The election of Shinzo Abe as Japan’s next prime minister will be the first chance that the former economic powerhouse has to resurrect itself after years of stagnation. Few people today realise that Japan is the world’s third-largest economy and the second-largest in Asia. This is because Japan has alternated between recession and stagnation since 1991. This lost decade merged with a period of remarkable political instability with the country electing a new PM almost every year and the once dominant Liberal Democratic Party splintering into ever smaller bits and pieces.
Mr Abe is most famous for his nationalist, even militaristic, agenda when he first ruled Japan in 2006-07. The assumption that he will resume where he left off is probably wrong. First, though he is certain to have a ruling coalition with the first super majority in the lower house in a generation, Mr Abe knows his 40% vote share is not the stuff of sweeping mandates. Second, a smart Japanese nationalist must recognise that talk of standing up to China is hollow without economic revival. This means major structural changes to an economy which remains, in large parts, rigid and protectionist. Finally, such changes remain politically difficult in a country with an ageing and thus conservative population. Sensibly, Mr Abe’s first statements have been almost solely about the economy.
A Japanese revival is something India would more than welcome. The crude view would be that this would help offset China’s predominant position in the continent. A more nuanced view would argue India benefits from a multipolar Asia — and Japan would be a pole that India would prefer not disappear. Tokyo has also committed to projects and investments in India that would transform the national economy. Mr Abe has long had a personal affinity to India. If he can reverse Japan’s declining fortunes as well, he will have done India the greatest favour of all.