is to maintain peace and security. To this end, collective measures are effective for the prevention and removal of threats to peace. We should continue our collective efforts, for example, to create a world without nuclear weapons and be proud of the fact that nuclear deterrence has thus far prevented the occurrence of a third World War. An important thing to note is that an abiding peace since WWII has provided a fundamental foundation for many nations in Western Europe, the United States and Japan, which has led to sustained economic prosperity and a high quality of life.   


The second current is what I call the steady expansion of independent nation states over the last 67 years. When the United Nations was founded in 1945, there were just 51 member states. After 67 years, there are now 193. The number has nearly quadrupled and the era of colonies has become a distant memory. The U.N., since its inception, has steadfastly worked to promote both nationalism and democracy on a truly global scale. The first wave of independent states came in the early 1960s, when scores of newly-independent nations in Africa joined the U.N. through a process of decolonization. The second wave came to Eastern Europe after the collapse of Communism and the end of the Cold War in the late 1980s. This trend can be summed up as nationalism on the rise based on the sovereign equality of the independent nation state.


The third current is, in my view, the even more astonishing fact that out of 193 U.N. member states, more than 170 have adopted a liberal democracy as a constitutional principle to govern their nations. By liberal democracy, I mean the political system in which a parliamentary democracy is augmented by the solid respect and protection of fundamental human rights. The notable exceptions in the Asia Pacific region are the People’s Republic of China, the Democratic People’s Republic of Korea, the Socialist Republic of Vietnam, and the Lao People's Democratic Republic. But the number is dropping and Myanmar is no longer an exception. Since late 2010, we have been witnessing the Arab Spring or Arab Awakening in which people in the countries of Tunisia, Libya, Yemen and Egypt have undertaken democratic revolutions. And I am very pleased to say the United Nations stood on the right side of history by steadfastly supporting the people in these countries.          


Now, the fourth trend is the wave of market economies. We know that Communism has lost to Capitalism. Capitalism, which is a market based economy, has proven more successful and efficient to better house, feed and clothe people worldwide. The spirit of the market economy embraces free competition and freedom of choice by an individual based on the belief that all men and women are created equal and are entitled to equal opportunities.

(Above mentioned four currents are the reasons for the sustained global prosperity for the last 6 decades) 
Ladies and gentlemen, it is my contention that the above mentioned four fundamental spirits of our time, namely, the abiding commitment to peace, the spread of independent nation states, liberal democracies and market economies around the globe, have all given rise to an amazing and real, sustained economic worldwide growth. It is true that the fruits of this growth have not necessarily been shared equitably among the nations of the world. This does require serious and critical examination. Still, no one can deny that globally sustained growth has liberated a huge number of people by taking them out of poverty and creating a middle class population in many countries around the world and most recently in China (est. 300 million people with an annual income jumping from $10k to $60k) and in India (est. 400 million).


Now, you may wonder how the two most impressive success stories of the last two decades, namely, China and India, fit in the narrative of major currents of what I described earlier. It is fair to say that China’s remarkable socio-economic development for the last twenty years has been achieved without a liberal democracy.


Indeed the question can be also rephrased as to ask why the Chinese socialist market economy has always outperformed the Indian economy which is under a parliamentary democracy. It is also a fact that until India ventured to undertake comprehensive economic liberalization reforms in 1991, the Indian economic growth rate was on average 3 percent per year throughout the 1980s. The figure has been somewhat derisively described as the Hindustan growth rate. The failure of the Indian economy before the launch of its liberalization was due to the “License Raj” where all aspects of the economy were controlled by the state and licenses were given to a select few. It is a great irony that a socialist economy under a liberal democracy was outperformed by a market economy under communist dictatorship.

My second point is that it cannot be denied that China’s impressive growth under an “open and reform policy,” has been sustained in no small part due to the markets of the U.S., Japan and the European Union, whose market economies are firmly rooted in their liberal democracies.


Thirdly, it is worth noting that both India and China are equally confronted with such challenges as public discontent grows due to the corruption of government, environmental degradation and the gap between rich and poor. These issues are being identifiedas the most serious challenges confronting the new leadership under the newly-elected General Secretary, Mr. Xi Jinping, as well as the current Indian government. But in the end, I for one argue what matters most in addressing these issues is the quality of the representative democracy in India and the quality of the governance executed by the Chinese government under communist rule. Therefore, here too, the competition between India and China seems worth watching.  


(The biggest challenge ahead for the U.S., Europe and Japan is to address the issue of demographic change of our societies – an aging population with declining birthrates)
Now, looking back from the horizon of the months passed in 2012, I am of the view that, in terms of people’s standard of living, in a way, almost every year up to 2008, it can be said, we’ve never had it so good over the last six decades. In the case of the U.S., the same sentiment is best reflected in the famous question asked every four years, namely, “Are you better off than four years ago?” or “Do you believe your life will be better off in four years time?” Over the last sixty years, your answer has always been overwhelmingly “yes.” The combination of peace, nationalism, liberal democracies and market economies, have given humanity unprecedented affluence and material happiness.


Yet, the time has come to admit that one of the most serious challenges confronting the U.S., Europe and Japan is the tectonic demographic change underway in society; namely fast-aging populations with declining birthrates. This demographic change in my view, poses the most serious challenge to the sustainability of our economic growth. Let me explain why.


To put it bluntly, the issue can be summed up as follows: if a population is fast-aging and an ever smaller proportion of the younger population is available for work, how can we sustain financing bigger medical bills and social security payments needed by the older population? If we define the old age dependency ratio as the number of people over the age of 65 for each 100 people ages 15 to 64 (the working–age population), the following alarming picture emerges. According to U.N. estimates, the dependency ratio in China will be 39 percent in 2045, up from just 11.3 percent in 2010. During the same period from 2010 to 2045, the U.S. dependency ratio is expected to rise from 19.9 to 34.6 percent. The U.K.’s figure will rise from 25.1 to 39 percent. Japan’s figure is staggering. It will rise from 35.1 percent in 2010 to 67 percent in 2045.


If the current economic slowdown of developed economies is caused by structural causes rather than cyclical ones, we may have to accept this inconvenient truth, namely, that developed economies have now entered an “era of slower growth.” Ever burgeoning government debts and budget deficits seem to me to be the most notable evidence of this structural drag on our growth engulfing entire developed economies almost without exception.


How then should we address this difficult issue? Faced with the prospect of a world getting older, economists argue we can still maintain growth if we succeed in raising overall productivity including labor productivity to compensate for the decline of an available work force. In order to do so, we must invest in education, science and technology. Yet are these enough to prevent the global economy from slowing down? What we must prepare for is an overhaul of the existing pattern of the redistribution of wealth and income including all tax and social security systems based on the principle of fairness, or, the idea of justice. This is my contention.
Most recently, we witnessed an interesting action taken in the United States. California voters showed their courage in changing the rule on taxation by casting a majority of ballots saying “yes” to Proposition 30. It would begin temporary tax increases to raise $6 billion USD a year to shore up the state’s public school and university system. The issue highlighted by Proposition 30 is very relevant to what I have been discussing. I would say that voters in Japan or in many developed countries in the past demanded benefits they did not want to pay for. Your response in California to this proposition is noteworthy because if we act collectively and now, we can stop the further deterioration of our public education system by shared sacrifice but without any segment of our society having to sacrifice too much. In Europe or Japan, we are confronted with even more serious challenges than in the United States.

In the case of Japan, let me tell you what Prime Minister Noda stated on the same issue at the U.N. this September. He said, and I quote, “Many countries have built up massive fiscal deficits so fiscal soundness is now a common challenge. If people living now do not overcome deficits by cutting spending and striving to increase revenues, future generations will be forced to repay the deficits. This structure is nothing but current generations exploiting future generations.” He continued to say that, “Over the past 20-odd years, Japan repeatedly procrastinated in politics and was considered symbolic of ‘a country that delayed decisions,’ but I pledged to change the politics of Japan and staked my political life on the realization of ‘comprehensive reform of social security and taxation systems.’ This reform is an ambitious package of policies made to support Japan’s social security system by maintaining a stable financial basis in the face of a rapidly aging population and paving the way for fiscal rehabilitation. Japan is taking a firm step towards becoming a ‘country that makes decisions’ without postponing difficult issues.” Close quote.

Thanks to the Prime Minister’s unflinching determination and leadership, the Japanese Parliament approved legislation on August 10th that will raise the consumption tax from its current 5 percent to 8 percent in April 2014 and eighteen months after that to 10 percent. As Prime Minster Noda mentioned, Japan must undertake comprehensive reform of all social security and taxation systems.

(Liberal Democracy to be tested and how China will shape its future under its new leaders?)
Now, Ladies and Gentlemen, the next logical question to ask here is, “Can the industrialized liberal democracies of the U.S., Europe or Japan do better to address these structural challenges than China whose system is distinctly different from ours?

For the U.S., Europe and Japan, the answer to this question depends on how the liberal democracies can meaningfully translate the principle of fairness into workable policies whereby voters will accept reforms to both tax and entitlement system reforms ensuring fairer inter-generational burden sharing. Can we do that? I hope we can. If we fail, what will await us is a decline of the wealth and power of our nations.

Now, can China make it? This is such an intriguing question. I hope they can. China overtook Japan in 2010 as the world’s second largest economy. China’s per capita income in 2011 was $5,417, which is impressive indeed. The average income of 1.3 billion people is more than $5,000 USD, which means that China is on track to having an ever-larger number of people in its middle class. An old Chinese proverb says that only after people are well fed and well-bred do they acquire virtues. I think this saying has a profound meaning for China under the current context of its development. Chinese leaders are fully aware that corruption, income inequity and environmental degradation are major concerns of their governance.

In his final report to the Chinese Communist Party’s eighteenth Congress on November 7, 2012, Party Leader Hu Jintao made several crucial remarks. He said that China faced a period of major change and complicated domestic and international circumstances are forcing the world, the country and the party to undergo profound changes.

He then went on to say that reform and China’s “opening up” policy have gained the country major advances, and the people’s standard of living has clearly risen. On the other hand, according to a New York Times report, President Hu repeated vows of “political system reform,” in his report to Congress, but Chinese officials have made clear that the party’s notions of political change do not embrace any idea of a full-fledged electoral democracy. The spokesperson of the Chinese Congress was quoted as saying, “the leading position of the Communist Party in China is a decision made by history and by the people.” It looks certain that China, under new leader Mr. Xi Jinping, will continue its open and reform policy, but firmly under the political leadership of the communist party.

In my view, one of the most difficult challenges facing China will emanate from the fact that China will be obliged to address the issue of accountability of the government to the people. This is directly linked to the issue of legitimacy in governing the nation. In an ordinary parliamentary democracy, the executive government is accountable to the parliament and the parliament is accountable to the people through elections. Now in China, the absence of a parliamentary democracy seems to critically handicap the Chinese system because people are denied an open space for representatives to openly debate and scrutinize the policies of the sitting government. The media and the judiciary can play their respective roles in this regard up to a point.

So China’s challenge remains formidable. China must prove to its people that the Chinese system of government can be accountable to the people as much as any other system of government. People may continue to voice their concerns or discontent through demonstrations or by using fast developing social media. In the end, it is entirely up to the people of China to decide how to reform their own political system. It is interesting to note that at the U.N., even China has joined Security Council resolutions or statements supporting a peaceful and democratic transition of power including the holding of presidential or parliamentary elections.

(Diplomatic relations involving Japan, China and the Republic of Korea)
Now, let me take up the diplomatic relationship involving Japan, China and the Republic of Korea with a focus on the recent diplomatic flare ups over the islands in the Sea of Japan and in the East China Sea. I know you are concerned about diplomatic confrontations emanating from these disputes. Please rest assured that Japan has no intention whatsoever to derail otherwise cordial and solid relations with China and the Republic of Korea because of these disputes.

On August 24th of this year, Prime Minister Noda made clear the position of the Government of Japan in a most comprehensive yet succinct manner in a press conference. Therefore, I have very little to add to what he explained on this issue.

I also know very well that Ambassador Fujisaki as well as Consul-General Niimi have already amply presented the position of my government to the American people and the media.

Therefore I would prefer to relate some historical perspective through which I hope we can find a way forward to overcome the current impasse existing between Japan and China and between Japan and the Republic of Korea.

It is often said that you cannot choose your neighbors. Indeed, for nearly two thousand years, Japan, China and Korea have been interacting with each other, sometimes as good neighborly states but other times we fought against each other. Lord Palmerston was right when he remarked in the 19th century, that nations have no permanent friends or allies, but rather they only have permanent interests. We know we are destined to live as neighbors for generations to come. Our economies are already closely interdependent. So if both sides are cool-headed and do not make the mistake of not seeing the forest for the trees, we can continue to be good friends.

But then why are we confronted with problems? One of the keys to unlocking this conundrum lies in recalling our joint efforts in reconciling the issue of the past between our countries. On October 8th 1998 in Tokyo, then Japanese Prime Minister Obuchi and Republic of Korea President Kim Dae Jung signed a historic Declaration called the “Japan-Republic of Korea Joint Declaration – A New Japan-Korea Partnership Towards the Twenty First Century.” In the declaration, Prime Minister Obuchi regarded in a spirit of humility, the historical fact that Japan caused, during a certain period in the past, tremendous damage and suffering to the people of the Republic of Korea through its colonial rule. He expressed deep remorse and offered a heartfelt apology and in response, President Kim accepted with sincerity and appreciation the Prime Minister’s statement.

Then Foreign Minister Komura mentioned recently that leading up to this declaration, President Kim had mentioned to Prime Minister Obuchi, “Let us resolve the issues which have transpired in the 20th century by the end of this century. The government of the Republic of Korea will never again revisit past issues once the government of Japan expressed its apology in writing. I will take full responsibility for that.” This is exactly what our two visionary leaders achieved in 1998. It is my earnest hope that not only will politicians and diplomats in the government in the Republic of Korea but also the Korean people read this joint declaration and learn with sincerity the evolving history of our bilateral diplomatic relationship.

Now one month after the visit of Korean President Kim to Tokyo, we welcomed Chinese President, Jian Zemin to Japan. On November 26th, 1998, Prime Minister Obuchi and President Jian Zemin issued a joint declaration in which “the Japanese side is keenly conscious of the responsibility for the serious distress and damage that Japan caused to the Chinese people through aggression against China during a certain period in the past and expressed deep remorse for this.” Ten years after this declaration, on May 7th, 2008 in Tokyo, Prime Minister Fukuda and President Hu Jintao issued yet another epoch-making Joint Statement to promote “a Mutually Beneficial Relationship Based on Common Strategic Interests” between Japan and China. In this statement, the two countries reached a shared assessment and improved mutual understanding of our diplomatic relations since the normalization of our relations in 1972. We expressed our positive evaluation of the fact that China’s development since the start of reform and open policy offered great opportunities for the international community including Japan. We also expressed our support for China’s resolve to contribute to the building of a world that fosters lasting peace and common prosperity.  

In response, the Chinese side expressed a positive evaluation of Japan’s consistent pursuit of the path to peace as well as Japan’s contribution to the peace and stability of the world for more than sixty years since the end of WWII.

If our two countries stay the course along the path envisioned in this Joint Statement, I am confident we will be able to weather the current dispute. I do believe that a healthy sense of nationalism produces centripetal force to strengthen nationhood. But I do not believe anger and pent-up violent nationalism against Japan should justify violence against anyone living in China or against Japanese factories, stores and restaurants in China. Healthy and mature nationalism requires education based on the fair and objective learning of history. You may wonder if it is really feasible for Japan and China to agree on the narrative of history between our two countries. I am not telling you that this can be done overnight. However, Japan and China have already started joint endeavors to conduct Japan-China research on history. In March, 2011, the Japan-China Joint History Research Report on Modern and Contemporary History was published. The report covers research conducted by Japanese historians and scholars through four rounds of intensive discussions with their Chinese counterparts. In the report, it was mentioned that historians of both countries need to continue their discussions in an effort to avoid simplification and allow for complexity and to deal with cases where there are differing interpretations of the same historical incidents. But the fact that researchers in Japan and China in the subcommittee on modern and contemporary history gained a measure of understanding of each other’s views represents a big step forward.     

(On the Arab Spring and its huge implications to the Middle East Peace)
Before concluding my remarks, let me touch briefly on the importance of the Arab Spring, which is in my view, having a sweeping and positive impact on our discourse in international affairs. The most important essence of the revolts which rocked the Arab world was that they were home-grown democratic revolutions accomplished collectively by ordinary citizens who happened to be predominantly Muslims. I emphasize that it was not an Islamic revolution like the one which transpired in Iran in 1979. The Arab Spring revolutions are “secular” in their true color. Therefore if new leaders in the post-Arab Spring have courage and vision for a just and lasting peace between Israel and Palestinians in the Middle East, they will be in a much stronger and more legitimate position to broker a peace precisely because they have a mandate as democratically elected presidents. Of course their democratic revolutions are pretty much unfinished business and the U.N. and the international community should continue to encourage and assist these countries in transition in anchoring their own functioning democracy on their own soil.

I am hopeful that in due course, there will emerge a window of opportunity for peace in the Middle East. Therefore, it is even more important for us not to alienate ordinary Muslim people. We should try our best to embrace them as friends and allies in our fight to defeat militant extremism of any kind. Those who justify indiscriminate killing of Muslims and non-Muslims alike in the belief that God is on their side, should not be tolerated.


My initial response to the news that the video mocking the prophet Mohamed aroused riots and anti-American mass protests in Muslim countries was sadness rather than anger. When we have to be united with ordinary people in the Islamic world to win over extremism, why do some people resort to such senseless behavior? Having said this, I know from the bottom of my heart the strength of the American people rests with their virtue of tolerance towards diversity and differences that they have over races, ethnicity and faiths, all the while, fully aware of politically divisive fault lines over these differences.


The late Ambassador, Chris Stevens, a California-native, was someone who had such a vision and led the way forward by his selfless actions. He was truly a first class diplomat, undaunted and fully cognizant of the dangers inherent in his calling as a diplomat. He dove headfirst into Libya right after the country’s liberation in order to help the people in Libya wade through challenging transitions to a new democracy. He gladly immersed himself in communities to take the pulse of the people for whom in the end he made the supreme sacrifice in helping to rebuild their nation.

Ann Stevens, Chris’s younger sister, told Secretary of State Hillary Clinton, “Don’t let this stop the work he was doing.” President Obama declared that the U.S. would never retreat from the world. I think Chris is relieved to hear those reassuring words and is smiling in heaven.


Ladies and Gentlemen,


Today, I have spoken about challenges, which in my view can only be addressed together by sharing experiences and wisdom. Indeed, my last message to you is let us remember we have the Parliament of Man called the United Nations in New York. We welcome President Obama’s pivot to the Asia-Pacific region wholeheartedly. We welcome the U.S. lead in addressing global challenges including nuclear disarmament, non-proliferation of WMD and the fight against global warming. But most importantly, I welcome the U.S. lead at the Parliament of Man, in building teams to address issues confronting the U.N. even if our collective efforts sometimes mean the U.N. could only, as Dag Hammarskjöld remarked, “save humanity from hell, rather than take us into paradise.”     
I thank you for your attention.



(In response to a question on the Senkaku issue raised by the audience)
The three islands of the Senkaku belonged to a Japanese individual. The Japanese government had rented the land from the said individual for years to maintain and manage the islands in a calm and stable manner. Therefore, it has not allowed Japanese nationals to land there except in emergencies. It has not allowed construction. In the last few years, however, it is true that concern grew as an increasing number of Chinese patrol vessels from relevant authorities and fishing vessels entered the waters adjacent to the islands, as well as our territorial waters. The reason for the Japanese government’s recent purchase of the islands from the individual was to preempt the purchase by others, so as to maintain the status quo and continue to maintain and manage the islands in a calm and stable manner. Furthermore, it is to be emphasized that the purchase was a civil transaction and the change of ownership of the land has nothing legally to do with sovereignty itself.
Japan will continue to deal with these issues in a calm manner. We have no intention of heightening tensions. There is no merit in doing so for anyone. We think what is required is to firmly register our position, restrain from making it an emotional issue and peacefully cope with the issues while respecting international law.
The U.S. government has repeatedly confirmed that the Senkaku islands are covered by Japan-U.S. security arrangements. Such reassurances constitute an important deterrence. For the last several decades, according to polls, around 70 percent of Japanese have always answered that the present form of defense should be maintained, where Japanese security would depend on the Self Defense Forces as well as on the U.S. extended deterrence.