JPRS ID: 8360 TRANSLATIONS ON JAPAN

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• Content Type: REPORTS

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_ ~ ~7r~s ~/8360 .
30 March 1.979
~
~ ~
T RANS LAT I O~~S ON J APAN
CFOUO 9/i9)
U. S. JOINT PUBLICATIOhlS RESEARC~I SERVIC~E
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@IBLIOGRAPNIC DATA 1~ Repon No. ~ 3~ Itecipient'~ Acee~~fon Na.
' SNEET .tE~R5 L/ 8360
~ t e.n , u~ u e ~ epon ue
TkANS1.A'1'IUNS ON JA~AN, (~'UUO 9/79) 3 March 19~~
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Th~ report contains prese and r~dio coverage on political, economic~ military,
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JPR5 L/8360
30 March 1.9 79
, T'RANSLATIONS ON JAPAN
(FOUO 9/79). ~ _
~
CON'~ENTS PAGE
POLITICAL AND SOCIOLOGICAL
Defense Role F'ollowing Japan-China Treaty Asseased
(Mineo Naka,jiro$; CHUO KORON, Jan 79) 1
~CONOMIC
Ni'T Preuic~ent Views U.S. Demand for Lireralization
(Toku,~i Akikusa Interview; NIHON I~IZAT 3HINBUN,
f3 M~r 79) 14
Ecoaomic Experts Speculate on Jepan's ].979 Economy -
~ (SfIUKAN ASAHI, 12 Jan 79) 16
Expanaion of Consumer Credit Syetem Inevitable
, (Isao Nlatsuura; NIKII~I BUSINESS, 29 Jan 79) 24
Briefs
F'RC Contract~ 30
aCI~NCE AND TECHNOLOGY
Liquid HycL~ogen to Flael 3-Sr,age H-1 Rocket -
( NIIQCAN KOC3Y0 SHINBUN, 11 Dec 78) . . . . . . . . . . . . . . . . . . . . 31
' a- IIII - ASIA - 111 FOUO]
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~ox orFicYa~, us~ oM.Y
- POLITICAL AND SOCIOLOGICAL
DEFENSE ROL~ FOLLOWING JAPAN-CHINA TRLATY ASSESSED
Tokyo CHUO KORON in Japanese Jan 79 pp 82-94 _
(Special report by Prof Mineo Naka~ima~ International Affaire Dept, Tokyo
Foreign Language Univereity: Poat Japan-China Friendehip Tr~aty--"The
Question of Defenee"J
(Text~ Japan, unable to become a milit~ry power, hae no
alternative but to depend on a foreign policy based on a
divereified axia of coordinatea.
1. Anxiety Over Our Stake in Japan-China Relatione
The eminent Americ~n historian on foreign affairs (Erneet R. May), incisively
points to the danger that, in rendering irreversible and essential foreign
policy deciaiona, the parties concerned tend to misaF~ply lesaons from con-
temporary history ("Lessone from Hiatory"). Also~ if I may exaggerate eoma-
what, the moder~i e ra has freque*tly prdduced tragedies because of auch glar-
ing irrelevanci.es.
In the recent past. Japan made a grave historical choice~ that is, the sign-
ing of the Japan-China peace and friendahip treaty. However~ with the adveat
of this new era of Japan-China friendahip, we are naw imbued with deeper fear
and anxiety than heretofore caacerning the future of our international en-
, vi ronme n t .
Fluid State of China's Internal Affaire
It ia not necessary for me to ~:~int out that this fear and anxiety has been
' umplified by the fluid political situation in China, which surfaced in mid-
rlovember, immediately after Deng Xiaoping's return to Peking from a busy trip
+~o three ASEAN nations foll~wing his vieit to Japan. The rzason is that the
present state of China's internal affaira~ directed tarard sharp criticism
of Mao Zedong's past patriarchial system and a clear de-Maoification of
Chinese 9ocietya is on the one hand an outcropping of the deep fisaure aad
internal discrepancies latent in the pawer structure and leadership of Hua
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Cuofeng's regime. On the other hand, iC ig ~ reeule df tihe inevitable f~il-
ure of the aCtempC to unreasonably blanie Che eina of tk~e "gang of �our" ae
the sole cause of Ch~na'e retarded political and social condition. It is a
situaeion which~ in general, could have been foreseen.
Of course, to Choae who remain obsessed with Maoiat mythg, the presenC etate
of affaire muat indeed have been shocking. tIowever, within China's society
itself, criticism of Mao was so latent :and recurring that it ie no exagger-
ation to say all "line"-related strugglea in the past had been parC of thie
criticism. Also, during the recent seven or eight montha, the de-Maoifica-
Cion proceas wea taking a concreCe form incernally. Therefore, China's de-
Maoification ia definitely different from the procesa of de-S~alinization
which required the ahock treatmenC of iconoclasm. For the ma~ority of the
Chinese masses~ iC muet have been an,inevitable phenomenon.
China has thus begun to "Cake off" from a cloaed society of Maoist mytha. "
Hawever~ this does not mean that de-Maoification will proceed amoothly be -
cause there are eCill elements at the center of power which have inheri~ed
the legacies of Mao's policies and because the Maoiet regime continuea to
exiat as a social syetem. Nonethelesa, becauae the absence of clarity dur-
ing the post-Mao eucceasion to pawer is beginning~~Co be definitely criti-
_ cized, there is no denying that the preaent state of affairs is causing
Premier Hua Guofeng himself to tremble with fgar behind the "shadoa of
Mao 2edong," who was the source of his political existence.
When the present tranaition ultimately reaults in the so-called "total
victory of the former power among the factional forces," the next step in
China's future will probab ly be the rise of an intellectual and atrategic
anti-Soviet awareness, unlike the emotional and Maoist anti-Soviet con-
sciousneas of hatp. ':oday, when even Peng Tehuai, a pro-Soviet leader
known as the "Khruachev of China," h as reportedly been reatored to honor,
the aforementioned probability deservea much thought. The outsid~ world
still seams unaware of this fact. Hacaever, regardless of the China policies
of the outside world, it has always been a histarical fact that a certain
recuperative force existe within China-Soviet relations, constituting a cor- ~
relation of alliance and hostility. It is fact about which nothing can be
done. It is, therefore, a source of great anxiety and concern.
Nonsy~netrical Nature of Japan-China Treat3?
,
- As far as the signing of the Japan-China peace and friendship treaty is con- !
ce rned, th~ Japanese definitely lacked a perspective that the preaent Japan- _
China relations can no longer be bilateral; rather, these relations must
neceasarily be internationally active and bluid. Moreover, such a perspec-
tive may have been clouded, first, by our unique and traditional sentimenC
~ in addition to a certain inprtia in Japan-China relations. While it may be
unnecessary to point out these facts at this t~me, once the Japaa-China pact
was concluded, it has been evolving under ita self-propelled motion, unre-
lated to the varioue factora unique to our country, and it has been raising
ma~or international repercussiona.
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. 5ecottdly, u fact which tiae hardly been recognized despite ita self-evidence
_ is th e unawareneee of the conepicuoue lack of symm~etry regarding decieione
on pollcy and intentiona between Japan and China. ir ie abundantly clear
that, from the etandpoint of present-day China, the two decieive factors
which made necessary a Japan-China peace and friendehip treaty with a pro-
~vision on "hegemony" were China's global atrategy (the forging of an anti-
"hegemony," i.e., anti-Soviet, alliance) and her national goal (the four
"mode rnizations"). In this regard, despite the emphasis on a relationship
of two nationa "separated only by a narxow strip of water" and two peoplea
coming from the eame atock and uein~ the same script~" auch a global
etrategy and national goal are inconceivable for our nation. To begin with,
we may be the on.1y "pawer" without a national goal or global atrategy.
Therefore~ our policy decioiona could be described as being very faithfully
- patterned after the general models of internatianal nnd domeatic policy de-
cisions. It goes without saying that thie treaty wae greatly influenced by
the varioua (political) factora of our inCernal affairs under the Fukuda
adminiatration and by economic demands steaming from a long period of re-
ceasion. Although Foreign Miniater Sonoda's tenacity and the antiquated
theatrics he diaplayed in the proceae of concluding the treaty were con-
apicuous, it cannot be claimed that our bureaucratic atructure (the Foreign
Office) asaumed the leaderehip in th~ policy decisions per se. Nor were
public opinion, the mess media and p~essure groups decieive factors in this
c as e.
The proceas of the policy formulation leading to the conclusion of the Japan-
~ China pact thue extremely lacked symmetry and, wherers China's position was
determined solely on a strategic basis, our natton adopted a"low policy" '
in concluding the treaty. We concentrated our attention passively on the
wording of the "hegemony" clause, worried about the direct responae from the
USSR and were unable to maintain a broader strategic perapective concerning
the post-treaty situation. Due to thia difference, despite our earneat ad-
vocacy of an "all-directional foreign policy," the nations of the world in
general evinced l~ttle interest in our "all-directional foreign policy."
They saw in the treaty only the significance of China's strategy.
It may be redundant to point out China's global strategy vis-a-vis the USSR,
but what about the stake our political end financial circles are placing on
the "four modernizations" which constitute China's present national goal?
From Deng Xiaoping's present position, the strengthening of his awn politi-
cal base may not be possible except by puehing furward the "four moderniza-
tione " with an urgent sense of mission.
Meanwhile, the greater the development of Japan-China economic relations,
the more dissociated China would become from the principle of "salvation
through self-help" and the greater its riek of ma~or problems in the future,
auch as the burden of foreian payments. Therefore, it is worth noting the
recent warning by (Raymond Allon)~ who states: "Nothing aeems so rfdicu-
lous to me as the idea of an 'unlimited China market.' While I can under-
stand the bankers and industrialists running to Peking, I hope no one will
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"cgrry uny fanCaeiea with them." ("Japan-China Cooperation," L'E7~'R~S5,
28 Oct - 4 Nov edition)
Paying a Two-fold Price
M~anwhile, the enormity of the price being paid by Japan's foreign policy
for a stake in China became quickly and abundantly evident through two re-
cent developmenta. One is the aigning of the Soviet-Vietnam friendahip and
cooperaCion treaty on 3 November. The other is the foreign policy �iaeco
suffered by Japan during the UN Security Council election for nonpermanent
member seaCa. The Soviet-Vietnam treaty was clearly a direct reaction to
Che Japar: China peace and friendahip treaty. Furthermore, when we realize
that the concluaion of the former~ which includea a"coneultation" clauae `
(stating that the partie~s concerned will consult on military and political
matters in an emergency situation) initiated by Moscow, is a hidden and
~ fuuuamental element of the so-called "'Asian collective aecuYity" concept
(for details see the chapter, "What Is the Meaning of the Asf an Collective
Security?", in my article: "The Choice of Japan's Foreign Policy--BeLween
the Global Strategiea of the U.S., USSR and Ci?ina"; TOKYO KEIZAI SHINPOSHA,
1978), one cannot deny that the aignificance of this treaty in terms of
Asia's future is very great. With even the currenC military clash betwQen
China and Vietnam, the Japan-China cooperation is, of course, a major threat
to Vietnam, forcing Vietnam to aeek strong tiea with the USSR. This marked
increase in Soviet presence on the Indochina Penineula may invite the "re-
turn" of the United States which "::�{*hdrew" from Asia. This cannot help but
increase the tenaion in Asia. `
The latter fact has clearly exposed the weakness in the foundation o~ Japan's
foreign policy which is oriented taaard the ma~or powera. Regardless of how
we may bank on Japan-Chinb relations, when we realize the cold reality that
China itself failed to vote on our side and that some of the ASEAN co~ntrles,
for example, on whom we had counted did not vote for ue, we feel that this
indicates the cautious attitude of the cotmtries surrounding China toward
. "a union of Asia's giants."
Therefore, in apite of the optimism that our international environment would
become peaceful and atabilized with the conclusion of Che .~a~an-China peac~
and friendahip treaty, reality could be said to be much worse� Meanwhile,
why was our government unable to perceive even such a short-range outlook?
Our Foreign Office has apparently erred in its evaluation of the U.S.-Ching
r.approachement, the 9lbanian resolution (on China representation), the anti-
Lin Biao and anti-Confucian movement, China's internal situation during the
last years of Mao, the Tten An Men incident, etc., and other aspects of
Chinese affairs. ~
Also, regarding the recent fluid trend of China's internal affairs, Foreign
a Minister Sonoda's outlook appeara to be extremely optimi~tic, but it is
queationable whether it wil.l be ~ustified.
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In any case, if the choice uf concluding the recent Japan-China treaty ~uet
adda to the accumulaCion of euch errore, we, of course, cannot help but fael
great e~ppreheneion concerning the future of our nationaL security, to eay
nothing about our foreign po],icy.
2. A New Cold War in the Form of a"Cool War"
"Cool War"
The extent of rapercueaions and effecta of Che Japan-China amity pact was~
of course~ deCermined by the preeant etage of development and direcCion in
international affaira. A1so, in the midet of what may correctly be viewed
as a"cold war," the pxesent inkernational eituation ie moving in an extremely -
alarming directian with the acceleration in the arme race involving cruiee
miseiles and neutron bombe, not to mention tactical nuclear weapona and con-
vantional weapone, although thz Ifiited States and USSR are aeeking mutual re-
striction of etra~egic nuclear arms through the SALT negotiationa. The prob-
lem of the deployment of MI~23s to Cuba, said t~ be confirmed by the Un3ted
States las t November, and eff~erte by the Carter adminiatration while coping
with ~ALT negotiations to prevent Che iasue from developing into a"second
Cuban crisis" reveal the innarde of the "cool war."
The characteristics of the current international aituation, in contraet to ~
the postwar East-Weat cold war period, are as follawa: on the one hand, r
mutual arma deterrence and channels of agreement are working between the
United States and the USSR while on the other hand strategic intervention ~
by the two powera in internal conflicts around the world has intensified
along with the danger of limited wara. Moreover, the addition of the China- -
~ Soviet cold war to the current situation, in the form of China-Soviet con- i
frontationa around the world, has epurred and amplified strategic c~mpeti-
tion between the United States and th~ Saviet Union.
It become:~ clear at thia point that the "detente" which began throi~gh a ~
polarization of international politics wae merely illusory. Of courae, "
the very neat "detente" concept in international politics prov~d that not
only could the cold war be atructured, but also tb.a*_ it continued a tradi-
tional international relationship callec' the "European state system," which
wae auited to a European-type international environment equipped with such -
conditions of detente as the maintenan ce of the statua quo, peaceful co-
e~stence and social etability. In the non-European regior.s of Asia~ the
Mideast and Africa, which lack auch conditions, it muat be pointed out that
the basia for their existence is inherently absent. In Asia, the U.S.-
~ China rapproachement was generally viPwed as a symbolic case of "detente,"
and it was widely believed that the cold war structure had already self-
destructed. However, as I discuased earlier, the cold war subsystem had
merely been tranaformed or tranamuted as a result of the China-Soviet con-
frontazion since the 1960a and cancurren~tly as a reault of the relative
decline in U.S. power. F'ar from being a diaintegration of the basic cold
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war structure, I think it must be viewed ae Che commencement of a new and ex-
panded "cool war" which includes, in addition to Europe Fsnd Asia~ the Middle
and Near East~ Africa and the entire Pacific region. (See my article~ "The ~
International Environment of the Jepan-China Treaty--A Choice Between Pea~e
and a Dangeroue A111ance"; SEKAI, October 1978 edition.)
U.S. Strategy
Under these conditiona, the United States hae awitched to a dual glot+al
atrategy, ae clearly manifesCed in the so-called "New Pacific DocCrine" of
December 197~--that is~ to implement the "detente" atrategy between the United
States and the USSR ae far as Aurope and Che Atlantic region are concerned
, and to strengthen the U.S.-Japan-China "Tranepacific coslition" in ~rder to
aecure the superiority of th e strategy. With China's response to this
strategy~ a clear outline of the anti-"Hegemony" coalition wae delineated.
(On this point~ see my arti cle: "New Pacific Doctrine and the China-Soviet
War"; CHlJO KORON, March 1976 edition. )
The Japan-China peace and friendahip trPat:y, which is winning the hearty ap-
proval of the United States, cannot es~:ape the realiry that it materialized
in the context of international politics, no matter how our countrymen may
- emphasize an "gll-directianal foreign palicy." Also, when seen from the
U.S. policy on China, as Stanley Karnaw, the percepCive U.S. critic on
problems of China and Asia h as atated: "For the first time in half a
century, the United Statea has not been obliged to choose between China and
Japan, but has been able to encourage cooperation between the two nations."
("Historical Rapproachement in Asia"; BALTIMORE SUN, 6 Nov 18)
On the other hand, the USSR, faced with a drastic shift in its position vis- ,
a-vis Aaia, hae won an increasingly freer hand in its strategy of countering ~
the anti-"hegemony" alliance. Japan, which is unable to form any kind of
global strategy, ie therefore not only being drawn into the Ch.ina-Soviet
confrontation, but has also been hended membership in an increasingly global-
~ ized "cool war." This is why we cannot ignore the "coincidence" of the ao-
called ~~emergency" debate in our country about the time of the aigning of ~
the Japan-China peace treaty.
Under auch conditions, the series of statements by National Security Advisor '
Brzezinski and Secxetary of Energy Schlesinger indicates that the United
States hae now overcame the difficulty of finding a formula for the reator- j
ation of U.S.-China relations, which has merely been an internal U.S. prob- '
lem, and U.S. policy ia clearly ch anging taward a b uildup of China's mili- `
tary reaistance againet the Soviet Union. The keystone of this U.S. policy ~
is being given further concreCe impetus by the policymakers at the core of ~
the Carter a~3miniatration. For instance, the speech by Assistant Secretary
of State for East Asia and Pacific Affairs Holbrooke, "The United States and
Southeast Asia" to the World Affairs Council in Toston on 18 November ehows
thia clearly. When he was chief editor of FOREIGN POLICY, Iiolbrooke pub-
lished a treatise by Michael (Pillabury) advocating a U.S.-China military
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nlllance~ In hie recent Creatiee~ "Is Japan Also a Trump Card?" (FOREIGN
POLICY, winCer 1978) ~(Pillebury) focnsed on Japan's recent defense debate in
which he emphasizea and advocates the need for U.S.-Japan-China miliCary co-
operaeion~
China's Strategy
We cann~t help but be deeply apprehensive about the young staff in the Carter
administration which preachea auch etrategy as a matter of courae. Mean-
while~ on the Chineae side, Chere have been well-known statements by Deng
Xiaoping and Liao Cheng-zhi. For instance, Liao Cheng-zhi atatea: "In the
preaen t world situation, the Japan-U.S. security treaty ia atill useful.
As long as we view the Soviet Union as the greatest force capable of caus-
ing a global war, we will show understanding taward the treaty." (Thia was
in rep ly to a question by planning chief Soga of the Japan Socialist Party
Central Committee; MAINICHI SHINBUN 22 Idov 78) This statement not only in-
dicates China's acceptance of the Japan-U.S. aecurity treaty but also China's
interpretation of the aecurity treuty as a link in anti-Soviet defense coop-
eration. The Japan-China treaty with the "hegemony" provision has made it
poasible for China to make this choice.
Thus it may be said that tha outline of China's global atrategy, which seeke
j to form an eaetern NATO by linking the Japan-China pact to the Japan-U.S.
- aecurity tre aty, is becoming increasingly clear. Also, China is .ready to
abrogate the China-Soviet f.riendship alliance and mutual aid treaty, which
is due to e xpire in 1980, with the awarenesa that the nullificaCion of this ~
treaty will remave any binding restriction on the Soviets from attacking
China and that the Soviet tt:reat wi~l increase. Therefore, it is well-knawn
that Ctiina is counting on a strengthening of Japan's defense power as a link
in the anti-Soviet defense. China is also beginning to move forward taward
its national goal of prosperity and military power through the ao-called
"four modernizations," while ~rging every stratum of its people to partici-
pate in bui lding productivity through de-Maoification.
, The "four modernizations" include agriculture, industry, national defense, .
and s cience and technology. Hawever, according to the p ar.adoxical nature
of Chinese logic, priority will be given to the modernization of science
and technology, inclu~ing production control, and the immi.nent target will
be none oCher t:~an the strengthening of ita national defense. It is there-
fore clear that the intensif'ed Japan-China economic relationa will, in
~ conce rt with the "four modernizationa," ultimately con tribute to China's r
military etrength. This strengthening of China's military pawer will not
only be countered actively by the Soviet's increased armament and strategy
in Asi a, but will also spur an arms grawth in Vietnam and other neighboxing
cotmtriea, inevitably resulting in the militarization of all of Asia.
Deapite its peaco and friendahip alogan, the Japan-Chin a pact must be viewed
in the ligh t~~f this latent dangerous trend. In view of this trend, might
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not the "all-directional diplomacy" for peace wfnd up aa a mere show and
seriously threaten our own national security? We have eo far been unabla
to find any clear anawer which negatea thia posaibility.
3. Pitfalls of the Defense Debate
Meaning of the "Emerg~ncy" DebaCe
The recent debate on "emergency" in Japan arose coincidentally under the
aforementioned internaCional circumetances. In the light of the interna-
tional situfition, Che "Japan-U.S. ~aint measures guidelines" between the
U:S. forces and Japan's Self Defense Force under the Japan-U.S. security
treaty, which were reported in late November last year, contain a great
many irritating problema.
The detailed atudy of these problems rauat be left to the military and de-
fense experts. Hawever, the most problematical issues concern the ~,.argency
legis~ation" and the "Japan-U.S. ~oint measures guidelines." In contrast to
the criticism which is expected fram some opposition party members, the
policymakers and defense authorities in Japan seem not anly to be virtually
unaware of th~ dangerous direction of internatior~al affairs surrounding Japan,
but have been r~garding Japan-China relations within a bilatera]. framework.
They also seem to be dealing with the various problems related to the Jap az.-
U.S. security tre aty as bilateral problems or as measures between our two
countries for the purpose of strengthening Japan's ~e~ense power. -
Frankly, becaus~ they are highly pleased with China's acceptance of the
Japan-U.S . secur~ty pact c~z~d China's anticip~tion of the strengthening of
Japan's Self nefenae Force as the bankruptcy of the so-called "unarmed
neutrality" concept, Japaneae Government auth~rities lack awareness of the
overall structure of the~"cool war" and cannot see th~ price they are pay-
ing for their choice of the imminently approaching danger. Of course, some
of Che supporters of an anti-Soviet Japan-China alliance seem to be whole-
heart~dly in favor of a U.S.-Japan-China anti-"hegemony" alliance. However, -
the ma~ority of government leadera, including Prime Minister Fukuda and
Secretary General Ohira, have not gone that far. This is why they ha~e
supported the s~.ogan of an "all-direc~ional diplomacy."
I noted earlier that "coincidence~' of our national "emergency" debate.
History teaches us that the crises of a nation and its peop]e Qften fa11
within such a "coincidence."
Dangers of the Defenae Debate as a Military Theory
Naw, according to my discusaion in the previous paragraph, in the present
internatianal situation all problems related to foreign policy involve na-
- tional security. And, conversely, it can be suggested that our national
aecurity is decisively involved with our foreign policy~ From the
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, ntgndpoinC of our ne~ton~l po~iCian~ which i~ glmo~t lOn perc~nC dependenC on
enp intprnaCion~l environment, thi~ f~nt ie und~nigbl~. Haw~ver, iC i~ true
- rhat., although euch ~n ~xcellent and etr~Cggic choic~ ae the Japan�Chine pe8ce
- anC ~iecuriCy Cregty ha~ be~n mede~ the debete or? foreign policy etrat~gy es e
- "higlt p~11Cy" in thi~ context hag lacked depth. On the other hand, es seen
in th~ "~mmerg~ncy" d~b ate, the debate on defense technique9 or Cactical de-
~anga h~g be~n waged artiv~ly in con~unctioci with the di~caoeion of defens~
i~n th~ form df s con~titutional d~bate uni~que to Japgn, end ehe deb at~ hae
- int~n~ified in recent mnnthg. Thie di~cuedion df def~nge ~g a militery
theory he~ been etimulatpd by China'e ~valuation o: Chp Japan-U.5. securi~y
, trpaty gnd ite anticipation that Japan'e Self Defense ~orce would be
strength~ned. It will probably becane further inten~ified by the latent
theory nf a Soviet threat which exiete in J~pan, aa w~l~ as by che activp
buildup in Soviet strategy in Asia.
'Thie will probebly re~ult in ~ defense theory with a militgry bi~. l:t mey
even deCer our fundamental awgrene~s of the f~ct that our national gecurity
in the preeenC internation al environment cannot exist ae a purely ~ilitary
proble~n--that it exiate only a~ a~econdary fgctor--but that it can only
exigt in the broad context of our foreign policy ~tr~tegy. Such a defense
d~bate~ which lackg the awarene~g af nation~l ~~~urity a~ a foreign p~+lir.,y
strategy~ containe a barrennegs which can only result in a mere theory of
value~. While it ie only natural to be prepared for an "emergency," we
would be blinding ourselves to the obvious fact that there can be no na-
tional security for Japan unless effortg are made to avoid such an "emergency."
Of course~ if it were possible for our country to become a great nuclear
pawer~ comparable to the superpawers~ the ~~efense debate Would be logically
fe asible as a military theory. However, thie ie imposeible for our nation
and such a direction is clearly not the course our nation should choose.
On the basis of avch a self-evident premise, the courae of being spurred by
- the "emergency" deb ate, of being induced by China'e contentions and of
drastically atrengthening our defense power would not only be a dangeroue
choice but it would al8o be meaningleae. Meanwhile, the fact that, with the
aigning of the Japan-China treaty as a turning point, such demands are gain-
ing force in Japan, and the unique aituation in our country in which advo-
cates of a Japan-China alliance are often anti-Soviet deserve our attention.
Therefore~ we must consid~r thet there is a major pitfall in Japan's defe*.se
debate. Zhere ia nei ther an active foreign policy concept as our natio~aal
strategy for eurvival~ nor a aerious awarenese of national security in the
senae that foreign policy ie defenae atrategy itaelf.
4. Foreign Policy as a Strategy for Survival
Japan: A Building of "Glasa Walls"
Professor Alistaire (Bakkan) af Oxford University (theory of internattonal
relations)~ who died two years ago, in deacribing the international situation
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in ~~sC Agi~, ~gidt "A~ig ~egnd~ today in ~r, envirnnm~nC of ~xtr~m~ con�
trgetg--Ching gnd the Soviet Uninn in armed confrontaCion and an unerm~d
Japen which et~nda aparr lik~ a g1a~e akyscreper." ("~'he A~ign Qu~dr~ngl~:
Japan'e F'oreign policy San~wiched Betwe~n the Giant N~tio~ne of eh~ UniCed
- Stnte~, Chin~ and the US51t"; BBC broadca~t l~cture~ 2 Uec 74) If 1~ere to
gdd ~ few ehange~ td Chi~ deg~ription~ A~ie �od~y could be d~ecribpd ge a ~
thr~e-~id~d conteet in which two enormou~ eeeel building~ repreeent China and �
th~ Sovi~C Union, one a hug~ eteel ~kyecraper and th~e oth~r gtriving to reach
th~ game h~ight. B~~ide them eCand~ a g1a~~-covered building repr~aenting
Japan. Unle~g the gl~g building i~ convertpd to etepl~ it would b~ morp
ae~ure by remaining ag ~ totally plieble g1a~s structure. On the orhar h~nd~
if it were to try to become g semi-ferro ~tructure, it would be deprived of
it~ agfety and might ~ven fall with a loud thud. Of cour~e, although the
foregoin~ ellegory is eimply that, it does auggegC our nation'g gecurity '
eituation.
If ti~e idea ~f e plignt Atructure is applied to the secur.ity etrategy in
foreign policy, it would mean a divergified axis of coordinaCes. 2'o become
a totelly glaea etructure meane to rejecC the deep-r~oted protecCioniet
trend which exiete even among the advanced capitaliet natione in the face
of an upheavel in the international rgtea of exchange. It mean~ to establieh
en internal structure which could internationalize the nation internally end
open it un from the standpoint of free trhde. In effect~ our national
security cen only be aecured in this way~ when viewed from our etrategy
for survival.
Abetinence Neceaeary in China Relations
In this case, the firat problem worth attention in the Japan-China poat-
treaty re lationa conce rns the danger of viewing theae relations through the '
concept of a comnunity of joint d~rstiny. Since the aigning of the Japan-
China treaty~ China ha~ repeatedly atresaed the elogan of "the friendahip and
solidarity of the one billion people of China and Japan." This alogan may
sound pleasant from the Chinese aicle, aince 900 million of the one billion
` are Chinese. Also, from the standpoint of Japan's unique sympathy toward
China, this concept of the integration of Japan and China is an inclinatian
i7to which we can easily fall in the light of our hiatorical preced~nta.
Nuwever~ an over-emphasis of it could bring on a new "ye:low peril" fever~
invite suspicion among China's Asian neighbore and in Europe, and also hamper
the diversification of our foreign policy. T'hia was made abundantly clear by
th e reaction in Singapore and other Asian natione during Deng Xiaoping's
recent visit to Southeast Asia.
,
Ttie control of Asian tendencies in our nation's foreign policy becomes in-
creasingly neceseary with the broadening of contacts between Japan and China.
Also, when auch abstinence is lacking~ as it ia already apparent to some
extent among our bureaucrats and "old boys" in the defense-related organiza-
tione, there ie even some danger of an uncertainty of "nationality" arieing
~nong the bureaucret claea.
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'i'h~ r~g~on cool d~tgchm~ne i~ demgnded in foreih~r? poticy vi~-a-vte Chine ie
rhat the future of China-3ovi~t rela~ion~ ie etill uncertein and Che future
_ hoide two glt~rnativee--the extremes of a China-3oviet wer or a reconcili-
etion--which are both great threate to our counery. Hecauae of thie uncmr-
Ceinty, iC ie clear that our foreign policy etrat~gy ~tuet be relatively in- ~
dependent. '1'hte ie a18o true when vieaed from the ee~ndpoine of anxiety
concerning the future of the Korean Penineul~, which ie vitglly 3mporCant
to our national security.
In effect, our nation ~hould ~trictly avoid the dangeroug line of a Japan-
U.S. ~~curity syatem edvocaC~d by both the United 5tate~ and China in form-
ing an eastern r1AT0. Rather~ we ehould uae the relatione between Japan~ the
United States and the advanced European nationg as a base for our foreign
policy ~traCegy Within the frmnework of the securiCy ~y~tem. Japan-Ching
re]ations ~hould be placed etrategically a~ a subeyetem of the overall
~tructure. To change the gr~gt-pawer-ori~nted nature of our foreign policy
and to ~trive ite diversification would diver~ify this aubayatem. ThaC ie
why Jepan-China and Japan-5oviet relationa, ae well ae relatione with AS~AN~
Indochina and the Pacific region muet be viewed with importance. And, of E
courge, remote areae~ from the etandpoint of foreign policy strgtegy~ euch
as Mongolia and Neiw Zealand~ muat aleo be regardnd aith importance.
~ Eliminating the Confidence Gap Between Advanced Nations
Secondly, after coneidering these situatione, Che problem of how to elimin-
nte th ~ confidence gap in the expanded Japan-China relations, and between
our country aed the advanced Weate rn natione amid the rieing yen, muet be
noted. Th ere is c^mpetition among Weste rn countriea over the aerious prob-
lem to cope with the future of a changing China~ but there is no common area
of agreament wh.~tsoever. Alsn, there is no firm and common underatanding
concerning the important international task of coping with the North-South
problem. From this standpoint~ the summit conference of advanced nationa
(the Tokyo summit), which will be held in Japan for the firat time in June
1979, Will prob~bly become a touchatone for our foreign policy, as to
whether we can escape from the fremework of the traditional "world econanic
conference" and embrace all of these problems.
Need To Coneider a Detour Approach
Thirdly~ there ia tr~e question of a detour approach to the problem of
i�oreign policy etrategy. In this regard, a change in the concept of a~tep-
by-etep solution to pending iasues is necessary, auch as taking up the Jap~n-
Soviet issue after the JaFen-China iseue. M improvemeat in Japan-Soviet
relations is the moat important foreign policy issue we now face, and today,
progress cen no longer be achieved by trEating the isaue in terms of a
triangular relation between Japan~ China and the USSR.
M example is the Japan-Australia relationship, which is extremely important.
Not only from the atandpoint of mutually comp:ementing our economic
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relgtinng wiCh Au~Creli~, but glgo froia thp gCgndpdine nf gugm~nCing our
negnei~ting capability with Ching ~nd Che UniCed 5CaCe~~ iC muat b~ con~id-
ured c~e our ~:;,et imporCent internation~l r@lationship nt prpsent. The reaeon
iN th~t Au~tralia, which alr.eady ehare~ the numb~r thr~~ po~ttion among our
tr~ding pgren.ere and which i~ ~xtrem~ly imporr.gnC in tern~s of our importg
df r~nourcee ~nd food produc:rs~ ie indi~pensible as g soUrce of fishery
resourceg. St ig gn important link in our etrategy for ~urvival from Che
- gtgndpnint of divereifying our fureign policy position, which hge bec~roe
weakened vi~-g-vi~ the Soviet Union throu~h our overdependence on no:th,,~rn
fishery re~ources.
Howev~r, the importance of Japen-AugCralia relations ia noC eufficienCly -
recognized d~~piCe the fact that, in tern?a of trgde, th~ rel~tionahip is
much broader than Japan-China relaCions. Moreov~r, ~s seen in the dispuCes
over gugar and beef~ factor~ which could hgrm thnse relationg--such ag the
distribution syetQm, ep~culation, proCectionism, etc.--lie latPntly in our
nation's makeup. 'if theae conditione are left unattended gnd the inherently
' complex fe~linge toward Japan which exiet in Auatral3a become unwieXdy in
~ the fuCure, our nation will auffer great lossea. As mentioned earlier,
there ig no guarantee thet China would replace such lo~see. Our attitude
tow~rd Japan-China relatione is an outataading example of the lack of uware-
nese of our foreign policy's role ae a atrategy for aurvival and its con-
tribution to our national aecurity.
A Cultural Diplomacy of Subatance
A final but serioue problem is the fact that foreign policy as a strategy
con tinuea to hold an inferior position in comparieon to the priority con-
sideration given t4 the traditional areas of politics and economics. In the
' preaent international situation, foreign policy is in effect also a game of
images. It is, of course, at :he a.ame time the human, cultural and informa-
tional exch ange between diffe:rent cultures and the avoidance of conflict in
cultural contacts. Such cultural diplomacy can be an important contribution
to our national security. Also, in the preaent cress-fire of the global ~
strategies of the United States, China and the ~,oviet Union, our nation,
which is characterized by a modern and diverse ~:ulture, has reached the
point where it must give further aubstance to its cultural diplomacy.
5peaking of culturel exchange, however, the era when we can export our
uniquely Japanese culture and arts, the first atage in the era of interna-
tionalization~ ia ending. Our cultural diplo~acy has reached the point where
,;apan's cultural and academic achievements and exchange of human talents
should be promoted under a more cor:ventional form.
Of course, in this respect, the International Exchange Fund and Overaeas
Youth Cooperation Corpa have bruught great c?oteworthy reaults. However, the
question of whether to include cultural exchanges as a link in our foreign
policy strategy conetitutea a dileoama, with a conce:n about "cultural in-
vaaion" on the one hand and the neglect of cultural diplomacy on the other.
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Tt~~ imporC~nce given to Che quegtion ie etill tar rro~ a~equate. Yet it
~eemg to me that rhe ~traCegy for survival~ or Che poeition of culCuYa1
diplomacy ae a defanee gCraCegy for our nation which i~ lacking in both a
global etrategy and a national goal~ ie gn increaeingly urgent taek. In
thie reapect~ also, Japan's foreign policy ~e ae g ma~or turuinq point.
~ COPYRIGNT: Chuo Koronsha, Tokyo, 1979
5 884
CSO: 4105
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E:CONOMIC
N1"C i'~L5IDENT VI~WS U.S. DE~t/WU ~OR LIB~KALIZA'TION
'C~~kyo NIHON KEIZAI SNINBUN in Japanese 8 Mar 79 Morning ~diCion p 3 OW'
(Intervicw with Toku~i Akikusa, president of the Nippnn Telegraph-Telephone
Yubllc CorporaCion, b~? NiHON KEIZAI SHINBUN on 7 Mnrch--place noC given]
[Exr,erpts] Question: What is the rec~cCion of Che Nippon 'Celegraph-'Celephnne
public Corporation [NTT~ to the U.S. demand for giving foreign companies
access to its procurementa?
Answer: I canriot understand why the NTT t~as become an issue. It may be thaC
tiic bigger ~ business becomes, the more severe criticiam it receives. NTT
operations ~re very specialfzed and, perhaps for Chis reasQn, the issue is -
not even fully understood Within Che NTT. I am certain that it is beyond
the comprehension of the general pu6lic.
Since it is not a domestic issue and is entirely left to diplomatic negotia- -
tions, there simply is nothing I can do about it. I am just counting on
Mr Ushiba (govexnment representaCive to the Tokyo-round negotiations) and _
other specialists in the diplomatic field. I think that this is the first
time the ~oreign Ministry has become involved with the telecommunications
area although ministry officials are highly familiar with economic problems.
(~uestion: It may indeed be an iasue that is di�ficult to understand, but
how do you explain your position to the U.S. side?
Answer: if the United States needs to understand the facts involved, then
we c:in gtve them to it one by one. However, We will be in trouble if the !
United States is aware of all the facts and refuses to hear us any further. ~
~
Anot}~er problem is that we can hardly find an independent U.S. office with
whict~ we can deal on this issue.
Qucstion: The Tokyo-round negotiations are now in their final phase and a
settlement on the NTT issue has become a gressing demand. Judging from the
present situation, Japan has no alternative but to accept the U.S. demand
one w~hy er another. What is your viewpoint? ~
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An~wer: Ye~, ind~pd. ~urth~rmdr~, ther~ ig anoth~r grgnd forum gchedul~d--
that i~, the Tokyo gumm3t m~~ting (dE mg~or industrial n~tione)~ Th~ gov~rn-
m~nt w~ne~ a11 problem~ (pending betwepn Japan and the United Stateg) to be
_ re~elved by the time of the eummit mReting. ~'or thie reaeon, too, the NTT
i~~u~ C~11g for an egrly gattlement.
c~uestiun: Specifi~~lly, hdw wi11 you respond to Che U~S. dem~nd?
M~w~r: Wp gre gtill unabl~ to fdregee how th~ gituation wi11 develop. At
the yame time~ we know that the N'1"f ig nnt allowed to do ev~rything in the
w~y it wants und~r pr~sent circumstances. On~ thing we know now is Chat the
United States has ~ome undergtanding of th~ NTT'e view and ia not demanding
~ complete, foolprnof bidding sysCem on all equi~pment and materials. ~iret
of all, ghould Eoreign companies be given acceae to $3 billioe worth of
procur~mente as denanded by the United Statea, it would Cgke, ~ccording to
my compuCnrions, 10 yenra C~ carry it out. IC is impoasible to totally
nlter the presenC procurement system.
Qu~stion: Neverthelesg, the privgte contracC method aeema to be hardly
understood by the public, correcC?
, Anawer: The British Telegraph-Telephone Public Corporation ehiftad from
private contracts to bidding in 1969, resulting in a deterioration in
quality oE materials, conatruction delays and trouble gt work~iCea.
Consequently, it reverted to private contracts only 2 years after the change.
Question: It seems an overstatement to say that, if the NTT opens itaelf
up to foreign companies, it will lead to bankrupCcy for many businesees
related to the NTT, correct?
Answer: If we adopt a competitive bidding system, I am afraid that it would
entail a drain from the cauntry of techniques develop:d bp the efforta of
our speci.ylists. This would app'_y not nnly to the NTT but to other manu-
E,~cturera well. Zf these techniques developed Chrough aevere competikion.
would be mnJe public, it would demoralize the specialista. There will be
no suc1~ thin~ as all related businesses going bankrupt, one right after
:~nother, but we should remember that some companies partially or entirely
depend upon the NTT, including Nippon Denki and Fi~itau. Nippon Denki
depends on the NTT for 20 percent of its business and Fujitsu, 22-23 percent.
Question: Will the NTT, after all, be left outside the Tokyo-round inter-
n~tional pact governing government procurements?
~ Answer: It has been suggested that communications equipmenC be excludec:.
}lowever~ I would like to refrain from making a hasty comment on it. I want
to open the NTT's door to foreign companies gradually; however, if we parti-
cip~ce in the int~.rnational pact on government procurements based on the
prlnciple of competitive bidding, it Will put our company under the super-
visfon of other countries and will cause it to pay a high price in the future. ~
COPYRICHT: Nihon Keizai Shinbunsha 1979
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~
Li-
~CONOMIC ~XPERTS SPECULAT~ ON JAPAN'S 1979 ECONOMY
Tnkyo SNUKAN ASAHI in Japanese 12 Jan 79 pp 144-147
(Discussante: Toshihiko Yoshino, Director of the ~conomic Research Center,
Yamnichi SecuriCiea Co., Ltd. and Hisao Kinamori, Director of the Japan
~conomic Research Cent~rj
(TextJ Industry has started to make gains, buC with rhe government giving
up its 1 percent growth "pledge," the future is noC at all clear. Where
is ttie Japanese economy of 1979 headed? Has there been any change from
_ ~ukuda to Ohira? We have spoken with the positive Hisao Kinamori and the
cnutious Toshihiko Yoshino.
Kinamori: I think 1979 will be a.relatively good year. For one thing, dur-
ing 1978 the economy finally got a grip on recovery. F'ive years after the
oil shock, industry is ad,justing well and has found the sCrength for self-
recovery. Prices have also stabilized and business loans and inventory
have decreased--things are looking good. Investment in equipment, which
up until now has been very sluggish, started to move in 1978 with the focus
on service industries. Isn't this quite a change?
Also, because fairly aggressive public investment policiea were enacted in
1978, demand has recoverEd, mainly in construction induatries and construc-
tion machinery.
On the other hand, the end of 1978 saw exports greatly reduced because of
the rise of the yen. But when you look at the pluses and minuses together, -
i think the plus side is still stronger. Won't this trend be carried for-
ward into the new year and won't 1979 be bright?
j
The reins of government have switched fraa Fukuda to Ohira. I think that '
Fukuda normalized the economy but I would like the new ~dministration to
tnke n little more positive action above and beyond what he did.
Yoshino: I thought the pledge of 7 percent growth basically impossible.
Tf~e idea of 7 percent grawth was an outgrowth of the Japanese-American
lo
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d~gcu~~ione of Uecember 1977. It is a number that arbitrnrily emerged ae `
a~?eagurc for reducing our internetional balance of pgymenCa eurplus. Con- `
~idering the probleme of dome~tic unemploymen~ and those of industrial mgn-
ngemrnt, i cannnt view it ep something J~pan decided on voluntarily.
Tl~erefore, I oppos~ tf~e ~ percent growth, whi.ch Che Ohira adminietration
know~ ie impoestble. I Chink thaC planCing the seeds of future in~fl.ation
and greatly increasing the national debt, which are the result of a general
expensi,an o� spending, are thinga we should not do at this time.
However~ I am not saying for a minute that the more we restrain the rate of
gY~owth, the better. I think we should find other ways to deal with employ-
ment ~nd the eurplus in international paymenta--and not by generally increas-
ing the growth rate.
Kinamori: I think the economy has gradually improved, but the growth rate
is still not aufficient. Even though domestfc demand is at a good level,
exports }tnve decreased more than expected. The government's interpretation
_ is thaC Chis has depressed everything. Exports also exert an importanC
influence on the employment problem, and when we take thia inCo account, I
think t}ie queation, after all, is the rate of growth of the economy. If
, grawth is lower~ khe employment problem will be difficult to solve. Because
Japan lias a very high raCe of rise in producCivity, when the growth rate is
about 5 percent, industry can get along even without hiring more people.
At a S percent rate, the number of ~obless people has increased about 200,000
over last year.
isn't the most impor~ant target of economics the employment problem? As
usual, there is a surplus in international payments, and equipment is in
g~od supply; even the rate of price increases is extremely low. Wholesale
prices have probably fallen 4 percent relative to last year. Therefore,
isn't it an important task for the new year to go ahead with a more positive
policy and to stabilize the economy~ which has finally begun to recover?
Yoshino: Althougl~ I have several reasons why we should not always oppose
a 7 percent growCh rate, one is that I fear inflation will result if we
reach for a predetermined growth rate whatever the cost, and if we must
increase public consumption based on a large increase in Che budget in order
~ to makc up for what is lost in exports. In 1978, although we issued national
bonds nmounting to 11 trillion and several hundred billion yen, I think
ttiut in 1979 so large an amount will not be permissible. If thoae national
bonds are satisfactorily absorbed, I am certainly not opposed to taking in
excess capital by increasing the national debt and stimulating the econamy
financtally. However, conditions have changed since April 1918, when we -
reformecl the regulations for issuing national bonds, and lowered the 10-
yer~r bond interest rate to 6.18 percent. In other words, the sellers of
national bonda have increased and the buyers have decreased. If the value
oE national bonds is lawered, absorption is hindered. Hereafter, if we
further increase the national debt by a great amount, this tendency will
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becoma morp app~rent. In 1979, will the market value of ~,aeional bondg be
, considerably lowered, or wi1.1 1ow~ring i*_ be bnd? The Bank of Japan, in
nrder to support the m~rket value of national bonda, is buying enormous
nmounea. A1Chough I won't go so far as to say that danger immediaCely follows
when we buy naCional bondg in the same way as we aupport t'he dollar, by
using "excess" currency~ ian't there a dangPr that price~,, which we have ~
worked hsrd eo stabiliz~, wi11 go up again? In that aense~ I think that
~xcesaive attention to increasing the money aupply and the policy of gener-
a11y increasing demand is an old way of thinking.
Rather, the important thing ia to pay a little more heed to how to reemploy
people of middle and upper age leve la who are the victima of their place in
the industrial hierarchy~ in what can be callel a"structural recession."
At any rate, I am noC opposed to a broad rate of growth in 1979. More than
that, I ti~ink it is a year to Cake specific steps regarding the imporCant
emplayment problem.
Interest ratea: will they go dawn or not?
, Kinamori: If we do not continue the recovery of fiscal initiative at least
Eor 1 morc year, in 1.979, I think there is the possibility that the ecoaomy,
wliich has ~ust begun to recover, will deteriorate again. In order to make
recovery permanent, a broad expansion of public investment is necessary.
At this year's level, the national debt is 11 trillion yen. ThaC is unaccept-
able. If we do not raise an additional S to 6 trilli~tt yen, we will not be
able to put together the necessary budget. Although it ia a question of
whether or not it can be absorbed, we had better improve the so-called tech-
nical problem of diversifying the national debt.
However,~as a whole, there is an excess of savings in Japan. If interest
rates are unrestricted, I do not think we will be unable to sell the necess.:ry
national bonds. However, because we have a system of controlled currency, I
think that a policy is required vis-a-vis the level of interest rates whereby
we ad~just those ratea to the point at which necessary growth can be realized.
ThereEore, by lowering bank interest rates a little more and by issuing
national bonds, we will expand necessary public investment.
Yet there is a problem of balance in using public investment alone. Because
I think it is desirable to consider the economy as a whole, it has been my
opinion for a long time that we should match our demands for public invest-
ment with a decrease in taxes.
However, because there is a strong feelins that it is nonsense to talk about
reducing taxes when the economy is in trouble, I think there is no prospect
of a lowering of taxes. Therefore, don't public investment and lowering bank
interest ratea somewhat become central concerns?
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Yomhind: Until n 1ow~ring o� Ch~ price of national bonde occurred in Apri1
1978, I was rarely in agreem~nt with Mr Kinamori. Rather, untiZ that time
Y thoub'~t we ehould low~r taxes~ Nowever, because I~udge the change 3n the
condiCion of Che narional bond market since April Co be an omen of great
danger, I t~ave come to think, from that time~ that eax reduction is not
appropriate. The reason ia that if we lower taxes, we must increase our
naCional debt. At that time, if we cannot smoothly abeorb that debt, we
wi11 carry ouC massive buying aupport in order to check the fa11 3n the mar-
ket value of national bonda. Becauae there ie the danger that this will be-
come the basie for greatly increased currency producCion in the future and
a source of price increasea, I have changed my mind, and think we should
grit our teeth and give up the ideu of reducing Caxes.
And~ concerning Mr Kinamori's point that Japan's intPrest rates are Coo
high, my view is a bit differenC. The official raCe between America and
Japan is 6 percent, and the prime rate can go higher. America fa far higher
and Japan is far lower.
The rate of increase in consumer pri.cea hae reflected the riae of the yen
up uneil nnw. Up to the present, the base raCe for the country as a whole
lias been 3 percent. But when Che yen went down when Preaident Carter announced
his support of the dollar on 1 November 1978, wholesale prices since November
' liave had a reactionary rise. Now interest rates on 1-year fixed-term depoaits ~
~re 4-5 percent, but if this trend, which has appeared in wholesale prices,
affects consumer prices, I think the day is near that savings will decrease.
Cert~inly, if we lower interest ratea on loans, industry will benefit. To
that extent I think it is desirable, b~t given the conditiona of present
banking facilities, 1 think that we cannot lower interest ratea on loane to
the extent that Mr Kinamori says without greatly lowering savings interest _
rates.
. Kinamori: America has a$20 bi;,lion international balance of payments deficit.
Imported goods cost that much more than goods made domestically. Thus, I
think it is appropriate that the;r raise interest rates and don't use tao
much money. However, in the case of Japan, although we repeatedly say we
will lower our surplus, in 1978 won't it be about $17-$18 billion? Therefore,
isn't it appropriate that on the one hand we uae if financially, and on the
ot~~er hand lower interest rates so we can use more equipment investment
domesticAlly?
Regarding prices~ wholesale pricea have declined 4 percent and are the same l�~~~
6 ;
as ast year. Certainly~ if the exchange rate is lowered, prices may go up
because costs for imported raw materials will go up. However, there is no
_ previous postwar example in Japan of prices having acutally gone down 4
percent. Isn't this true for the world as a whole? I think it strange to
worry about inflation at such a time.
As for a 3 percent rise in consumer price,this too is historically very low,
~nd because the rise of wages has fortunately become fairly slack, I don't
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rhink Ch~re's a danger of inflation for the Cime being. No~.~, if we fegr
influtinn gnd don't cnrry out credit and #iac~1 policies, there won'ti be a
chance for such policies.
A decrease in the workforce: will the decrease in income and the increase _
in profite continue?
Yoahino: I am not gayittg we already have inflati.on now. ~'he raCe of in-
cr~ase in wholesale prices relative to last year is minua 4.01 percenC--it
has really gone down. If, however, you divide it into domestic and foreign
factore, gnd then if you divide foreign factore into contract and exchgnge
factors~ exchange factora emerge as minus 4.18 percent. Thia means that
t}ie decreased portion is almoat entirely becauae of the rise of the yen.
Although wholesale pricea have gane down 4 percent compared to lasC year, ~
the rise in consumer pricea is at the same time close to 4 percent. If
wholesale pricea set off a reactionary increase in pricea, there is no doubt ,
thnt consumer prices will go up more. If thia occurs, there is naCurally
the possibiliCy that the vicioua circle of wage and price i~ :reases will
occur again, and soon a consumer price increase rate of the sort that will
exceed the int~rest rate of fixed-period eavings will occur. I am older
than Mr Kinamori, and although it may ~e the fault of nervousnesa, I really
do not think it is that simple a thing.
Lookin~ next at the economy, what will happen to industrial profits is
important. In the past a separation of macroeconomics and microeconomics
was spoken of. Macro wae good; micro was bad. I am opposed to that view
now. Although salea have declined 2.7 percent compared to the previous
period becauae of liquidations in the period ending September 1978, earn-
ings have increased 11.6 percent.
As the government expected, the growth rate has been low, and therefore un- ~
employment has increased. Why does this kind of macro and micro separation
occur? Because of the rise of the yen, things purchased from abroad are
cheaper and there are companies which make a great marginal profit on ex-
change. Also, even companies which buy domestically, processing things
which other companies have imported without importing things directly from
foreign countries, are able to say to other companies, "Because you have
bought at a cheap price, isn't it strange to sell at such a high price?"
Industry is not the same as conaumers. If induatries are united, there is ~
much room for negotiation. When the exchange market price goes up, cases '
often come up where they even put in a sliding clause which says they will I~
lower the price by that much. Therefore, the cost of imports has generally ~
decreased considerably. If we look at the Bank of Japan's import price i
index, compared to the same month last year, it has gone down more than 20
percent. About two-thirds of the reason that industrial profits took a
favorable turn ia the benefits from the rise of the yen. The other one-
third is that the Bank of Japan enacted a policy of low interest rates, and
rates fell. Added to this, consumer prices have stabilized and wages have
not gone up very much.
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Wli~n we et~ink of whAt will happen to induatrial profiCs now~ a big factor
whiCh hng revived industrtal profita--namely, the lawer coat of importa--can-
not buC weal;en. Up unCil nc~w, interest rares have, on the whole, fallen,
but there ia a subtle diffei~ence between l~ng and ahort-term rates. Still,
for the time being, I think short~term ratea will continue to decllne, but
aeen as a 10-year national debt, won't long-Cerm rates probably cease to go
down?
Also, if the falling rate of wholesale prices brings down peraonnel expenses,
and if the riaing rate of conaumer pricea increases, the rare of wage increase
wi11 probably go up.
One more Ching concerning Che rapid decrease in the workforce--I think this,
after all, will run into resistance from.society.
Kinamori: Macro is not very attractive, but micro has improved. Thus, I
Chink the feelings of industry have greatly changed and have become brighter.
industrial sales have fallen off, but pro�its have increased. When you ask
why this happens, I anewer that it ia because differences find some outlet.
One is abroad. Japanese industry makes money~ and because it buys lawer
from abroad and sells higher, foreign countries lose. Another reason is be-
cause wages have not gone up much and the workfo~ce has decreased, and rhe.
rate of labor-aharing has gone dawn. Another reason for increased profit
!s, I think, the government's deficit. Because the government has apent
more than it has received, induetrial profits have risen. However, I do
not think this increaee ~.n profits while sales as a whole decline will con-
tinue for very long. Certainly, we cannot have such a reduction of the work-
= force. The rate of labor-sharing has risen a little too much. I Chink this
effeet on industrial profits came about in the course of normalization, but
by a certain time, if sales do not increase, profits won't go up either.
Even though we may somehow make it through March 1979 under these conditions,
I feel profits may drop around September.
Thus, for another year, in 1979, we must boost finances. And isn't it
necessary to bring increased revenues and profits into the new year? The
expansion of a monetary deficit is definitely a problem, but for a while we
must close our eyes to it. Closing our eyes will, I think, expand the mone-
tary deficit a little more. If we look at it only f rom this angle, it is
certainly not a desirable situation, but if we do not take the long view
that the economy will improve, the resu3t will be that we must continue
issuing national bonds indefinitely. Therefore, even if the deficit expands _
for a short while, taking the longer view, if we don't use finances so that
the economy improves, it will be a bad situation.
The yen market: 200 or 210 yen?
Yoshino: One important factor in thinking about the economy is what will
happen to the yen exchange rate. On 1 November 1978, President Cart~r ~
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announced a policy of dolLar protection. America deposited (traded) currency
with other countries, withdrew capital from the Tnternational Monetary Fund
(IMP), and sold Special Drawing Rights (SDR). On the one hand they expressed
Cheir detcrminAtion to maintain the dollar and procur~~ funds up ta $30 billion.
And because they even took steps once to raise the official raCe by 1 percent,
a movement resulted whereby the excesaive ri.se of the yen was revised. How-
ever, I really do not think this will take us back to the level prevailing
around the end of 1977.
Although the calculation differs depending on who is doing it, the amount
of dnllars which has gone from the U.S. Cu foreign countries is at least
$450 billion, and many people say $600 billion. Taking an average of $500
billion, speculating 10 percent would be $50 billion. Twenty percent is
$100 billion. There are plenty of reasons to suspect that $30 billion is
not enough to aupport the ciollar. Moreover, because America's international
" payments deficit still continues, excess dollars continue to increase. There-
fore, American inflation is clearly coming to an end [sic~. It would be good
if the inCernational paymenCs deficit were reduced, but as long as it is
not, ~ust how long we will have a policy of dollar protection is problematic.
If you see things that way, I think there will be a movement from 190 to 200
yen.
Kinamnri: Because America has taken the position of buying and supporting
the dollar with $30 billion, Che dollar has recovered, but the basic causes
have r;ot changed that much. I do not think American inflation will readily
end, and Japan's surplus in balance of payments will continue for the time
being. This factor still works in the direction of raising Che yen. If
the veneer of policy wears off, won't the yen become still stronger? The
desirable level is about 200 yen. If the yen does not get a little weaker, -
Japan's export industries will not be able to carry on normal business, I
think, and because our domestic economy is suffering and our international
surplus in balance of payments continue, the possibility that a rise in
the yen may recur i~ very real.
We cannot con~ecture about matters of foreign governments, but the American
government says that because the dollar is its currency, it must protect it.
I think they feel that if the dollar becomes a little weaker, more strength
would accrue to American goods in export competition, and if the balance
oE payments improved, it would be good. However, that is not the only rea-
son why they are giving positive support to the dollar: they are worried
that OPEC will greatly raise its prices. Moreover, an important thing is ~
that American inflation has bzcome very pronounced. If the dollar gets I
weaker, American domestic prices will increase. And the popularity of the ~
government will decline. Therefore, I think that policies to fight infla-
tion are an extremely important goa.l. However, America does not have basic
confidence in the dollar now. Therefore, even if we think that the dollar
has now stabilized, 1 feel that the possibility is strong that this will
not last.
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Currc~nry rrvalu~tinn: whether nr n~t td do it.
Yoghinn: Juat to ~dd dne more thing--if you gek, thereEor~, whether indus- _
erial bankruptcieg will come in quick guce~sgion, that will not hepprn. In
_ Octaber 1977, when $1 equ~led 260 yen ond ie ldok~d lik~ the dolla~t ~,rould
brcuk thrau$h the 250 yen b~rrier~ ther~ wer~ thd~P who ~~id that if w~ ~o
b~yond the $1 equel 2~t7 y~n level Jupan'g ~xpnrt indu~tri~~ wi11 be wa~h~d
up. Finwev~r, there wgg unugual flexibiliry in JapaneBe induetry with r~~p~ct
to the exct~ange rate. That i~ eo gay, recent export pric~s expr~eaed in
y~n, when compared to ~ y~ar ago, are aboue 8 pprcent cheaper. Speaking
only from thE ch~ng~ in the exchange raCe, prir~~ ehouid be dotm about 21
percent but 12 percent, wt~ich ig epproximately half, ie covered by the rig~
nf dollar-indicnted ~xp~rt prices. Whether you eay it ie that the delivery
period nf
Japan~g~ goods is ghort, or the qualitp of tl~e products is good,
or thnt you cnn immedi~tely g~e parte--the fact that we hav~ competttive
str~ngCh ouCgide of the price aepect, gnd the fact that America, who ig our
biggest customer, !.s suffering frnm inflation, playg a greaC part in it.
Added to this, the lowering nf import cogts besed on the rise of the y~n
had an unexpectedly great effect.
Kinamori: But exports from Japan have decllned in amount nf revenue and
in quuntity. This ie a rare thing for Japen. Even if the rise of the yen
is ndt directly related to bankruptcies, there are in reality many induatri~a
which can no longer afford to export. A18o, there are many which do ~Qt
export any more because it is aenseless to do so. In the automobile snd
home electric industries, where up until now exports were favorable, even
domescic demand has o~sified. Because profits originally Wpre relatively
good, tlie dreaded bankruptcies did not occnr. NoWever, I think there is no
mistnkc thnt the decrease in exports has been a fairly large negative factor
for the economy, Therefore, to say it again, I think things will be bad if
we do not make it [he basis of our policy to give careful thought to thoae
points and to cover that portion by expanding domestic demand.
Yoshino: An importan[ Ching is how to keep Japan's economy on the track of
stnblc growth. In other words, we are not presently in a period of high-
level growth like beEore. How can we best deal with the unemployment that
comes about in the course of thnc? And, because we have too great a sur-
plus in the international balance of payments, we hgve exposed ourselves to
fierce international criticism. We are not solving the problem of hoa beat
to deal with that. Thcrefore, governmenc ~olicies should put great stresg
on measures which directly shrink the surplus in the international balgn~e
of paymcnts, and on unemployment countermeasures. Moreover, naa? is not [he
time to think about the redenomination of the yen, Which has almost no re-
lation to the substance of economies.
Kinamori: No, I think we had bet[er carry out redenomination. With S1
now equal to 200 yen, it is very strange~ internationally speaking, and for
business, too, it is inconvenient. I think that prices will atabilize, and
that now is a good chance to do i[.
However, taking the long view~ because Mr Fukuda has been replaced, the
time Eor carrying it out has receded a little.
COPYRIGHT: Asahi Shinbunsha 1979
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~CONOMI~
~XPAN9I~N OF CONSUM~R CRED2T SYST~t IN~VITABLE
`Cokyd NIKK~I BUSIN~SS in Japan2ae 29 Jan 79 pp 163-105
~Articlp by Ieao MateUUra, chief r~eearcher, buainesa pl~nning deparCment,
5anw~ genk: "NB ~orecast on Coneumer Credit Market: 16 Percent Yearly
Crowch, 80 Trillion Y~n Lev~l After 5 Year~, Centered on Card Loane, New
produrt~ Coming to the Xore"j
('TextJ The outlook ig for en even grenCer qualita-
tive gct9 quantitative exp~nsion of the consumer
credit m~rket to continue in the future, ewelling
to the level of 80 trillion yen, over twice the
preaent level, by 1982. Of this~ the market for
coneumer loans, eupported by the appearance of
bank card loana, a p~raonal credit reporting
gyetem, and the expaneion of the warranty atruc- -
ture, will probabiy reach a acale of 15-16 trillion
yen.
With the recent expansion of coneumer credit we have a remarkable develop-
menr. In the distribution industry rapid growth of monthly inatallment
gales speciality storeg is continuing, and deparcment stores and super-
markets are comp~ting by offering their own credit.. In order to turn up
nea demand, manuEacturers of automobiles, household appliances and other
items are further expanding their existing inatallment sales capacitiea.
Laet March, the Sanwa Bank began offering the card loan, through which a
loan of up to 500~000 yen can be obtained from an automatic caeh disbursal ~
machine. One bank after another folloWed auit. As a result, as of December ~
outscanding bank loane were said to exceed 100 billion yen. ~
Consumer Loans To Reach 15 Trillion Yen by the End of 1982
In this atmosphere oE conaumer credit for everyone, while the phenomenon hns
appeared of the "wage earner" loan shark transformed into a social proble~a,
. the expansion of coneumer credit has become a major force supporting
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~on ox~tcint, us~ ortt.Y ~
c:onHUmer buyin~ pnw~r ~turin~ the rec~~eion. Cit~d as ~n ~xpl~nation for thi~
iet (1) Tt?e prrdominnne ~tetue oE firme a~ th~ eourc~ of d~nand ~ox capital
i~ in tti~ proceee o� ehi~ting to th~ natl.on41 and locai governmant and the
hous~hold; nnd (2) With th~ rapid advence o,~ comput~r technology, it has be-
~ come po~eihle ro proc~a8 and manage conewaer credit rapidly and accurately,
the greatest portion of which is ~worde 311egible~ ~n sme11 emounte.
It is wron~ to view this flourishing of conewner credit as a temporary phsno-
menon ~f the recession. Sinc~ it ia rooted in ehe etructure of Che economy
its~lf, ire continued expansion i~ a certeinry. Rather, 3t may be eaid that
consumer credit 1~ at laet heading inCo a p~riod o! growth. According to
calculations by the Sanwa Bank's research department, aeaumieg an improvement
and perfecCing of the eyetem, the outlook ie for the overall conaumer credit
market tn reach the level of 80 Crillion yen by the end of 1982. Of thie,
conaumer loane will probably expand frrnn their 1977 level of 5.~6 trillion
yen to 15-16 trillion yen. HoW~ver, even so, the proportion of congumer
gpending teken up by coneumer loan~ will only be 5.4 percent comparEd with
17 percent in the Unired Statea.
- Before Chere can be a quantitative expansion of cone~mgr credit, eystem im-�
provements are neceaeary such as: (1) Expaneion o� the target group of con-
sumers; (2) simplification of handling; and (3) expansion and liberalization
of borrowing purposee. The clasaic example of this is the bank card loan.
Mnreover, the equipping of a personal credit reporting system network and a
warraiity structure are indispeneable. Because it vill be connected with the
problem of personal privacy. a peraonal credit reporting syatem in particular
involvea some very difficult aepects, but in any caee it will probably take
the form of a link-up between the National Bank Aesociation'e personal
credis data bank plan now under study and the organized credit fi~.e of the
rest of the credit industry when this ia completed. In addition, the equip-
ping of collection organization~ and a conaumer protection system are also
likely to cause probleme.
Creat Convenience With Interbank On-Line
Next, let us look at the forecaet for individual products. Firat, the card
loan will probably be the heart af consumer credit for exieting producCe.
In functional terms, for example. innovations euch as aets of varioua types
af accounts; agreed upon repayment plans; and transfer, depuait, and With-
drawnl of funds by telephone are envisioned. Alao, through interbank on-line
hookups, it will prabebly be poasible to make and repay loane at anq time
through the automatic caeh disbursal machines of any financial institution.
Until now, the principal type of peraonal loan has been a joint loan tying
toRether household appliance and automobile companies. Recently, however~
the trend is to move away ~rom things, that is, loans for the purpose of
purchasing speciPic products, toaard loans for the purchase of aervicea,
such as hoapital expenses, funde for education or weddinga, or loans for
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lllfii~e~l.ti�r ~
p_, ~~?~(18~
~tlRtLyllR 1l8t11R
- ~6 ~x~o~t 9) ' ~(22)
anuao
' ( 20 ) ~~ar~c ~ 2
a~~a~ ( 23)
. k~~n~c yan~c 4 ~zs se
4'?'. ~~1~~fi1i52~R3i~flfif6l � ~p~x 131 ~
_
The Nation's Consumer Credit System
~ Key: 1. Consumer Credit 19. Department Store Card
2. Home Loana 20. Inatallment Type
3. Private Financial Inatitutiona 21. SQecialisr ~+~-~~~{~~ha~~ lgency
4. Pts52:c Tinancial Inatitutiona Type
5. Company Loana 22. Camprehenaive Inatallment
6. Conaumer Loans, etc. 23. Specific Item Inatallment
7. Finance 24. Independent Type
8. Non-inetallment type 25. Affiliated Type
9. Poetal Loane 76. Note: The estimated unit value
10. Pawnshop Finance of loans outstanding at the end
11. Inatallment type of 1977 was 10 billion yen. ;
12. Private Financial Institutions
13. Non~oint Loana
14. Loan Brokers
16. Sales
17. Non-inatallment type
18. Bank Credit Loan
26
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no gp~eified p~rpoee. t.~at y~ar, ~.r accnrd w~,th ~overnment palicy, educa-
tion~l loans and em~ll gum loans Were inaugurated. However, thia eu~geste
the pos~ibil3,ty that loane which unt~], now have been tinged wt,th the character
of goverr?ment pol~cy measures, ~uch ae the 1ow intereet ael~tare loane~ may
. be i~ltroduced on ~ wid~ ~cale, and the croeat,na o,# policy goale arid the
privnte managmnent of fi~ancial inetitution~ may become a problem. Nome loana
account �or over 80 percent of the ouratanding con~umer credit, and this wi11
probably not change in the futur~. The inauguratiion o~ loane for older homes,
ChE introduction oP floatinA intereste ratee~ the ealee o! morrgage aecuri-
tiea and eimilar meaeures will be the key to future growth, end the reali-
zation of all of theae is probably not far off.
Moreover, automobile makers and large dietributions, auch as department
storeg, nre currently ewitching from traditional reliance upon credit ealea
romp~nies and banks to direct loane fram company funda. Hoaever, for thi~
eype of loan an effective revolving credit formula Will probably be centr~l
to holding cuetomers.
Credit sales and inetallment salea compgnies differ in whether or not they
have an installment payment capacity. ~a~h has exploited ite apecial
characteristice while expanding the scope of ite bu~inees. However~ in the
, future, a new credit sysrem merging the functions of both will probably be
developed in responae to consumer needg. Both are putting efforta into
direct consumer finance, attempting to offer low coat, good quality financ-
ing as an alternative to the "wage earner" loah sharke. Their future de-
velopment will be watched.
Meanwhile, with reapect to new product development, t~ith the improvement of
computer uae technology, the development of all eorts of conaumer credit is
said to be theoretically posaible. The three remaining major problems are:
(1) Personal credit protection; (2) legal regulation; and (3) profitability.
As for 1 and 2~ provision of facilities and adjustmente are gradually pro-
gressing in reaponse to the trend of the time and will probably make posaible
the development of coneumer credit based upon a neW system such as that of
the Japan Data Center (NDC) plan.
The NbC Plan Suggesta Future Direction
The NDC plan was unveiled last November. ~~Since then, atudy by Japan Tele-
phone and Telegraph~ financial institutiona, distributora, and othere has
been progresaing. The essential elementa of the plan are: (1) shopping
service at retail storea; (2) remittance by telephone instruction (Data
Phone); and (3) in-store cash advance aervice. The shopping aervice system,
which is the cnain pillar of the plan, is shown in the preceding figure. At
present its prospects for realization are faint, but it is believed to in-
dicAte the future direction of consianer credit.
Even if the expanaion of consumer credit makes life more convenient, it
does not necesearily make it affluent. The Pact that the deatruction of
27
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a~7~~y~~y~~y+t-Lx~ rx~t~ .
IA~!`7~~,1~J1t~1 Ao~?~ ~
~ (in) ,
r-~x~.?- o~oK( 3)
~~1~ , ~M* (2)
- ~ . . .,.r~
m31! r ~~M ~1 ~i~A -
~7) ~ ~i
~~adtal~NY1 n
~ 6 ~ ~ b
~Q V
, ~
2~RIM ~~VRMI
c~~ ~l ce~~13 (9) I
_ ~z ~ . ~A ' i
n,3i~a~~8~a~u~~~ ' '
1
(11-0~1t, S7~'AO'~~1:1~A14N tif?l:'p--l~}sYI:~cY~il-1''t~~+l.,
A~?th~ti~.t~~
~14~i~~~~r.yti ~t+.v--~~~.~-rar--~a~.M~,o~M~.gh~~:�~.ean~:~~~, ~
1~~~ MAt!!~: rn~~ls! n. ti~.yY-~xillRo~n~ ~~,t i
Future Shopping Service Syetem
Key: 1. Bank Card Presentation 9. Individual Member
2. Reference Inquiry 10. Member Store
3. O.K. 11. Service Center
4. Item Purchase (Signature on 12. Financial Institution
Sales Ticket) 13. Pinancial Institution
5. Request (S~lea Ticket Porvarded) 14. Note: (1) -(3), The individual
6. Payment (Account Tranafer) member inserta the bank card in the
7. Deduction BreakdoWn data phone provided at the member
8. Ueduction (Account Transfer) store and inputa hie secret number,
the purcha8e price, etc. At the
service center, in response to the ;
data phone inquiry, credit out- ;
standing, credit record~ etc are
automatically verified, and ap-
proval or denial of the ahoppittg
service uae is given.
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whal~~dm~ livin~ ig ~igo ~omeeim~~ ~ d~nger ie not du~ only to a eing.l~
"wng~ ~arn~r" loan ~ht~rk.
Borrowing by ~irms i~ linked to the ~utuxp growth o~ eeies~ but p~zsonal
borrowing ie tlad to retrenchment i.n ,#uture living.
tt is the duty of financial in~titutiona to recogn3ze fu11y the character of
consum~r credit a~ a double-edged eword and to work to create and eupport
a h~eithy coneumer credit structure by nor encouraging Qasy borroa3ng and
~asy lending. At the same time, the foster3ng of ~udicious money eenee by
the coneumere W311 b~ deroanded more and inore in the future.
COPYRICNT: Kikkei-McGraw-Hi11, Inc, 1979
9407
CSO: 4105
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~CONOMIC
BRI ~~'S -
PRC C~NT~ACTS--China rec~nrly frozp a numb~r of plant impore contracCg by
withholding th~ iasugnce of import 11c~n~es ~fter the conergctg had b~en
initiel~d. According t~ g report by affpcted Japanege firme, the value of
the ~c~ntrncCS frozen by China total 580 billion yen as of 12 March. In
nddition, the contracte thgt have been formally gigned and that will c~r-
tainly be frozen are expected to reach SO billion yen. According to the
terms of the plant export negotietions, th~ contracte were to h~ve taken
effect on the 60th day after they were signed and Japan and China were
required to issue export or import licenses within 60 days of the ~igning
oE contracts. According to e aurvey conducted by the Minietry of Inter-
national Trade and Industry, China had withheld the iasnance of import
licenseg beyond the 60-dey limit on 20 contracte valued at 420 billion yen
ag of the end of February. The total val~e of the frozen contracte rose to
_ 580 million yen ~a of 12 March. In addition, 60 days have not passed since
Petroleum Refinery and Cooper Works and other plant contracts totaling over
500 billion yen were aigned. Thus, no contract withholding notices f.or ~
those plants have been received. However, it is certain that China will
serve withholding notices on theee contracts unless the two countries agree
on financing terma. Therefore, the total value of the frozen contracta
will reach 630 billion yen. (Textj (Tokyo NIHON KEIZAI SHINBUN in Japanese
13 Mar 79 Morning Edition p 1 OWJ
CSO: 4105
r.
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,;C1'L"NCI. 11NU m~CNNOL00Y
-
LIQUIU HYDROG~N TO FUEL 3-STAGE H-1 ROCKET
'Tokyo NIKKAN KOCYb SHINBt1N in Japanese 11 Dec 78 p S
(T~xtJ The 5pnce Development Committee hopee to have
formulated by the end nf March Che basic plan for de-
vclopment of the H-1 rocket which will be Japan's
mnin launch rocket in the decade after 1985. Based
on this, Che Spnce Development Corporation (director
Yokei Matsuura) is anxious to get started on basic
experiments on the liquid hydrogen-liquid oxygen
(LH-LOX) propulsion system which will be a key
point in the development of this rocket.
This rocket is to be developed by our own technology
to cope with the increas~ in the size of stationary
- satellites for meteorology, co~nunication, and
broadcasting, and the LH-LOX fuel technology to be
used for the second-stage engine, which we are at-
tacking for the first time, is considered to be
state-of-the-art technology. This will not only
enhance our technological potential in space de-
velopment, but it is hoped that the use of LH fuel
will nlso produce important future applications
Cor aircrgft and automobiles.
~'lan To Uae 5econd-Stage Rocket
Tl~e H-1 rocket is a 3-stage rocket weighing a total of 120 to 200 tona with
a capability of putting a 500 to 800 kg artificial satellite into a 36,000-km
t~igh stationary orbit. It will be characterized by an LH-LOX second stage
propulsion system, a more advanced guidance control system, and furthermore,
hea[-processed materials, the third stage m~tor, and other ob~ecta will be
newly developed.
A subcommittee of the Space Committee, which has been atudying rocket specifi-
c:ations in relation to the need for practical satellites in the decade starting
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19g5, i~ ~xpecCed tn h~ve ~n inCprim r~porC c~uC by ab~uC eh~ 20th. Seending
dn ehig report, eh~ admmttt~~ hop~g for ~ finnl d~Ci~ion by ehe end of March
of n~xr yegr, eince rock~e epecifiagCion~ w~ii v~ry non~iderably d~pending
dn wh~th~r ehe Lnunch capgblliCy ie to be for a seationary satellite of thp
500, 600, or 800 kg clgss~ In other wordg, for a 500-kg clgs~ entellite,
currenCly ~xi~eing N-rockeC Cechnningy ran be uCilized as ig for the firge
gC~g~, wh~r~ng fdr an 800-kg eatellite, both the aecond and third stages
hnve to be gtrengthen~d in nddiCion to adding booster rockete Co the firat
gtn~e.
'Th~re ~re neher problems demanding urgent con~ider~tion ~uch gg for in~ettnce,
incrensing gaCellite ~iz~ will me~n higher ourpur power and leeg d~mand on
receiving fncilitieg, but would thig be economically gnd technically feasible?
Al~o the dev~lopment of the N-1 rocket containa elemenCe of the basictechnology
for.the development of the H-2 rocket for manned epace development.
bevelopment Coat About 180 Billion m
The total development coet for the H-1 rockeC is expected to be about 180
billion yen. This includes 60 billion yen for rhe development of a LH-LOX
propulsion system to launch a 500 kg artificial satellite, 60 billion yen
for C?~e launch aite and ground test faciliCies, and 60 billi.on yen for two
test Elights in FY 1984.
There has been the opinion in,some quarters as to wheCher it wouldn'C be
clieaper to make use of American space shuttles instead o� spending all of
this time and money for rocket development. Taka Tsunashima, deputy chair-
mnn of the Space Uevelopment CommitCee atates however that "when considering _
a practicAl satellite for the future, there is no assurance that shuttle
launch will be ad~ueted to our schedule, and also when we have to consider
the possibility of having to launch a aecond satelliCe in case of failure
of the first, it is necessary to have rocket development based on our own
technology." There is no denying the fact that the establishment of our
own unique technology is a necessary condition when there will naturally
ensue many problems involving international cooperation in space develop-
ment.
!'rototyE~e Manufacture and Testing From FY 1980
In the N-1 rocket development schedule, research atarted in FY 1974 with
basic studies on the second stage engine, critical to development of the
entire system, preceding that on the first and third stages. Basic studies ;
on the third stage and the guidance control system will start in the next
fiscal year, and prototype manufacture and testing start in FY 1980.
ftegardin~ main engine components, the Space Development Corporation is
directing and is responsible for their development. Responsible develop-
ment contractors are Ishikawa~ima-Harima Heavy Industry for the turbc~ pump
nnd other fuel propellant feed systems, Mitsubishi Heavy Industry for the
nozzle~ and combustion chamber. equipment, Nissan Auto for the third stage
32
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gnlid prop~ll~nC rdck~t, Mit~ubi~hi Heavy Industry fox Che eecond at~~e Cenk
nnd r~laepd ~quipm~nr, Nippdn ~lectrtc fnr compuC~r ~nd guid~nc~ conCrol
gyyeem, Kdku Den~hi (A~rn~pgc~ ~lpctronic~) for control seneore and relaCed
~quipmene, i~hi.kaw~~img-H~rim~ Ne~vy Indu~try for the gae-~et conCrol syetem,
Nippon ~i~ctric and Mit~ubi~hi ~lectric for rgdio equipment, and MiteUbiehi
Spgce 5y~tem~ for ~oftware for th~ guidance control ~yetem.
Arcel~rnCed 5tudy oE the Inertial Guidanc~ Equipmenr
At preg~nt fnr the ba~ic developmental teeting of the eecond etage rocket,
itg developm~nt ie being promoted by an LH-LOX ~ngine DevelopmenC Coordinating
Council form~d by the Space Developm~nt Corporation together with the Aero-
nguticnl and Space Technical Regearch Laboratory and the 3pace and Aero-
n~uticg Reaenrch InstituCe of Tokyo Univeraity. The council is also pro-
mneing ,~oint reeearch on the inertial guidance ay~tem and Cha eolid pro-
phllant rocket motorg,
Sinr.e th~ Lf{-LOX pngine, which will be the hero of this rocket~ ueea liquid
hydrogen ne th~ fuel ~nd LbX ag the oxident~ cryogenic techniques involving
-250 t~ -260�C temperatures are required~ This pute severe demands on the
degign nf the LH pump, combuetion chambere. and related equiptnent. Toaarde
thig end, LH pump testing is being performed at the Teunoda RockeC Develop-
ment CenCpr of Che Spgce Uevelopment Corporation, while a aaCer-cooled 10-ton-
thrust combugtion chamber is being teated at Mitaubishi's Taehiro Test Site.
Varioug other tests are progressing on achedule as witneesed for instance
by Che expected design performance in a basic LH teat of a 1.5-ton claes
pratotype LH pump built in FY 1976.
Scale-~p and Higher Performance
Starting with Japan's first rocket, the pencil rocket developed by the Space
and Aeronautical Research Institute of Tokyo Univeristy in 1955, both aize
and performance have increased through the Baby, Kappa (K), Lambda (L)~ and
Mu (M) series of rockets, with a Lambda-4S rocket launching Japan's first
~rtificial satellite Osumi into apace. On the other hand, with reapect to
practical applications or rocketa and satellitea for apace communicationa
and meteorological observation, the Science and Technology Board~ the
Ministry of Posts and Telecommunications, and the Minietry of Transportation
tinve been conducting research since 1960, and the development work has now
been tnken over and pursued since 1969 by the corporation.
The N-rocket currently used by the corporation is a liquid-liquid-solid
1-stage rocket capable of launching a roughly 130-kg stationary satellite.
'fhe first stage has three solid propellant booster rockets. Particularly
the second stage uses N204-A-50 as a propellant. The next rocket in line
for development, namely the N-2 model capable of launching a roughly 350-kg
stationary satellite, is simply a scale-up of the N-model.
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PNOTO
- Test of propellant fuel syetem
~ i ~ ~ .
o:
-
~ f
r: `;:d ``:j f
' i.:
1 + ~ t
:
, ~ _ , ~ y+~,yy' i~ .
E ~ " ~ ~II w~ ~ ~~i ~
~'r;'~
~
~`.a.
~ r~ ~ .
r ~ .
~~x i'~~r: ~ .
I
f~ .
I _
34
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Outline of H-1 Rocket (Example)
Key to legend :
~ H. r~~r' F o~~~~
! 1 4~J) (1) OuCline of H-]. rocket (example)
~ ~
7sTVYy li?
i~-~' (2) Third atage
t ?
) ; ._.__J ' .
~ ~ "MY 3 f.~~"' ' (6) (3) Second atage
~ I ~M: ; t~ ~ x~.~-7~~ (7)
~ ~id9'ix~~t~yai g~ (4) Firat stage
~ �
~3z z F3 *2tsa.y ~9) (5) Faring
- o;' (6) Third atage motor
`p~~'~-~'~4~~ ~ ~10) ,
~2G~'s~>v (11) ~7) Spin table
3s-ntm I (8) Guidance section
I
~ ~ ' i~ i~~y~~ ~12 (9) Second stage tank
:
. I . i ~'~-~~~''-~13 (10) Adapter section
~ ~~iai
~4~ ~ I n
(11) Second stage engin~a
1
.
~ . (12) Firat sCage tank
I C1st~~?~~?ia~; r F.(14
I ~ ' (13) Center body section
~ ' (14) Solid propellant booster rockets
~ ~ r~""% ~15 (15) Ffrst stage engirie
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Mnin Itncket Types fnr 1985 and Thereafrer
On the other hand, Caking into consideration energy conaervAtion and enhanced
lift c~pability, the~H-1 rocket to be built around an LH-LOX nonpolluting
engine is receiving closer attenCion as the main power planr for the decade
nfter 1985. This will also be a milestone in Japan's future apace effort
which wi11 be working towards experimenting with materials in a space labora-
eory and preparing for manned flight.
In any case, the H-1 rocket is in line with the Space Development CommiCtee's
concept of development using ita own technology, and since this is a key
link in Japan's future space development program, the outcome is being
watched with particular interest.
COPYRIGHT: Nikkan Kogyo Shinbunsha 1978
5576 '
CSO: 4105 END
I
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