{
  "id": "RL31609",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "RL31609",
  "active": false,
  "source": "EveryCRSReport.com",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 101409,
      "date": "2002-10-16",
      "retrieved": "2016-05-24T20:03:25.891941",
      "title": "Japan's Economic and Security Challenges",
      "summary": "This report provides a snapshot of U.S.-Japan relations, current economic and security\nchallenges\nfacing Japan, and policies being adopted or considered to deal with them. The information was\ngathered primarily during a trip to Japan in February 2002 and augmented by subsequent research.\n  Japan's economy is beginning to recover from its third recession over the past twelve years. \nThis \"lost decade of the 1990s\" and slow growth means that Japanese gross domestic product is as\nmuch as $1.3 trillion dollars (equivalent to Brazil's GDP) below what it could have been if it had\ncontinued to grow at the 3.6% rate it did in the 1980s. Japan's economy faces three basic problems. \nThe first is the legacy of the bursting of the economic bubble in 1989 that includes a large\naccumulation of nonperforming bank loans and deflation. The second is the current global recession,\nand the third is globalization.\n  The largest immediate economic problem for Japan is the $417.7 billion in nonperforming\nloans held by its financial sector despite a decade of government programs (which critics call\nhalf-hearted) to strengthen Japanese banks and private efforts to clean up the financial mess. This\nis causing credit to contract, monetary policy to be less effective, and contributes to the ongoing\nrecession. Economic policymakers realize that if they do not act aggressively, market forces may\naccomplish what policy will not. Japanese government bonds already are being downgraded;\nbankruptcies are rising; a major capital flight out of yen denominated assets could occur; a premium\non borrowing by Japanese banks could return, or financial instability could begin in Japan that could\nspread to other countries. In a move that reflects near desperation, in September 2002, the Bank of\nJapan announced that it would consider directly purchasing stock shares held by more than a dozen\nJapanese banks. In October, Prime Minister Koizumi reshuffled his cabinet to enhance the authority\nof reformist leaders and promised aggressive action by month end. The Bush administration has\nbecome more vocal in articulating its desires for Japan to move forward to rehabilitate its economy\nand has advocated that Japan cut taxes and clean up the bad loan problem to spur investment and\neconomic recovery.\n  In the security area, Japan responded to the September 11 terrorist attacks on the United States\nby approving new laws that allowed its Self-Defense Forces to directly assist the U.S.-led war on\nterrorism. The Japanese navy was sent to the Indian Ocean to transport nonlethal supplies and\nprovide fuel and other supplies to U.S. forces. This was the first time since World War II that\nJapan's navy had been allowed to operate outside of its home waters. Japan also is strengthening\nprotection of its nuclear plants and taking other measures to counter the new terrorist threat.\n  Japan is concerned over the rise of China and is seeking normalization of relations with North\nKorea. Japanese businesses are investing heavily in China -- often to the detriment of local\nmanufacturing. Japan is concerned that it could be drawn into the China-Taiwan dispute.",
      "type": "CRS Report",
      "typeId": "REPORTS",
      "active": false,
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      "topics": []
    }
  ],
  "topics": [
    "Economic Policy",
    "Foreign Affairs",
    "Industry and Trade",
    "Intelligence and National Security",
    "National Defense"
  ]
}