THE PROBABLE FUTURE ORIENTATION OF JAPAN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01012A001600010002-3
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 23
• Document Creation Date: December 22, 2016
• Document Release Date: September 20, 2012
• Sequence Number: 2
• Publication Date: May 29, 1952
• Content Type: NIE

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COPY NO. -r
SECURITY INFORMATION
titiAMO COPT
RECORD gat
NATIONAL INTELLIGENCE ESTIMATE
.ECORD Can
THE PROBABLE FUTURE ORIENTATION
OF JAPAN
NI E-52
Published 29 May 1952
DOM M ENT NO. ./
NO CHANGE N CLASS. L
X DECLASSIFIED
CLASS. CHANGED TO: TS S C
NEXT REVIEW DATE:
ALITH: R 70-
DATE REVIEWER;
CENTRAL INTELLIGENCE AGENCY
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teeMSEggfir
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eiotemer
NATIONAL INTELLIGENCE ESTIMATE
THE PROBABLE FUTURE ORIENTATION
OF JAPAN
NIE-52
The intelligence organizations of the Departments of State,
the Army, the Navy, the Air Force, and the Joint Staff
participated with the Central Intelligence Agency in the
preparation of this estimate. All members of the Intelli-
gence Advisory Committee concurred in this estimate on
22 May 1952.
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SaiaglIffir
THE PROBABLE FUTURE ORIENTATION OF JAPAN
THE PROBLEM
To analyze the various factors ? both internal and external ? which are likely
to determine Japan's future foreign policy; and to assess in the light of these factors
Japan's probable future orientation in the East-West conflict.
CONCLUSIONS
1. We believe that Japan will seek to
achieve its national objectives by a pro-
Western orientation, at least during the
next two or three years.
2.- We believe that the essential conserva-
tism of Japanese society, the strongly
entrenched position of conservative polit-
ical parties and groups, and the weak-
nesses of major leftist forces, make the
continuation of conservative control of
Japan almost certain, at least through
1954. If, however, the Liberal Party
should lose its present majority position,
divisions within the conservatives might
weaken the Japanese Government.
3. We believe that the basic national
objectives of Japan will be to rebuild its
national strength and to enhance its posi-
tion in the Far East. Because of Japan's
economic and military deficiencies, and
because Japanese conservatives share a
broad identity of interest with the US in
containing Communist expansion, prog-
ress toward the realization of these objec-
tives will almost certainly require close
cooperation with the US, at least during
the next two or three years. Even during
this period, however, Japan is likely to
seek to develop at least economic rela-
tions with Communist China and the
USSR.
4. The degree of Japanese cooperation
with the US, in both the short and long
term, will depend largely on the extent
to which the Western alignment not only
meets Japan's needs for security and
foreign trade opportunities but also satis-
fies its expectations for economic and
military assistance and for treatment as
a sovereign equal. Adverse developments
in any of these respects would in-
crease existing pressures for independent
courses of action in Asia and make Japan
more vulnerable to Communist tactics of
conciliation and threat.
5. As the most probable long-term pros-
pect, we believe that as Japan grows in
strength and bargaining power, it will
seek to increase its freedom of action in
Asia within the framework of a generally
pro-Western orientation. Japan will
probably attempt to readjust its relations
with the US, seeking to eliminate the
basing of US troops in Japan and seeking
to attain increased influence and leader-
ship in Asian affairs of joint US-Japanese
concern. Japan will inevitably attempt
to expand economic and political rela-
tam& 1
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riaToft1LP1"
tions with Communist China, and proba-
bly with the USSR, to the extent possible
without jeopardizing its domestic stabil-
ity and will seek at the same time to avoid
a basic alteration in its pro-Western
foreign policy.
6. If, however, Japan is unable to solve
its economic problems, it will be particu-
larly vulnerable to economic and diplo-
matic pressures from the Soviet Bloc and
will be tempted to seize opportunities for
2
closer economic and political relations
with the Bloc. Even in this situation a
conservative government would seek to
avoid courses of action that would be
likely to lead to Japan's absorption into
the Bloc. Serious internal pressure in
Japan would be more likely to result, at
least initially, in a trend toward tradi-
tional authoritarian measures rather
than in the rise of a pro-Communist
regime.
DISCUSSION
FACTORS AFFECTING JAPAN'S FOREIGN
POLICIES
Geographic Position
7. Japan's position as a small island country
close to the Asian mainland has made Japan
susceptible to political and cultural influences
from the mainland. In modern times the en-
croachment of strong maritime powers in the
western Pacific and the activities of strong
powers on the northeast Asian mainland in-
creased the concern of the Japanese over their
national security. The postwar increase in
the power of Communist China and the USSR
has exposed Japan to Communist influence
and pressures, and concern for Japan's secu-
rity has received new emphasis. On the other
hand, the Japanese have been and are con-
scious of the strategic importance of their geo-
graphical position astride the approaches to
Korea, North China, and Siberia.
Economic Factors
8. Japan's foreign policies in the post-treaty
period will be strongly influenced by economic
pressures. As in the past, there will be a
critical need for imported food and raw mate-
rials to support its expanding population and
industrial production and to provide for the
development, and support of armed forces.
1 The historical background for this section is
presented in Appendix A.
9. Japan's 1940 population of 73 million in-
creased to 85 million by 1951 and, according to
present estimates, will reach 90 million by
1955 and 111 million by 1975. Domestic food
production, which cannot be increased signifi-
cantly, provides only 85 percent of current
consumption; by 1955, as a result of the popu-
lation growth, Japan will produce less than 80
percent of its food at present per capita con-
sumption levels. If present strong social and
political pressures for increased levels of per
capita food consumption are to be satisfied,
even larger food imports will be required.
(See Appendix B.)
10. In 1951 Japanese industry in most fields
surpassed 1932-1936 levels of production by
an. average of 35 percent. Japan's present
production level is estimated to be about 60
percent of capacity. (See Appendix C.) The
achievement of the levels of production pro-
jected for 1953 ? expanding production to
about 70-75 percent of existing plant capacity
? would make possible the attainment of a
standard of living at least comparable to the
prewar period (present living standards are
estimated to be at 80-85 percent of prewar
levels) while supporting moderate rearma-
ment and capital investment programs. The
Japanese also have the technological and fi-
nancial capadity to improve and add to their
existingindustrial plant. Manpower would be
adequate to meet the requirements of an ex-
panded industrial activity, and further ration-
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(vaat.
alization in the use of industrial labor would
increase both the pool of available manpower
and the efficiency of industry. However, Ja-
pan's industrial production depends on sub-
stantial imports of most basic raw materials,
particularly coking coal, iron ore, raw cotton,
and crude petroleum. (See Appendix D.)
11. The restoration of Japanese levels of con-
sumption to prewar levels by 1953 and the
support of moderate rearmament and capital
investment programs would require a level of
imports in the order of those presented below:
Selected Japanese Imports
Net Imports Projected
Import
Requirements
(Thousands of Metric Tons)
1951 2 1953
Rice (brown rice
equivalent)
896
1,043
Wheat
1,677
2,450
Sugar
596
640
Raw Cotton
399
527
Coal
1,778
3,125
Iron Ore
3,500
5,310
Crude Petroleum
18,000
26,000
(1,000 barrels)
2 partially estimated.
12. Japan's ability to obtain imports of this
order will depend in part on production levels
in source areas and in part on the extent to
which political considerations permit Japan
access to these sources. The most important
factor, however, will be the extent to which
Japan is able to earn sufficient foreign ex-
change from exports and other sources to pay
for required.imports.
13. Over the next two years at least, with
large US procurement and military expendi-
tures in Japan, Japan's prospects are favor-
able for obtaining the necessary foreign ex-
change. Japan's commercial exports have ap-
proximately doubled in value each year since
1946; current trends indicate that these ex-
ports will continue to expand, though at a re-
duced rate. (See Appendix E.) The rapid re-
building of the Japanese overseas merchant
marine will have a substantial favorable ef-
fect on the foreign payments balance. It is
estimated that in 1953 Japanese commercial
exports and net earnings from shipping will
3
bring in about 2 billion US dollars worth of
foreign exchange out of a total of 2.6 billion
needed to pay for imports. Expenditures in
Japan by Allied Forces and US and UN pro-
curement agencies, plus relatively small re-
ceipts from tourists and foreign business in-
vestors, will contribute nearly 0.9 billion,
largely in US dollars. This will cover the esti-
mated deficit on trade and shipping account
and leave Japan with a net favorable balance
of about 0.3 billion, a small part of which
would represent a net increase in Japanese
holdings of US dollars. (See Appendix F.)
14. Japan's rapid postwar economic recovery
and satisfactory short-run economic outlook,
however, are based on abnormally high dollar
earnings incident to the occupation, the- Ko-
rean war, and present US security arrange-
ments. When the level of such earnings falls,
Japan's continued economic viability will de-
pend on finding a market for still larger ex-
ports and on getting more imports from
non-dollar sources. Considerable progress
in this direction has been made. Only 33
percent of Japan's imports came from the US
in 1951 as compared with 98 percent in 1946.
Non-Communist Asia provided 31 percent of
Japanese imports in 1951.
15. The Japanese postwar economic recovery
has taken place without significant trade with
the Communist Bloc. Largely as a result of
Japanese investment and emigration, Japa-
nese trade with mainland China (including
Manchuria) was at a high level during the
prewar and war years. In 1941, mainland
China (including Manchuria) supplied about
17 percent of Japan's total imports, and took
about 27 percent of Japan's total exports.
Mainland China supplied more than half of
Japan's total coal imports, about a quarter of
iron ore imports, and three-quarters of its soy-
bean imports by quantity. Japanese trade
with the Soviet Union and its East European
Satellites has never been important. How-
ever, South Sakhalin, a part of the USSR since
1945, was an important supplier of coal and
wood pulp to Japan before 1945.
16. There is a tendency among the Japanese
to overestimate the benefit that Japan under
present circumstances would derive from
SIOSMINSIW
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trade with the Communist Bloc. Mainland
China can provide little or none of such vital
Japanese imports as sugar, rice, raw cotton,
crude petroleum, bauxite, manganese, and
copper. Moreover, since the Japanese have
lost their investment position in the area and
political considerations now exert an impor-
tant influence on this trade, Communist
China is not likely, at least for some years, to
provide Japan with either markets or raw
materials on a scale comparable to that of the
prewar period.
17. Access to Communist China's markets and
cheaper raw materials (particularly coal and
iron ore) and access to coal and fishing
grounds in the Soviet Far East would some-
what improve the competitive position of
Japanese exports, ease Japan's balance of pay-
ments problems, and might improve prospects
for expanded industrial activity. But such
trade is not essential th Japan's continued
economic growth so long as Japan can con-
tinue to develop large-scale trade with dollar
and sterling areas, and particularly with
Southeast Asia.
18. There are a number of serious obstacles to
a further significant expansion of Japan's
trade with non-Communist Asia such as the
political instability of the area, the inconvert-
ibility of sterling, and the present limited
capacity of the area to produce the resources
Japan requires. Over a period of time, these
difficulties can be overcome, particularly if
economic development programs in the coun-
tries concerned are undertaken on a large
scale. But over the next few years, the pros-
pects for a significant expansion of Japan's
trade with non-Communist Asia are not
bright.
19. Therefore, the Japanese Government will
be subjected to strong internal pressures to de-
velop economic relations with the Communist
Bloc, particularly trade with Communist
China. Serious popular resentment is likely
to develop in Japan if, following an armistice
in Korea and in the absence of other Commu-
nist attacks, Japan's Western orientation
should preclude efforts to develop economic
relations with the Communist Bloc. Resent-
4
ment would be particularly strong if Japan, in
response to US pressures, severely limited
trade with Communist China and then found
that individual Western Powers adopted less
restrictive policies with regard to their own
trade with this area. In addition, any of the
following possible developments would greatly
increase the pressure upon the Japanese to
trade with the Communist Bloc:
a. Communist acquisition of Southeast
Asia, which is assuming increasing impor-
tance to Japan as a replacement for China in
its external trade.
b. A general economic depression prevent-
ing the expansion of Japanese exports to the
non-Communist world.
c. A return to the restrictive trade policies
of the 1930's on the part of non-Communist
countries, notably the US and UK.
To offset these pressures, the Japanese Gov-
ernment will almost certainly seek sufficient
US aid so that economic expansion can be con-
tinued without becoming dependent on Com-
munist China for a significant portion of Ja-
pan's foreign trade.
Current Trends in the Distribution of
Political Power
20. Background. Prior to V-J Day, political
control in Japan was concentrated in three
major groups ? the military, the civilian
bureaucracy, and the financial and industrial
interests. The role of parliament, political
parties, and organized labor was generally
slight, and the real struggle for power took
place within and among the three major
power groups. The military occupied a posi-
tion of particular strength because of its tra-
ditional prestige and its direct access to the
Emperor, the titular source of all authority,
and focus of national loyalty.
21. Occupation Policies. The occupation au-
thorities, in compliance with the initial US
post-surrender directive, attempted to estab-
lish the foundation for responsible, constitu-
tional government and to broaden the base of
political power and diffuse its exercise. Gov-
ernmental changes initiated to this end in-
cluded: (1) the granting of universal, adult
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(aAs faait or
suffrage and the provision of constitutional
guarantees of basic rights of political activity
and organization; (2) the establishment of a
parliamentary system insuring cabinet re-
sponsibility to the Diet; (3) the reduction of
the Emperor's legal position to that of "sym-
bol of the State and of unity of the people";
and (4) the encouragement of local auton-
omy, particularly with regard to local govern-
ment, the police power, education, and taxa-
tion. Other measures, such as the barring of
wartime leaders from public office, the en-
couragement of popularly supported political
parties, the fostering of trade unionism, the
land reform program, and the program to
break up the great, family-controlled financial
monopolies (Zaibatsu) , aimed to develop new
leadership and interest groups and to broaden
popular participation in Japan's political life.
22. Present and Probable Future Political In-
fluence of Major Japanese Institutions and
Groups
a. The Emperor. A deep and abiding rever-
ence for the Emperor institution as the symbol
of stability in national life and of an ordered
social structure continues to exist. In the
past, the makers of modern Japan relied upon
the prestige of the Emperor institution in exe-
cuting their programs. Proposals to eliminate
the Imperial institution, advanced by Japa-
nese Communists and some Japanese intel-
lectuals, have met with little or no popular
support. In the short run, it is unlikely that
any change in the constitutionally powerless
position of the Emperor will be effected. If
the prestige of the Imperial institution grows,
however, the importance of the throne as a
symbol of national unity and moral authority
may again enable special interest groups to
use the institution in their efforts to attain
power.
b. The Military. One of the most signifi-
cant postwar changes in domestic political re-
lationships has been the destruction of the
political power of the military. The military
group was forced into the background, both by
the stigma of defeat and by the terms of the
occupation. Under the new Japanese consti-
tution the military was deprived of its former
power to overthrow a cabinet or block the for-
5
mation of a cabinet. The present political
leadership, moreover, appears determined to
maintain firm control over the military. Al-
though the rearmament of Japan, together
with actual or threatened hostilities in the Far
East, would gradually enhance the power po-
sition of the military class, this group will
probably not attain its former supremacy ex-
cept possibly under conditions of prolonged
domestic or international stress.
c. The Bureaucracy. The power of the
bureaucracy has geen greatly circumscribed
by the predominant position given the Diet in
the new constitution and by the decentraliza-
tion or elimination of some of the bureauc-
racy's functions. On the other hand, the rela-
tive power position of the bureaucracy was in-
creased by the elimination of the military
group and by the anti-Zaibatsu measures.
Moreover, the occupation policy of working
through Japanese governmental agencies
whenever possible served to maintain the po-
sition and influence of this group, many of
whom have attained prominence within the
Diet and political parties themselves. Finally,
the traditional tendency of the Japanese peo-
ple, both in and out of government, to rely,
upon the trained bureaucracy as the reposii'
tory of experience and skill in public admin-
istration will tend to sustain or increase the
political influence of the bureaucracy.
d. Financial and Industrial Groups. At the
outset, the occupation authorities in Japan,
implementing US post-surrender policy, at-
tempted to break up the family (Zaibatsu)
financial and business monopolies. The heads
of these monopolies were excluded from the
business and public life of the country on the
ground that they, in alliance with the mili-
tary, had been responsible for Japanese ag-
gression. Shortly after its initiation, the pol-
icy of destroying monopolies was modified on
the grounds that its complete execution would
dangerously postpone the economic recovery
of Japan. Subsequently, the severity of the
purge of business executives was also moder-
ated. It is almost certain that dominant
groups in Japanese business will soon succeed
in modifying or abolishing most of the anti-
monopoly legislation and that the trend will
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be to monopoly organization and close ties
between government and business. Financial
and business interests will also influence gov-
ernment policy through their ties with the
conservative political parties.
e. Labor. Although unionization proceeded
rapidly after V-J Day, labor's political influ-
ence has been limited by a lack of cohesiveness
and by factionalism in the labor movement,
and in the left-wing political parties. Al-
though organized labor will probably continue
strikes and demonstrations, its political influ-
ence will probably decline at least through
1954.
f. Rural Society. The social stability and
reliance on traditional patterns which char-
acterize Japanese conservatism have histori-
cally drawn strength from Japan's rural soci-
ety. Moreover, the land reform program has
strengthened rural conservatism and stability
by removing a major source of unrest and
broadening the base of private land owner-
ship.
g. Position of Political Parties. The placing
of supreme executive and legislative power in
the popularly elected Diet in postwar Japan
has provided much greater opportunities for
popular influence on national policy. How-
ever, while party leaders have dominated Ja-
pan's postwar politics, public opinion has had
only limited influence on the political parties,
in part because public opinion has been er-
ratic. The parties continue to exhibit such
prewar characteristics as factionalism, reli-
ance on personal relationships, and neglect of
grassroots organization. There are already
indications of decreasing popular interest in
party politics as the province of the relatively
few. If these trends continue, the Diet will
tend to revert to its prewar status as a politi-
cal trading ground for dominant special
groups.
h. The Press. The press has become an in-
dependent and articulate institution in the
post-surrender period and will resist attempts
of the government to institute pre-surrender
control. So long as the press remains inde-
pendent it will remain as a check on the arbi-
trary exercise, of governmental power.
6
23. Present Political Situation. The current
strength of the various Japanese political par-
ties and factions in the Diet elected in 1949
is indicated below:
Japanese Diet
(As of 15 March 1952)
Lower House:
Upper House:
Liberals
284
Liberals
82
Progressive Party
68
Ryokufukai
53
Right-Wing
-Wing
Socialists
30
,Left
Socialists
31
JCP
23
Right-Wing
Left-Wing
Socialists
30
Socialists
16
Democratic Club
17
Dai San Club
5
Progressive Party
14
Labor-Farmer
4
Dai Ichi Club
10
Farmers
Labor-Farmer
5
Cooperative
3
Socialist Democrat
3
JCP
Independents
3
Independents
2
Vacancies
27
Vacancies
3
466
250
a. Conservative Parties. Party names and
party affiliations are constantly changing in
Japan, but the dominant conservative party,
the Liberals, has demonstrated a considerable
degree of unity and party discipline. The Lib-
erals now hold a safe majority in the Lower
House. Although the Liberals have only a
plurality in the Upper House, they are gener-
ally supported by the Ryokufukai, the Demo-
cratic Club, the Progressive Party, and the Dai
Ichi Club, all of which are conservative fac-
tions differing little in their basic principles
from the Liberals. Conservative strength in
the Diet, in the light of existing social and
political trends, will probably be maintained
and even increased in the national elections
required by January 1953, although shifts in
the relative strengths of conservative parties
May necessitate the formation of coalition
governments. Conservative party support is
found among all classes in Japan but is par-
ticularly strong in business and industrial
groups, in the small towns and countryside, in
the bureaucracy, and among former military
personnel. Many present-day conservative
leaders are the "liberals" of prewar Japan and
are strong supporters of parliamentary gov-
ernment. In times of crisis, however, Japan's
conservatives would not hesitate to adopt au-
thoritarian political and economic measures.
senziaro?T.
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SECRET
b. Other Non-Communist Parties. The Jap-
anese Socialists, the strongest group between
the conservatives and the Communists, cur-
rently are split and disorganized over the is-
sues of the peace settlement, rearmament, and
Japan's orientation in the East-West struggle.
Their support is drawn from organized labor,
white-collar workers, students, intellectuals,
and, to a lesser extent, small and medium
businessmen. Because of their opposition to
proposed modifications of occupation-spon-
sored economic and political reforms, the So-
cialists have been supported by these groups,
largely urban, whose stake in the mainte-
nance of such reforms is largest. In addition,
many of their supporters among students and
intellectuals, while not in sympathy with So-
viet Communism, are impressed by the theo-
retical aspects of Marxism as an explanation
of Japan's history and as a key to its future
development. In general, however, support
for the Socialist movement has been preju-
diced rather than strengthened by the fre-
quently doctrinaire approach to current prob-
lems particularly as advanced by left-wing
Socialist leaders. Internal factionalism is
likely to continue among the Socialists. More-
over, the development of strong and effective
middle-of-the-road and moderate leftist par-
ties is hampered by the strength of the tradi-
tional political and social organization of Ja-
pan on which conservative power is based.
c. Ultranationalist Groups. On the ex-
treme right, numerous small and thus far in-
effective ultranationalist societies have ap-
peared in Japan in recent years. Their mem-
bers include ex-military personnel, bureau-
crats, and former administrators of Japan's
overseas possessions. They have rallied little
support and they will probably be unable to
exert significant influence so long as the pres-
ent leaders can make progress in rebuilding
Japan's economy and in attaining a respected
position in the Far East.
d. The Communist Party. The Japanese
Communist Party has steadily lost popular
support since its peak in early 1949, and has
emerged from nearly two years of internal dis-
sension and confusion as a disciplined party
with approximately 50,000 registered mem-
bers. The Soviet-sponsored party policy in-
7
itially seeks to undermine the Yoshida govern-
ment and the US position in Japan. Overtly
the party seeks broad popular support by play-
ing upon Japanese nationalism, exploiting the
problems arising from Western orientation ?
particularly those relating to the presence of
US troops in Japan, US control over the
Ryukyus, and limitations on trade with Com-
munist China. However, its increasing em-
phasis on underground organization and re-
sort to violence will probably lead to increas-
ingly repressive counter measures by the Japa-
nese Government and will probably further
reduce popular support for the party. A para-
mount Communist objective within Japan is
to develop a para-military force meanwhile ex-
panding its influence in left-wing labor by
forcing it to choose between acquiescing in
governmental suppressive measures or siding
with the Communists. The Party has consid-
erable capabilities for sabotage, espionage, and
subversion. It does not have the capacity for
seizure of power by violence, and future accre-
tions to its strength will be overbalanced by
strengthening of police and security forces.
Nationalism
24. Defeat in World War II discredited aggres-
sive nationalism in Japan and ,for a time weak-
ened national feeling. Many Japanese sup-
ported the concept that Japan was to be the
Switzerland of the Orient, and the constitu-
tional limitation on armaments still has
strong popular support. The idea of neutral-
ity remains attractive to many Japanese who
fear the consequence of Japan's involvement
in the East-West struggle. It may be expected
that ultranationalists, Socialists, and Com-
munists will exploit neutralist sentiment.
25. Conservative groups in Japan are now en-
couraging the revival of nationalism, and most
of the Japanese people are coming to accept
the necessity for alignment with the West and
for defensive armament as a protection
against possible Soviet aggression. Probably
the memory of defeat and the changed power
situation in the Far East will prevent a re-
vival of the aggressive nationalism of the pre-
war period and slow the pace of rearmament
at least for the next few years. However, most
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Japanese believe that the future of their coun-
try is inextricably tied to the fate of Asia and
that Japan's political and economic capabili-
ties entitle it to leadership in Asia. Given an
opportunity, it is probable that aggressive na-
tionalism and pan-Asianism would revive in
Japan.
Japan's Position as a Power in the Far East
26. Japan was able to pursue an independent
and aggressive policy in the Far East prior to
World War II because her industrial capacity,
modern military forces, geographical posi-
tion, and strong nationalism gave Japan a
power position far stronger than that of the
other states of the Far East, and because the
attention of the other great powers was con-
centrated on Europe.
27. Following the defeat and occupation of
Japan in 1945, Japanese military forces were
disarmed and demobilized. At present, Japa-
nese security forces, comprising the National
Police Reserve (75,000) , the Autonomous and
National Rural Police (125,000) , and the Mari-
time Safety Board (16,000) , are capable of
maintaining internal order, but would be un-
able by themselves to defend Japan against
external aggression.
28. Several basic changes in the power situa-
tion in the Far East will affect Japan's ability
to regain its prewar power position.
a. Japan cannot build military forces ade-
quate for defense without extensive foreign
aid. Japan now has the economic capability
to maintain at least 8-10 divisions with sup-
porting troops if this force is initially equipped
by the US. On the other hand, the develop-
ment of strong sea and air power would be a
long-range project and would require substan-
tial foreign economic assistance and, initially,
foreign technical assistance as well. Diver-
sion of materials to naval construction in the
short run would seriously retard rebuilding
the merchant marine and further complicate
the foreign trade outlook. Thus Japan will re-
quire foreign military support even for defense
and will be unable, for the predictable future,
to develop with its own resources military
forces capable of supporting an aggressive
foreign policy.
8
b. Mainland China is controlled by a strong
central government backed by formidable mil-
itary power; Soviet power in the Far East has
increased; and Communist China and the
USSR are closely allied. The US has under-
taken major political and military commit-
ments in the western Pacific.
c. The wartime experience of most Far East-
ern countries with Japanese occupation un-
dermined Japan's prestige with the result that
Japan has little appeal as an example or
leader in Asia, and Communist China and
India now contend for leadership in Asia.
While these considerations do not preclude
the re-emergence of Japan as a strong Asiatic
power, they do make such a re-emergence very
unlikely in the foreseeable future except with
the support of some other power.
PROBABLE DEVELOPMENTS THROUGH 1954
Economic Developments
29. Irrespective of the level of trade with the
Communist Bloc, economic output in Japan is
likely to continue to expand through 1954.
The major forces making for the expansion in-
clude the probable high level of US expendi-
tures in Japan for special procurement and
for Korean rehabilitation and the increasing
rate of armament procurement for the use of
Japanese forces. In addition there will be in-
creasing capital investments directed toward
the development of Japan's electric power re-
sources, the merchant marine, nonresidential
construction, and modernization and improve-
ment of existing plant and equipment in Ja-
pan, and toward the development of sources of
foodstuffs and industrial raw materials in
South and Southeast Asia. Although Japan's
dollar income and acquisition of other foreign
exchange through 1954 will be enough to fi-
nance essential imports, continued pressure
for increased consumption during this period
of rising employment and incomes may make
it politically difficult for Japan to get from
domestic sources alone the funds required to
finance investment and rearmament. Japan
will therefore almost certainly seek US eco-
nomic assistance. The Japanese Government
may also resort to a reduction of consumption
levels through inflationary deficit financing,
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the traditional Japanese method of financing
rearmament and investment programs. It is
also likely that as the rearmament and in-
vestment programs claim an increasing share
of Japan's resources, increased economic con-
trols on the use of raw materials and man-
power will be required.
Internal Political Developments
30. Through 1954 political conditions in Ja-
pan will probably remain generally stable
largely as a consequence of the essential con-
servatism of Japanese society reinforced by
the effects of land reform. The weakness of
Japan in face of the growth of Communist
power in Asia and the danger of Communism
within Japan will encourage existing trends
toward the revival of traditional ideals and
traditional cultural and political patterns. It
is also likely that the conservative govern-
ment of Japan will repeal or make substantial
modifications of occupation-sponsored meas-
ures ? notably those affecting public safety,
labor, business organization and practices,
and education. These modifications are cer-
tain to provoke opposition of varying degrees
from labor and from other elements generally
supporting the Socialist parties, but their ef-
fect will generally be to reinforce the position
of the dominant conservative groups. While
the structure of government is likely to be lit-
tle changed, it is probable that in its operation
increasing recourse will be made to the pres-
tige of the Emperor to win popular support for
government policies. The bureaucracy and
the financial-industrial interests are likely to
be the major dynamic groups in Japanese pol-
itics and within the conservative political par-
ties. The Socialist parties and organized labor
will probably remain relatively weak. At least
in the short run the left-wing Socialists are
likely to become increasingly isolated in the
Diet, supported by a narrowing sector of the
electorate. The right-wing Socialists are
likely to remain a liberal opposition party
seeking support from disaffected elements to
their right and left. The Communist Party,
whether or not suppressed, will probably fail
to regain significant popular support al-
though it may expand its capacities for sub-
9
versive action and extend its influence in the
ranks of left-wing labor.
31. Thus conservative and generally effective
government is likely to be continued through
1954. If, however, in the national elections
which must be held by January 1953, the Lib-
eral Party should lose its present majority po-
sition, divisions within the conservatives
might weaken the Japanese Government. Any
conservative government will be the target of
popular resentment that may develop over
such issues as the presence of US troops in
Japan, US control of the Ryukyus, and con-
trols on trade with Communist China. Exploi-
tation of this resentment by opposition parties
could develop considerable popular support
and weaken .the effectiveness of the govern-
ment in its implementation of foreign policy.
National Objectives of the Japanese
Government
32. The Japanese Government under conserv-
ative control will have as its basic objective the
restoration of Japan to a position of independ-
ence and power. Specifically, the government
will undertake to: (a) stimulate a unified
national spirit; (b) expand the domestic econ-
omy and foreign trade; (c), develop military
forces; (d) regain control of the Ryukyus, and
at least the southern Kuriles; and (e) contain
Communist power in Asia.
Foreign Policies
33. Orientation toward the West. At least for
the next few years the rulers of Japan will al-
most certainly recognize that progress. to-
wards its foreign policy objectives and the na-
tional security of Japan require close relations
with the US within a Western orientation.
The degree of effective Japanese cooperation
within this alignment, however, will be con-
tingent upon satisfaction of its expectations
for significant economic and military assist-
ance, confidence in effective US aid in case of
attack, compromise of the inevitable conflicts
of US and Japanese policy, and treatment as
a sovereign equal. Undoubtedly Japan will
attempt to exploit its strategic position in the
Far East to exact such terms from the US.
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34. The Communist Bloc, aided and abetted
by the Japanese Communist Party, may be
expected to exploit every opportunity to hin-
der Japanese rearmament efforts, to encour-
age anti-US and anti-Western sentiments, and
to hold out the prospect for profitable eco-
nomic and political relations between Japan
and the Soviet Bloc. The military capabilities
of the Communist Bloc represent a formidable
and immediate threat to Japanese security; at
the same time, the development of commer-
cial relations with Communist countries rep-
resents to many Japanese an attractive alter-
native to economic dependence on the non-
Communist world. Japanese susceptibilities
to Communist overtures or threats, however,
are overshadowed by the prevailing Japanese
belief that its national interests are best
served by close relations with the West. Con-
sequently, during at least the next two or
three years, Communist efforts to influence
the future orientation of Japan are not likely
to attain significant success.
35. Areas of Independent Policy. As Japanese
strength grows, however, Japan's national in-
terests virtually dictate an increasing exer-
cise of independent policy with respect to non-
Communist Asia and to the Soviet Union and
Communist China. Japan is likely to seek:
(a) increasing economic and political ties with
non-Communist Asia with the objective of at-
taining ultimate leadership in the area; and,
(b) at least limited contacts with the Soviet
Union and Communist China. Even a profit-
able relationship with the US is not likely to
dissuade Japan from undertaking such inde-
pendent courses of action. These courses of
action will almost certainly be regarded by the
Japanese Government as means of strength-
ening its bargaining power with the West,
providing both short- and long-run economic
advantages, bolstering its internal and re-
gional prestige, and increasing Japan's free-
dom of action in the long run. Through 1954,
Communist conciliatory and/or threatening
tactics are not likely to alter Japan's funda-
mental Western orientation.
36. In the unlikely event that a coalition gov-
ernment with strong Socialist representation
came to power, such a government would
probably tend toward a "third force" position
in Asia. In addition, it would probably seek
to reduce Japan's commitments under the
Security Pact with the US.
LONG-RANGE TRENDS IN JAPAN'S
ORIENTATION
Major Influences
37. Beyond 1954, any Japanese government,
whatever its political complexion, will be con-
fronted by serious limitations upon its eco-
nomic and military capabilities. A rising pop-
ulation and the probable sharp reduction in
special US spending in Japan will make neces-
sary a steady expansion in foreign trade, and
probably foreign economic assistance if living
standards consistent with political stability
are to be maintained. Japan will not be able
for many years, without foreign assistance, to
defend itself against attack ? much less to
support an expansionist policy.
Future Trends
38. If they can maintain progress toward re-
storing Japan's economic and military
strength and international prestige, conserva-
tive elements such as those now in control of
the Japanese Government will probably be
able to remain in power. Since those elements
recognize an identity of interest with the US
in containing Communism, they may be ex-
pected to continue a foreign policy generally
consistent with US objectives. The degree of
Japan's cooperation with the West will de-
pend, however, on the military security, eco-
nomic opportunity, national self-respect, and
international position which a Western orien-
tation offers.
39. Since Japan will aspire to an independent
position of power in Asia, complete coinci-
dence of Japanese and US foreign policies is
unlikely. The US could expect most coopera-
tion from a Japanese government that was
successfully meeting its problems as a conse-
quence of US economic, military, and diplo-
matic support.
40. If, however, Japan is unable to solve its
economic problems, it will be particularly vul-
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91111416W.T., 11
nerable to economic and diplomatic pressures
from the Soviet Bloc and will be tempted to
seize opportunities for closer economic and po-
litical relations with the Bloc. Even in this
situation a conservative government would
seek to avoid courses of action that would be
likely to lead to Japan's absorption into the
Bloc. Serious internal pressure in Japan
would be more likely to result, at least ini-
tially, in a trend toward traditional authori-
tarian measures rather than in the rise of a
pro-Communist regime.
41. The most probable long-term prospect lies
between these two extreme cases of very close
cooperation with the US and an attempt to
pursue a neutralist foreign policy. As the
Japanese bargaining power increases, Japan
will attempt to increase its freedom of action
as a great Asian power, within the framework
of a generally pro-Western orientation. Japan
will probably attempt to readjust its relations
with the US, seeking to eliminate the basing of
US troops in Japan and seeking to attain in-
creased influence and leadership in Asian af-
fairs of joint US-Japanese concern. Japan
will inevitably attempt to expand economic
and political relations with Communist China,
and probably with the USSR, to the extent
possible without jeopardizing its domestic sta-
bility and will seek at the same time to avoid a
basic alteration in its pro-Western foreign
policy.
401mitongE.-
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APPENDIX "A"
JAPAN'S DEVELOPMENT AS A MODERN STATE
Basic Prewar Influences on Japan's
Orientation
1. Early National Objectives. The emergence
of Japan as a modern power began in 1868
when a group of soldier-statesmen seized con-
trol, restored the authority and prestige of the
throne, and set out to make Japan secure
against Western encroachments and to make
Japan a great power. From their contacts
with the West, these early Japanese leaders
realized that to attain their objectives it was
necessary to adopt Western political forms
and to modernize Japan through the institu-
tion of such programs as universal military
training, universal education, and industrial-
ization. They also were aware that Japan, an
insular country with inadequate natural re-
sources, would have to expand its foreign
trade if these objectives were to be achieved.
2. The Growth of Nationalism. While empha-
sizing modernization, Japan's leaders were
careful to preserve the tightly integrated
feudal loyalties and political hierarchy, redi-
recting popular loyalty from feudal families to
the imperial institution. Thus redirected, the
totality of national loyalties and energies
could be focused on support of foreign policies
regardless of the material sacrifices imposed
upon the mass of Japanese people. Through
the educational system and universal military
training, Japanese youth was indoctrinated to
glory in Japan's military traditions and na-
tional heritage. Within a few decades the
average Japanese had developed an intense
loyalty to the Emperor and a profound belief
in the mission of Japan to bring order to
Asia.
3. Development of Expansionism as a Na-
tional Policy. Initially, Japan's leaders con-
centrated on the development of normal in-
ternational commercial relations, and the cre-
ation of national strength. However, Japa-
nese leaders, with their military background,
strong nationalism, and appreciation of the
weakness of China, were impatient to follow
the 19th century example of Western im-
perialism in the Far East. The war with
China, started by Japan in 1894, signified the
triumph of the policy of forceful expansion.
From 1894 until the Washington conference
of 1921-1922, which marked the end of the
first period of Japanese expansion, Japan had
acquired control over Formosa, Korea, the
Pescadores, South Sakhalin, and the Man-
dated Islands and had achieved recognition
of a special position in South Manchuria. A
fuller measure of Japan's expansionist ambi-
tions was also revealed in the "21 Demands"
served on China in 1915.
4. The Interval of Peaceful Cooperation. By
1918, the control of Japan had passed from
the hands of the above small group of aristo-
cratic elder statesmen (Genro) , heirs of the
past, who had created and guided the modern-
ization of the Japanese State, to members of
the new classes developed in the process of
that modernization. The new leadership was
found in the new bureaucracy, product of the
new education; in the officer corps of the
newly created National Army; and in the new
business leaders, who as heads of the family
controlled financial houses were still closely
allied with the two powerful feudal clans that
had engineered the Meiji restoration. the
postwar surge of popular and national inter-
est in the building of an industrial structure
with world wide trading connections, and the
fading out of the old feudal controls before the
advancing competence of the new national bu-
reaucracy, provided political parties and the
Diet with a brief opportunity to exercise a
fairly significant degree of influence in na-
tional policy, at home and abroad. During
the decade that ended with 1932, business
leaders who exerted a dominant influence
favored Japanese participation in world dis-
armament. They were convinced that Japan
possessed economic advantages that would
make peaceful economic expansion more prof-
itable than an expansion built upon armed
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force. Under their influence and leadership
Japan followed a course of peaceful interna-
tional cooperation until 1931.
5. Return to Expansionism Following the De-
pression. By 1930, however, international co-
operation had been discredited in Japan, par-
ticularly as a result of the world-wide depres-
sion which hit Japan especially hard. To
many Japanese, the only answer to Japan's
problems of supporting its swollen population
was a resumption of expansion by force. The
discrediting of liberal policy and business
leadership within Japan and the growing sup-
port for policies of aggressive expansion facili-
tated the return to power of the military class,
this time unrestrained by the wisdom and
world knowledge of the "Elder Statesmen."
During the 1920's there had developed a new
class of young officers, much influenced as to
their outlook by the plight of the rural class
from which most of them had sprung. They
were chauvinistic, anti-capitalistic, anti-demo-
cratic, and fanatically convinced that Japan's
Emperor was being badly advised by self-seek-
ing and corrupt politicians, and were com-
pletely converted to the belief that aggressive
expansion offered the only solution to Japan's
domestic and foreign problems. This group,
relying upon its traditional prestige as the
loyal supporters of the Emperor, and its con-
stitutional direct access to the Throne, terror-
ized all opposition, renewed the indoctrination
of the people in the ancient warlike and aus-
tere virtues of the Japanese people, and em-
barked on a program of expansion. The weak
13
reaction of the major powers to the initial
Japanese act of aggression in Manchuria con-
vinced these youthful leaders and the Japa-
nese populace that the new policy was safe
and profitable.
Prewar Orientation
6. Japan's power position in the Far East was
generally sufficiently strong to allow Japan
to remain free from precise or restrictive alli-
ances or commitments. Japan's orientation
with respect to any particular major power
was determined primarily by coincidence of
interests, or by the other power's will and abil-
ity to support a position in the Far East,
rather than by any traditional relationship.
Only Japan's relations with China and with
Russia (both Tsarist and Communist) pro-
vided significant exceptions to this generali-
zation. Because of China's geographical
proximity, raw materials, and market poten-
tial, Japan traditionally regarded both China
proper and Manchuria as its sphere of inter-
est and the most suitable fields for expansion.
The Japanese program, however, led to con-
flict with Russian interests in Northeast Asia,
and Russia ? Tsarist and Soviet ? was there-
fore regarded as the greatest potential or
actual threat to Japan's national interests.
However, both powers for various reasons, at-
tempted for some time to accommodate their
interests on the Asiatic mainland. Japan re-
garded such an accommodation as a prerequi-
site to its expansion and consolidation in
China and areas to the south.
"aggeliga=
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APPENDIX "B"
FOOD REQUIREMENTS OF JAPAN BY PRINCIPAL ITEMS 1936-40, 1950, AND 1953
Commodity
Total Supply
Domestic Production
Net Imports a
1936-40
1950
1953
1936-40
1950
1953
1936-40
1950
1953
(ay.)
(in 1,000 metric tons)
Rice (brown rice
equivalent) b
12,387
10,390
10,543
9,861 C
9,652
9,500 P
2,526
738
1,043
Wheat
1,259
2,904
3,825
1,454 C
1,338
1,375
-195
1,566
2,450
Minor grains
2,150
2,880
3,500
1,838
2,162
2,500
312
718
1,000
Pulses
1,122
702
900
622
498
500
825
204
400
White potatoes
1,824
2,438
2,450
1,824
2,442
2,450
-4
Sweet potatoes
3,122
6,290
6,300
3,122
6,290
6,300
Sugar
1,166
453
640
150 g
1,016
453
640
Fish
3,749
3,075
3,310
3,713 g
3,202
3,500
36
-127
-190
Estimated daily
per capita caloric
intake
2,280 "
2,000 "
2,150 "
a. During the year 1936-40, rice was obtained almost entirely from Korea and Formosa. Pulses (soybeans)
were supplied by Manchuria and China. Principal sources for sugar were Indonesia, Formosa, and the
Philippines. Minor grains were imported from a number of the countries in Asia.
During 1950, rice purchases were made chiefly in Thailand and Burma with smaller quantities from
Korea, Egypt, China, Mexico, and the United States. Wheat procurement was made largely in the US,
Canada, Australia, and Argentina. Principal suppliers of minor grains were the US, Canada, Argentina,
Australia, and the Middle Eastern countries. Chin a and the United States supplied all of the soybeans.
Sugar was purchased almost entirely in Formosa, the Philippines, and Cuba.
Projections for 1953 assume a pattern of procurement similar to that for 1950, with the exception
that Communist China is not assumed to be a maj or trading partner of Japan. In general, the South-
east Asian countries, Korea, and Formosa are expected to become increasingly more important to Japan
as suppliers of rice. The US and Canada will supply the bulk of wheat and minor grains. The US
will also supply the bulk of Japan's soybean requirements and possibly 200-300,000 tons of rice in 1953.
b: Conversion factors used are as follows: 0.8 brown rice equals 1.0 paddy rice; and 0.91 milled rice equals
1.0 brown rice. Imports were assumed to be milled rice:
c. The production of rice and wheat during this period was above the average for 1931-40. The average
for rice during the years 1931-40 was 9,359,000 metric tons; and for wheat, 1,274,000 metric tons.
d. The production of rice during 1950, because of favorable weather conditions, was above the average for
the postwar years. Rice production in 1951 totaled 9,042,000 metric tons, brown rice equivalent. Aver-
age annual rice production for the years 1946-1950 was 9,458,700 metric tons.
e. The estimate for rice production in 1953 appears to be low as compared to the years 1936-40 and 1950,
but this is only because of the very favorable weather conditions during these years, which resulted in
bumper crops. The estimates for 1953 are based on the assumption that average weather conditions will
exist in that year, that productivity per unit of land will improve only slightly over the postwar average,
and expansion of cultivated acreage will be negligible.
f. Data are for US fiscal year 1951.
g. Data are for 1936.
h. The estimated caloric levels per capita in the postwar years appear somewhat high in relation to the
total supply of foodstuffs available and in consideration of the population increase. However, this arises
from the fact that, in the postwar years, better and more complete usage of available supplies of food-
gg:PIPINgf
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stuffs has been made. For example, the milling rates for wheat are now somewhat higher than in the
prewar years; non-food uses ? such as rice for sake (rice wine) , fish for fertilizer and other industrial
uses ? have been cut down; storage facilities and marketing procedures are now more efficient. It is
estimated that these various changes save about 5 percent of food on a per capita basis.
Sources: The 1936-1940 and 1950 production and net import data are based on the Japanese Government
1951 Annual Report to the Food and Agriculture Organization of the United Nations, June 1951;
SCAP, Natural Resources Section Report Number 143; Japanese Crop and Livestock Statistics,
1951; and SCAP, Japanese Economic Statistics bulletin No. 62, Section II, October 1951. The 1953
data are estimates of OIR/DRF, Department of State.
IRMR?Z
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alEafr
APPENDIX "C"
JAPAN'S INDUSTRIAL PRODUCTION 1936, 1951, 1953, AND CAPACITY 1951
16
1936
1951
1953
Commodity
Production
Capacity
?Production
Production
(In metric tons, unless specified otherwise)
Pig iron
2,008,000
7,000,000
3,124,000
4,930,000
Crude steel
5,223,000
11,030,000
6,499,000
9,150,000
Aluminum
4,693
90,000
36,778
60,000
Copper refined
77,973
120,190
90,949
120,000
Cement
5,579,000
8,836,000
6,548,000
8,800,000
Ammonium sulphate
875,000
2,200,000
1,697,000
2,150,000
Petroleum products
(bbls.) a
13,822,200
28,100,000
19,000,000
26,550,000
Cotton yarn
654,528
441,818
335,000
420,000
Cotton fabrics
3,495,000
3,901,000
2,178,000
3,380,000 b
(1,000 sq. yds.)
Rayon fabrics
1,044,000
1,920,000
810,000
1,200,000
(1,000 sq. yds.)
a. Refinery output.
b. Estimated on the assumption that total yarn production less yarn exports will be manufactured into fab-
rics. Fabrics are calculated on the basis of 4 yards equaling 1 lb. of yarn.
Source: The 1936 and 1951 data are based on SCAP reports; 1953 estimates are those of OIR/DRF, Depart-
ment of State.
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,
StaKi it NIB df 17
APPENDIX "D"
PRINCIPAL RAW MATERIAL REQUIREMENTS OF JAPAN, 1936, 1951, AND 1953
(IN 1,000 METRIC TONS UNLESS SPECIFIED OTHERWISE)
Commodity
Total Requirements
1936 1951 1953
Domestic Production
1936 1951 1953
1936
Imports
, 1951
1953 a
Raw Cotton
925
399
568
925
399
568
Raw Wool
100
69
79
negl.
negl.
negl.
100
69
79
Coal b
46,758
44,978
53,125
41,803
43,200
50,000
4,955
1,778
3,125
Salt
1,935
2,325
2,500
519
600
650
1,416
1,725 c
1,850
Iron Ore d
4,528
5,825
9,010
505 e
2,325 f
3,700 f
4,023
3,500 g
5,310
Copper Ore
113
50
120
65
50
60
48
negl.
60
(Content)
Crude Petroleum
26,959
20,333
29,500
2,561
2,333
3,500
24,398
18,000 g
26,000
(1,000 barrels)
,
a. Principal sources for raw material imports are summarized below:
Raw Cotton
Raw Wool
Coal
About three-fourths of Japan's imports will probably be from the US; the re-
mainder will be largely from Pakistan, Egypt, Mexico, and Africa.
The bulk will be from Australia with smaller quantities from South America,
Africa, and possibly the US.
The US is likely to be by far the largest supplier, with smaller quantities com-
ing from India and Goa. Communist China and Sakhalin are other potential
suppliers.
Salt The Near Eastern countries, followed by Southeast Asiatic countries - includ-
ing Formosa - and Spain are likely to be the major suppliers. Mainland
China potentially is a large supplier.
Iron Ore The Malayan Union, the Philippines, Goa, and India will be the principal
Asiatic suppliers; substantial quantities of US and Canadian iron ore will
probably also be imported.
Copper The US and Chile are primary sources.
Petroleum The Near East and the US are principal sources. Indonesia may become im-
portant in the future.
b. Domestic production is largely bituminous grade; small quantities of semi-anthracite coal are also in-
cluded. Imports consist largely of metallurgical grade coking coal; only several hundred thousand tons
of anthracite coal are included.
c. Estimated.
d. Figures are given in terms of ore of which 60 percent is iron content.
e. Includes only iron ore, as complete data for other sources of iron are unavailable.
f. Includes all types of iron for pig iron production, such as pyrites, iron sands, etc.
g. Estimated.
Source: Data for 1936 are based on official Japanese statistics; data for 1951 are based on SCAP reports;
estimates for 1953 are those of OIR/DRF, Department of State.
1511111RWINEL
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esalibT
APPENDIX "E"
18
JAPAN'S EXPORTS BY MAJOR CATEGORIES, 1936 AND 1951, AND ESTIMATES FOR 1953
COMMODITY
1936
1951
(in million US
dollars)
1953e
Foodstuffs and Beverages a
111.8
69.3
100
Textiles and Fibers b
506.8
554.2
885
Machinery and Metal Products C
158.0
428.1
600
Chemicals d
44.2
37.0
83
Miscellaneous
218.2
265.9
257
Total
1,039.0
1,354.5
1,925
a. Includes exports of minor cereals, vegetable and fish oils, vegetables and fruits, canned and other
packed foods, tobacco, alcoholic beverages, and tea.
b. Includes exports of cotton, rayon, wool, industrial fibers, and their manufactures. Cotton textiles are by
far the most important in value: in 1936, they were valued at $185 million; in 1951 at $345 million; and es-
timates for 1953 provide for $540 million. In 1936, raw silk and silk manufactures, valued at $140 million,
were also of major importance.
c. Includes exports of metals and ores, steel mill products, transportation equipment (water and land) ,
machinery and motors, and other metal products.
d. Includes exports of chemical fertilizers, sulphur, caustic soda, and dyes and paints.
e. Markets for Japanese exports, especially of textiles except for raw silk and fabrics, lie chiefly in Asia. It
is estimated that about one-half of the value of Japan's total exports in 1953 will be sold in Asia, exclusive
of Communist China; about one-sixth to the United States, Canada, and Mexico; and the remainder will
be to the other areas of the world. Machinery and metal products, it is estimated, will find increasingly
larger markets in Asia as well as in other areas of the world. Chemicals, particularly nitrogenous ferti-
lizer, will find a ready market in Asia. Foodstuffs, such as marine products, canned foods, and tea most
likely will be sold to the dollar areas, chiefly the US.
Source: Prewar data are based on Official Japanese Trade Statistics and include exports to Korea and For-
mosa; 1950 data are based on SCAP, Japanese Economic Statistics, No. 54, Section II, February
1951; estimates for 1953 are by OIR/DRF, Department of State.
Meensior
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APPENDIX "F"
JAPAN'S BALANCE OF PAYMENTS IN 1936 AND 1950 AND ESTIMATES FOR 1953
19
1936
1950 1953
(in million US dollars)
Exports (f.o.b.)
1,034.9
911.2
2,025.0 a
Imports (c.i.f.)
-1,049.3
-969.9
2,600.0
Trade balance
- 14.4
- 58.7
- 575.0
Non-monetary gold
38
Transportation and insurance
68.4
3.9
132.0
Investment income
50.8
- 6.8
- 9.0
Other services
- 34.3
110.3
770.0 b
Total goods and services
70.5
52.5
318.0
Private donations
36.9
39.6
10.0
Other
- 93.8 e
- 15.8 c
_ 55.0 c d
Total
- 56.9
23.8
- 45.0
Errors and Omissions
- 6.7
48.2
Surplus or deficit (-)
6.9
124.5
273.0
Compensatory official financing
US appropriation
360.9
US credits
. . .
- 43.1
Short-term assets
15.7
-438.5
- 273.0
Monetary gold
- 22.6
- 3.8
Total
- 6.9
-124.5
- 273.0
a. Includes an estimated $100 million in UN procurement for the rehabilitation and reconstruction of Korea.
b. This figure consists of $250 million for personal expenditure by Allied Forces in Japan, tourist receipts,
and foreign investments in Japan; and $520 million for procurement and payment by the US for: (1)
the maintenance of US Forces in Japan; (2) military construction in Japan; (3) the support of Japanese
security forces; (4) the maintenance of the Republic of Korea (ROK) army; and (5) MDAP procurement
for South and Southeast Asia.
c. Includes private capital movements and official amortization.
d. Includes reparations and restitution payments.
e. Japan recently received a $40 million cotton revolving fund credit. Utilization of this credit can be ex-
pected during 1953, but only the interest payments are considered in the table.
Source: Data for 1936 and 1950 are based primarily on IMF International Financial Statistics, January
1952; estimates for 1953 are those of OIR/DRF, Department of State.
g*;wipai,
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