PROBABLE DEVELOPMENTS IN JAPAN THROUGH 1957

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01012A004300030001-2
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 23, 2016
• Document Release Date: April 25, 2013
• Sequence Number: 1
• Publication Date: August 10, 1954
• Content Type: NIE

?1'X 934 8-lGQry
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NIE 41-54.
10 August 1954
.? LIZ lI r,
NATIONAL INTELLIGENCE ESTIMATE
N I E 41-54
PROBABLE DEVELOPMENTS IN JAPAN
THROUGH 1957
NT N6 I
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ALITH? HR 70.2
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CLASS. CHANGED TO: TS S C
NEXT REVIEW DATE:
DATE: [innREVIEWER: UU -A
Submitted by the
DIRECTOR OF CENTRAL INTELLIGENCE
The following intelligence organizations participated in the
preparation of this estimate: The Central Intelligence Agency
and the intelligence organizations of the Departments of
State, the Army, the Navy, the Air Force, and The Joint Staff.
Concurred in by the
INTELLIGENCE ADVISORY COMMITTEE
on 10 August 1954. Concurring were the Special Assistant,
Intelligence, Department of State; the Assistant Chief of
Staff, G-2, Department of the Army; the Director of Naval In-
telligence; the Director of Intelligence, USAF; the Deputy
Director for Intelligence, The Joint Staff. The Director of
Intelligence, AEC, and the Assistant to the Director, Federal
Bureau of Investigation, abstained, the subject being outside
of their jurisdiction.
COPY NO. 178
ASSISTANT DIRECTOR,ONE
g
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1. This estimate was disseminated by the Central Intelligence Agency. This copy
is for the information and use of the recipient indicated on. the front cover and of per-
sons under his jurisdiction on a need to know basis. Additional essential dissemination
may be authorized by the following officials within their respective departments:
a. Special Assistant to the Secretary for Intelligence, for the Department of
State
b. Assistant Chief of Staff, G-2, for the Department of the Army
c. Director of Naval Intelligence, for the Department of the Navy
d. Director of Intelligence, USAF, for the Department of the Air Force
e. Deputy Director for Intelligence, Joint Staff, for the Joint Staff
f. Director of Intelligence, AEC, for the Atomic Energy Commission
g. Assistant to the Director, FBI, for the Federal Bureau of Investigation
h. Assistant Director for Collection and Dissemination, CIA, for any other De-
partment or Agency
2. This copy may be retained, or destroyed by burning in accordance with appli-
cable security regulations, or returned to the Central Intelligence Agency by arrange-
ment with the Office of Collection and Dissemination, CIA.
3. When an estimate is disseminated overseas, the overseas recipients may retain
it for a period not in excess of one year. At the end of this period, the estimate should
either be destroyed, returned to the forwarding agency, or permission should be re-
quested of the forwarding agency to retain it in accordance with IAC-D-69/2, 22
June 1953.
WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
DISTRIBUTION:
White House
National Security Council
Department of State
Department of Defense
Foreign Operations Administration
Operations Coordinating Board
Atomic Energy Commission
Federal Bureau of Investigation
United States Information Agency
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PROBABLE DEVELOPMENTS IN JAPAN THROUGH 1957
THE PROBLEM
To analyze the factors determining Japan's present strength, stability, and orien-
tation, and to assess probable developments in Japan through 1957, with particular
respect to Japan's future role in. Asia.
CONCLUSIONS
1. Through 1957, "Japan will not be in.a
position to play a leading or stabilizing
role in Asian affairs. Assuming a con-
tinuation of US assistance, however, we
believe that Japan will slowly gain in
strength.
2. Japan will almost certainly continue to
be economically and militarily dependent
on the US. It will therefore continue to
avoid any action that might seriously
jeopardize its alignment with the US, in
spite of numerous frictions arising out of
its condition of dependence.
3. Within these limitations, Japan will
attempt to pursue a more independent
foreign policy, notably in terms of estab-
lishing more active and extensive eco-
nomic and political relations with Com-
munist China and the USSR. There will
probably be some growth in neutralist
sentiment, an increasing spirit of nation-
alism, and a continuing critical appraisal
of US policy.
4. Japan's economic situation will con-
tinue to be precarious. Import require-
ments will remain high and even with
the probable increase in trade with Com-
munist China, exports will not be ex-
panded sufficiently to avoid continuing
balance of payments difficulties. There-
fore, Japan will remain dependent on a
continued high level of US expenditures
and other financial assistance.
5. Moderate conservative elements will
probably continue to dominate Japanese
government and politics, although fac-
tional rivalry among the conservative
elements will probably hamper govern-
mental effectiveness. Conservative ten-
ure is likely to be assisted by further in-
creases in the powers of the central gov-
ernment.
6. Although the Japanese Communist
Party is not likely to gain substantial par-
liamentary strength, it will continue to
exercise an important influence through
its ability to aggravate popular grievances
and to exploit and infiltrate mass organi-
zations of the non-Communist left. The
Communists will probably be able to
maintain their underground organization
but not to.increase significantly their po-
tentialities for sabotage and subversion.
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2
7. Assuming US military assistance, the
Japanese Government will continue to re-
arm gradually during this period. By
the end of the period, we believe Japan
will have military forces capable of mak-
ing a substantial contribution to its de-
fense, but by no means adequate to
assume full responsibility therefor. Ja-
pan will be reluctant to accept military
commitments beyond the immediate de-
fense of Japanese territory and will hesi-
tate to join any regional defense system.
DISCUSSION
1. JAPAN'S PRESENT POSITION AND.
ORIENTATION IN ASIA
8. Two years after regaining its independence
and nine years after the close of World War
II, Japan has not yet begun to play an active
role in world affairs. The Japanese domestic
scene has been marked by indecision and a
lack of general purpose, and only recently
has Japan begun to face up to its basic prob-
lems. Japan is not competing effectively in
international markets, the volume of its trade
is still considerably below prewar levels, and
its balance of payments deficit has risen
sharply during the past year. Japan con-
tinues to be almost totally dependent on the
US for its security and for its economic sol-
vency.
9. For a variety of reasons, the nearly 90 mil-
lion Japanese have felt impotent and in large
measure unable to determine Japan's future.
As a consequence of defeat in 1945 and during
seven years of occupation, Japanese tradition-
al institutions were severely dislocated.- The
Japanese have suffered a loss of self-confidence
and initiative and the nation has faced a pre-
carious economic situation. The persistence
of cold war tensions has further deprived Ja-
pan of opportunities to act with'certainty and
independence in world affairs. Japan has
been deprived of a secure market and source
of raw materials on the mainland of Asia, and
the rise of a strong Communist China has
greatly lessened the opportunity for Japan
to become again a dominant power in the Far
East. Confronted with strong military power
on the Asian mainland, with the threat of
an East-West conflict, and with the further
development of nuclear weapons, the Japanese
are mortally, afraid of involvement in general
war. Moreover, the presence of a Communist
regime in North Korea and gains in Commu-
nist power in Indochina have created a further
sense of uncertainty and disquietude among
the Japanese who look to future developments
concerning Asia with apprehension as to the
effects they will have on Japan. In these cir-
cumstances the Japanese have not exercised
fully their capabilities, apparently preferring
to rely on the US to support and protect Ja-
pan.
10., Japan still possesses certain of its prewar
assets : the most highly developed industrial
base in the Far East, a large skilled labor force,
an energetic and disciplined population, and
the potential to recreate a military machine.
However, Japan's leaders recognize that the
achievement of a position of strength and in-
fluence in Asia and as a world power will be
at best a gradual process. At present, the
principal domestic and foreign policy concerns
of Japan's leaders are the revival of a strong
sense of national purpose under the leader-
ship of an effective and stable central govern-
ment, the recovery of Japan's economic posi-
tion with emphasis on the expansion of com-
mercial relations with Asia, and the creation
of a m6dest defense establishment in coopera-
tion with the US. In large measure, effective
Japanese support for Western policies depends
on the degree to which these policies are con-
sidered to support Japanese national interests.
11. The Japanese public generally supports a
Western alignment, and, with the exception
of the Communists and Left Socialists, few
Japanese leaders presently favor a policy of
strict neutrality or of alliance with the Com-
munist bloc. The main basis for this orienta-
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tion is that Japan at present sees no reason-
able alternative that would serve its national
interest. In addition, there is strong antip-
athy to Communism and distrust of the Com-
munist bloc in conservative and Right Social-
ist circles and among the general public. The
Japanese Government considers the Sino-
Soviet Pact of 1950 and the failure of the
Communist powers to recognize the San
Francisco Treaty to be major obstacles to
closer relations with the Communist bloc.
12. At the same time, there are indications
of a slowly growing spirit of independence in
the conduct of Japanese national and foreign
affairs. The government is evidencing an in-
creased tendency to bargain more vigorously
with the US. There are indications of a lack
of confidence in US policies in the Far East.
Numerous groups in Japan, both official and
unofficial, are now urging that the country
modify its close US alignment which tends
to cut Japan off from the Asia mainland, in
their view Japan's proper area of activity and
influence. Thus, Japan in mid-1954 is aligned
with the US, yet restive; aware of Communist
ambitions in Asia, yet eager to expand its
economic relations with Communist China
and the USSR.
II. POLITICAL AND SOCIAL SITUATION
13. Conservative forces continue to dominate
Japanese society, and politics. Traditional
patterns of social and political authority are
accepted and observed by a large majority of
the people. Traditional symbols of national
unity, including those of racial and cultural
uniqueness, retain a fair measure of their
prewar appeal. The Imperial institution re-
mains a stabilizing 'symbol despite its loss of
direct political authority.
14. Despite the strength of conservative and
traditional forces, however, postwar Japan has
not exhibited the same cohesion in its social
and political life that was evident in the pre-
war period. This condition has been caused
in part by the strengthening of such political
forces as organized labor, Socialism, and Com-
munism, the eclipse of such groups as the mili-
tary and the ultranationalists, and the in-
creased appeal of individualism. These post-
war changes in Japanese political life have
contributed to the caution with which Japa-
nese governments have dealt with vital issues
such as rearmament, domestic economic pol-
icy, international commitments, and the crea-
tion of effective national controls to deal with
subversive organizations.
15. Conservative forces in Japan have sought
to weaken those new social and political move-
ments which they regard as major obstacles
to strong and consistent governmental action.
To this end the conservatives have tried with
considerable-success to adjust many of the re-
forms of the occupation to traditional Japa-
nese forms and practices. Japanese govern-
ments in the next few years are likely to turn
increasingly to traditional institutions and
practices in an effort to achieve greater stabili-
ty and effectiveness of government. This
trend will almost certainly be strengthened
by the reviving spirit of nationalism and by
the increasing influence of military leaders.
16. Under the new -constitution the role of
elective institutions, and particularly of the
National Diet, was strengthened. The ability
of organized groups and public opinion to in-
fluence government policy through the medi-
um of political parties was substantially in-
creased. At the same time, certain tradition-
ally powerful groups, notably the military and
court cliques, were reduced to positions of
negligible influence. The bureaucracy and
financial and business interests have retained
positions of substantial political power and
currently exercise a major influence through
both parliamentary and extra-parliamentary
channels. However, on some issues public
opinion, aroused by the press, has exercised
considerable influence on government policy.
17. Conservative forces. With the exception
of one brief period, Japan has been governed
since the end of the war by conservative
forces. The conservative parties draw their
main strength from business and industry and
from the conservative-minded farmers in rural
districts. At present, the conservative parties
hold roughly two-thirds of the seats in both
houses of the Diet.
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JAPAN
DISTRIBUTION OF DIET SEATS
As of 1 July 1954
LABOR-FARMER PARTY
2 seats
0.8%
LOWER HOUSE
.(467 seats)
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18. The present government of Prime Minister
Yoshida is organized by the largest party in
the conservative group, the . Liberal Party.
The Liberals do not have a majority, however,
and they must seek the cooperation of the two
opposition conservative parties in the Lower
House, the Progressives and the splinter Japan
Liberal Party. In the House of Councillors,
the Liberals are generally supported " by the
Progressives and the Ryokufukai (Green
Breeze Society), a loosely organized group of
conservative-minded independent members.
In both houses, government legislation is sub-
ject to modification as the price extracted by
these conservative opposition parties for their
cooperation. The fact that the conservatives
are split into factions, largely the result of
personal rivalries among their leaders, has
diminished the effectiveness of postwar Japa-
nese governments.
RESULTS OF ELECTIONS FOR THE LOWER
HOUSE, 1949, 1952, AND 1953
PERCENTAGE
OF
SEATS
PERCENTAGE OF
TOTAL POPULAR
VOTE
Conservative
parties
76.8
69.7
66.5
65.4
66.2
65.7
Socialist
parties
10.3
.23.8
29.6
13.6
21.4
26.5
Communist
party
7.5
...
0.2
9.6
2.5
1.9
Other
5.4
6.5
3.7
11.4
9.9
5.9
19. As a group, the conservatives favor: an
economic program that conforms to the needs
of the major business and industrial interests,
policies designed to prevent the rise of sub-
versive influences either on the right or the
left, and a foreign policy that calls for align-
ment with the Western bloc at the same time
that it seeks opportunities to permit Japan to
exercise a more independent role in world
affairs. In dealing with Japan's many domes-
tic and foreign problems, the conservatives
will tend increasingly to restore traditional
forms and practices and to centralize the po-
litical and economic powers of the national
government. To insure continuation of con-
servative control and to achieve more effective
government, the majority of the Liberals and
Progressives will probably merge to form a
single conservative party, or at a minimum,
to cooperate in a coalition government. Yo-
shida will probably be replaced during the
period of this estimate, but his successor is not
obvious at this time. The outlook is for con-
servative governments backed by majorities
in the Diet but still hampered by political
rivalries. The military, and, to a lesser ex-
tent, the court circles will probably regain a
measure of their traditional influence.
20. The Socialist Parties and Organized Labor.
The Socialist movement in postwar Japan has
derived its strength chiefly from its close
identification with organized labor, small en-
trepreneurs, intellectuals, youth, and women.
Though there have been separate Right and
Left Socialist parties since October 1951, they
share a common constituency. The Social-
ists rely more heavily than do the conservative
parties upon the urban electorate, although
there has been a slight increase in the pro-
portion of Socialist seats drawn from rural
constituencies.
21. The Right and Left Socialist parties derive
more popular support from their opposition
to the domestic and foreign policies of the
Yoshida government than from their own pro-
grams. The Left Socialists oppose the exist-
ence of Japanese armed forces and advocate
a rigorously neutral position in foreign affairs.
The Right Socialists, on the other hand, are
prepared to countenance a more limited re-
armament program than that advocated by
the government, and favor some form of col-
lective security through the UN, rather than
unilateral reliance on the US. The two So-
cialist parties generally have achieved unity
of action within the Diet and, together with
the conservative opposition, have been suc-
cessful in amending or preventing the passage
of a number of important bills submitted by
the Government.
22. The chief source of organized support for
the Socialist movement is the Japanese trade
union movement. Organized labor, whose
present membership is about 5,850,000, is one
of the principal forces in Japanese political
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life. Its leaders regard the achievement of
labor's political objectives to be as important
as the economic. Despite certain differences,
the political and foreign policy views of or-
ganized labor have demonstrated a significant
degree of uniformity and generally conform
to the views of the Socialist 'parties, though
neither party has been able to translate the
membership of organized labor into assured
blocs of electoral support.
23. The principal union federation, Sohyo
(Japan General Council of Labor Unions), has
about 2.75 million members or almost one-
half of organized labor in Japan. Though it
has generally been identified with the Left
Socialist party, Sohyo under the leadership of
its secretary-general, Takano Minoru, has for
more than a year tended to pursue pro-Com-
munist policies. The other major labor fed-
erations are Sodomei (the Japanese Federa-
tion of Trade Unions), and Zenro (the All-
Japan Congress of Trade Unions) - 680,000
total membership - which have generally
been associated with the Right Socialists.
24. A number of factors have thus far limited
the strength of the Socialist movement. It
is divided into left and right wings which com-
pete for political power and control over or-
ganized labor, and differ over rearmament
and foreign policy. In particular, they differ
over the question of cooperation with the Com-
munists. The organized labor movement has
been adversely affected by the recent stiffen-
ing in the attitudes of government and man-
agement toward organized labor, and by
schism growing out of the Communist activi-
ties and influence in the trade union move-
ment. These developments may weaken the
organized support of the Socialist parties.
Despite the pressures for a reunification of the
Socialist parties which would be generated by
a conservative merger, chronic factionalism
probably will continue to retard such a deve-
lopment. Similarly, such factionalism prob-
ably will continue to limit the over-all in-
fluence of Socialism and organized labor, al-
though during the period of this estimate
these two groups will probably retain suffi-
cient strength to act as a brake on the govern-
ment's increased conservatism.
25. Communism. Despite setbacks since
1952, the Japanese Communist Party 1 re-
mains an important political force. The
Communists have had considerable success in
heightening existing popular . grievances,
whatever their origin, and have had some suc-
cess in infiltrating non-Communist organiza-
tions and institutions. Communist sympa-
thizers and possibly party members hold a
few of.the leading positions in the extremist
faction of the Left Socialist party, and the
Communists have considerable influence
among the leaders of Sohyo and some of its
major affiliates, including the influential
Japan Teachers Union. The greatest Com-
munist threat probably lies in its substantial
capability for exploiting labor unrest. De-
spite increasing emphasis on overt activities,
the party has retained its underground
organization with a capability for conducting
espionage which is considerable at low levels,
and sporadic sabotage and terrorist opera-
tions against both Japanese and US targets.
It has, continued to emphasize the develop-
ment of paramilitary forces, although it has
apparently made little progress in this re-
spect.- There is also some evidence of Com-
munist infiltration in the bureaucracy and
the security agencies.
26. However, Communist strength in Japan is
not great enough at present to seriously dis-
turb the country's stability or alter its orien-
tation. The Communist party has not recov-
ered the substantial loss of popular support
which it suffered as a result primarily of its
violent activities in the spring of 1952. The
party's thinly disguised character as an in-
strument of international Communist policy
'The total overt and covert party membership is
estimated at between 80-85,000 persons. In ad-
dition, between 100,000 to 250,000 persons are be-
lieved to be nonmember sympathizers who
actively participate in Communist-sponsored
movements. There are an estimated 500,000 to
650,000 additional "leftists" who may be classed
as "passive" sympathizers through their occa-
sional participation in pro-Communist move-
ments. In addition, there are an estimated 80,-
000 active and 350,000 passive supporters among
the Korean minority. These figures total rough-
ly 1,000,000-1,400,000. The Communist popular
vote'at the last Diet election (1953) was 653,000.
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SECRET
makes its announced objectives suspect to the
Japanese. Efforts to develop popular support
through legal political activities are hindered
by exposures of the party's covert program of
subversion and violence. The fact that al-
most all the party's top leaders remain under-
ground has hindered the overt activities of
the Communist party. There are indications
that the party continues to be troubled by in-
ternal dissension. The party is also con-
fronted by increasingly effective police and
other, government control measures. The
Communists exert little direct influence on
the major Japanese newspapers or radio
broadcasting media. They are unable to ex-
ercise a direct and continuing influence on
the policies of either Socialist party. Al-
though 7-10 percent of union membership is
composed of Communists or Communist sym-
pathizers, the degree of Communist party
control in organized labor is far short of that
achieved in the immediate postwar period.
27. The Japanese Communist Party will re-
main an important political force in Japan
because of its ability to exploit popular griev-
ances, the capabilities of its covert apparatus,
and its influence in certain leftist, labor, and
intellectual circles. Moreover, the party's ef-
forts to alienate the Japanese from their gov-
ernment and its policies of alignment with
the US will be reinforced by Communist bloc
pressures and inducements aimed at Japan.
However, the Communist party itself will con-
tinue to have only a small popular following
and to have negligible parliamentary repre-
sentation. The Communists will probably be
able to maintain their underground organiza-
tion but not to increase significantly their
present covert capabilities.. The Japanese
Communists will almost certainly not be able
to subvert or overthrow the Japanese Gov-
ernment during the period of this estimate.
28. Ultranationalist forces. The point of
view of the ultranationalists often coincides
with that of the Communists. They share
an anticapitalist bias, a contempt for parlia-
mentary government and established political
procedures, and a desire to establish a totali-
tarian state. Like the Communists most
ultranationalists seek to heighten anti-Ameri-
canism, but unlike the Communists they en-
visage a strong power position for Japan in
Asia, independent of both the US and the
Communist bloc.
29. Extreme rightist groups have become in-
creasingly active in recent months, but ultra-
nationalism continues to be hampered by the
absence of a number of its prewar sources of
strength. It lacks the strong military forces
that once supported and protected it, the Im-
perial institution has been weakened, and
ultranationalism can no longer depend on an
official mythology to which all Japanese were
once required to subscribe. Extreme rightist
groups are capable of carrying out scattered
acts of violence, but they do not at present
pose a serious subversive threat, nor does
ultranationalism as yet play more than a
minor role in Japanese society.
30. As time goes on, however, the gradual
reappearance of traditional institutions and
values, and a probable modest increase in the
size and the influence of the Japanese mili-
tary establishment, will give the extreme right
somewhat more respectability than it pres-
ently enjoys. Moreover, although ultrana-
tionalist groups will probably not play a ma-
jor and direct role in Japanese politics during
the next few years, these groups will be able
increasingly to exert pressure on the mod-
erate conservative majority.
III. JAPANESE ECONOMIC SITUATION
31. Despite basic maladjustments, the Jap-
anese economy has demonstrated a consid-
erable capacity for recovery and-growth dur-
ing the postwar period; and at present pre-
sents a picture of considerable prosperity.
Japanese national income of US $16 billion in
calendar year 1953 exceeded that of calendar
year 1952 by about 12 percent in real terms
and that of prewar (1934-1936) by about 34
percent. Japanese industries are generally
producing at levels not far below the all-time
output records achieved during World War
II. Production of foodstuffs has increased
over prewar by an estimated 15 percent. Jap-
anese per capita consumption of food and
textiles in 1953 was substantially above 1952
and slightly above the prewar average of
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1934-1936. However, this postwar recovery
and present prosperity have been largely
achieved as a result of US expenditures which
have enabled Japan to avoid facing up to its
basic economic problems.
Peak Year
1950
1953
Total
179
(1944)
84
153
Mining
147
(1943)
97
122
Manufacturing
182
(1944)
82
157
Durable Goods
320
(1944)
110
209
Lumber
168
(1953)
120
168
Ceramics
177
(1939)
98
155
Metals
243
(1943)
97
183
Machinery
463
(1944)
126
266
Non-Durable
Goods
129
(1953)
67
129
Food
135
(1953)
84
135
Textiles
114
(1937)
41
76
Printing
115
(1937)
45
107
Chemicals
216
(1953)
103
216
Rubber &
Leather
172
(1953)
32. Japan's basic economic problem is that of
supporting a rapidly growing population de-
spite an extreme shortage of domestic natural
resources. The maintenance of an ade-
quate standard of living, the continued high
rate of investment, and defense requirements
have made necessary a high level of imports
throughout Japan's modern history. Before
1945, Japan sought to cope with its trade
problem by forcing the pace of industrial de-
velopment and by overseas expansion de-
signed,to secure markets and sources of raw
materials. Defeat and occupation closed this
avenue of approach, disrupted Japan's em-
pire trade pattern, and disorganized the do-
mestic economic system. Thus, the Japanese
were confronted with the task of reorganizing
their internal economic system simultane-
ously with the more basic problems involved
in developing a new pattern of external trade.
In the postwar period, Japan has not been
able to expand output from its domestic re-
sources sufficiently to reduce its continued
high import requirements, nor has it found
a. way to expand its exports to a level that
would ensure self-support. This problem has
been further aggravated in recent years by
the failure to divert available resources from
consumption into the investment needed to
modernize its industrial plant and thus im-
prove its international competitive position.
33. Only 15 percent of the land' in Japan,
which approximates California in area, is
arable. The country is now inhabited by 88
million people and it is estimated that by 1970
the population will reach 100 million. As a
result of a severe and growing population
pressure, Japan has become increasingly de-
pendent on a large and uninterrupted flow of
imported foodstuffs and fibers. Although
agricultural output has increased some 15
percent over the prewar level, at present some
20 percent of food requirements must be im-
ported. A second principal result of the pop-
ulation growth has been an increase in under-
employment as evidenced by the prevalence
of part-time work and a surplus of workers
on the farm.
34. Japanese industry has operated at high
cost during and since the Korean War as
compared to that of other industrial coun-
tries. Although Japan has excess capacity
in its manufacturing plants, much of the
equipment is obsolescent and in poor condi-
tion. In the first half of 1953 labor produc-
tivity in industry generally was only about
two percent higher than in 1935. In certain
industries, such as coal mining, it was still
considerably below prewar levels. In most
other industrialized countries, such as the US,
Sweden, the UK, and Canada, the prewar
level of labor productivity had been exceeded
by 20-40 percent by 1951. In addition, the
Japanese have not effectively- standardized
the quality of their product. As a result of
these difficulties, Japan's ability to compete
in international markets has been impaired,
and many important Japanese products
would have been noncompetitive in. world
markets had it not been for inflated interna-
tional price levels resulting from world-wide
shortages during the period of the Korean
War and immediately thereafter.
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35. In addition to its other difficulties, the
events of the postwar period have forced the
Japanese to alter radically their pattern of
trade. Japan has become more dependent
than before the war upon the Western hemi-
sphere as a source of imports and as a market
for exports. In the postwar period the US
has been the most important single source of
imports, as well as the largest market for
Japan. Korea, Taiwan, and mainland China
accounted for 42 percent of Japan's total ex-
ports in 1936 but only about 14 percent in
1953; mainland China by itself accounted for
18 percent of all Japanese exports in 1936 but
only about 0.4 percent in 1953. This shift
has been an important factor in Japan's bal-
ance of payments difficulties, largely because
expansion of trade with North America has
been limited both by trade restrictions and
similarity of products offered for sale, i.e.,
textiles and manufactured industrial goods.
To compensate for the loss of traditional
markets, the Japanese have made some efforts
to develop South and Southeast Asia as a
major trading area. In 1953 about 21 per-
cent of Japan's total imports and about 30
percent of total exports were accounted for in
South and Southeast Asian trade as compared
with roughly 17 percent in 1936 for both ex-
ports and imports. In real terms, however,
trade with South and Southeast Asia was no
larger in 1953 than in the prewar period.
JAPAN'S TRADE PATTERN BY AREAS,
1936 AND 1950-1953
(as percentage of total)
Asia
64.
46.
51.
North & Central America
18.
26.
23.
Others
18.
28.
26.
Total
Imports
Asia
53.
32.
33.
North & Central America
26.
49.
43.
Others
21.
19.
24.
Total
36. The full impact of this situation became
apparent as the international market soft-
ened in mid-1951 and Japan's high export
prices discouraged purchases of Japanese
goods. The internal rise in prices and wages
in Japan made reduction of export prices dif-
ficult, even with the simultaneous decline in
raw material import prices. Thus, as of mid-
1953, although Japanese export prices had
declined substantially, Japan's export prices
for many products remained somewhat higher
than those in most of the major competing
countries. At the same time, Japan's com-
petitive position has suffered because of dis-
criminatory restrictions against Japanese ex-
ports, particularly in the sterling area. Also,
Japanese exports to the raw material produc-
ing countries of Asia were reduced because
of restrictions on imports, applied by these
countries as a result of a reduced availability
of foreign exchange.
37. As result of these many difficulties;
Japan's total foreign trade in real terms has
been and remains substantially below prewar
levels. Moreover, imports have far exceeded
total export earnings, a situation made pos-
sible only because Japan has received large-
scale direct and indirect US assistance. Al-
though the Korean War led to a sharp rise
in the level of Japanese exports, the rise in
imports was even sharper. This trend has
continued at an accelerated rate in the post-
Korean War period resulting in an increased
trade deficit each year.
VALUES AND PHYSICAL VOLUME INDICES
OF JAPANESE FOREIGN TRADE
Value Volume
$Million Index
Value Volume
$Million Index
1934-1936
980.0
100.0
939.6
100.0
1950
974.4
32.8
819.6
29.6
1953
2,409.6
74.5
1,274.8
35.0
In 1953 and during the first quarter of 1954
the Japanese deficit from commercial trade
became so large that US expenditures in
Japan, though continuing at a high level,
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were unable to offset it. As a result Japan's
foreign exchange position has deteriorated
seriously.
L APAN'S BALANCE OF PAYMENTS
1936, 1952, AND 1953
US Government Surplus
& Military Pro- (+)
Commercial curement and or
Trade Personnel Other Deficit
Balance Expenditure Items (-)
(million US dollars)
1936
-14.
...
21.
+.7
1952
-756.
786.
228.
+257.
1953
-1,135.
786.
159.
-190.
38. A substantial increase in Japanese ex-
ports is essential if Japan is to develop a self-
supporting economy. Although the current
balance of payments deficit might be tem-
porarily alleviated through import "auster-
ity," in the long run the Japanese can only
provide increased employment opportunities
and secure a rising standard of living by bal-
ancing their trade at a higher, rather than
a lower, level. The increase in exports must
be sufficient not only to balance the present
level of imports but also to permit an increase
in this level. Increased imports of raw ma-
terials and capital goods will be required for
production for export, and increased imports
of consumer goods to meet the demands in-
duced by rising levels of income.
39. The Japanese have recently adopted a
series of measures designed to reverse the
trend of an increasing trade deficit. As an
immediate measure, the Japanese Govern-
ment has adopted an austerity program de-
signed to lower export prices and to reduce
the 1954 import level some 10 percent below
1953, by restricting credit and.reducing for-
eign exchange allocation. On the export side,
the Japanese Government has adopted a
series of measures designed to facilitate Jap-
anese exports and to make Japanese goods
more competitive in international markets,
including: (a) establishment of facilities
abroad for servicing exported Japanese equip-
ment; (b) encouragement of integration and
combination in foreign trade companies to
strengthen the financial position of export
companies and the formation of cartels and
trade associations to reduce competition
among Japanese importers and exporters; (c)
reduction of interest rates on loans to export
industries; (d) allocation of foreign exchange
to assist those imports needed to support ex-
port industries; and (e). adoption of a dual
price system whereby export goods are priced
below those for the domestic market. The
Japanese are also seeking to correct the more
fundamental problems raised by obsolescent
plant and technology, and low labor produc-
tivity. The rate of investment in industry
has risen somewhat above the 1934-1936 level.
At the same time, the Japanese have had
some success in obtaining foreign capital.
40. Japan has also sought to deal with the
problem of trade restrictions imposed by
other countries. One approach has been to
build up a system of bilateral trade and pay-
ments agreements between Japan and coun-
tries outside the dollar area. Japan has also
made efforts to obtain equality in trade rela-
tions by seeking membership in the General
Agreement on Tariffs and Trade. The Jap-
anese are also seeking to expand trade in their
"traditional" markets on the Asian mainland
and with the Soviet Far East. Following the
Korean armistice in 1953, controls on Jap-
anese trade with the Soviet Bloc countries,
and in particular with Communist China,
were somewhat relaxed. Since then Japan's
trade with the area has shown an upward
trend, though remaining a very small per-
centage of Japan's total trade. Although
many Japanese have expectations of greatly
increased trade with Communist China, the
government has warned business leaders that
this is illusory because China has reoriented
its trade toward the USSR. Notwithstand-
ing, the pressure for increased Japanese trade
with Communist China and the USSR con-
tinues to be strong, even among conservative
industrial groups.
41. The weakness of applied research and de-
velopment is an outstanding problem in the
Japanese economy. While Japanese theoreti-
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cal research has given Japan a place of prom-
inence in international science, applied sci-
ence and technological development have
produced only a few significant successes, and
Japanese industry has depended extensively
on foreign developments and assistance.
42. Recent government plans demonstrate
that Japan is now seeking greater technical
self-reliance. Japan's scientific and technical
organization, manpower resources, and re-
search and education facilities are believed to
be adequate for the support of a research and
development program of great value. We
believe such a program will be carried forward
vigorously. However, it will require consid-
erable time and effort, to translate this de-
velopment into higher productivity and lower
costs of production.
43. Short-run Prospects. So far the Jap-
anese efforts to correct some of their more
pressing economic problems have not achieved
much success. During 1954 the rising trend
of imports has continued and it is anticipated
that special earnings accruing from US Gov-
ernment and personnel expenditures will de-
cline substantially. Over the next few years,
Japan almost certainly will continue to have
a balance of payments deficit even though
exports are likely to increase somewhat as a
result of a combination of Japanese Govern-
ment measures to promote exports, a reduc-
tion of discriminatory trade restrictions, and
an increase in trade with mainland China.
44. Over the next few years the determining
factors in the Japanese balance of payments
situation will be the level of business activity
in the US, the level of US expenditures in Ja-
pan, the level of restrictions against Japanese
exports in foreign markets, and indirectly, the
level of US expenditures in other Asian coun-
tries which are potential importers of Japa-
nese goods. A further serious decline or ces-
sation of special dollar earnings from the US
would lead to a rapid loss of foreign exchange
because no quick adjustment to such a decline
could be made. If Japan were unable to ac-
quire compensatory foreign aid or loans, it
would inevitably require drastic, painful, and
politically dangerous internal adjustments
which would be accompanied by reduced em-
ployment, lower consumption, and generally
depressed business conditions. A serious de-
cline of business activity in the US would
cause a substantial reduction in Japanese ex-
ports to the US and to countries which are
suppliers of raw materials to the US, such as
Indonesia, the Philippines, and Malaya. The
impact of such a decline on the Japanese econ-
omy would more than wipe out any gains that
the "austerity" program could possibly pro-
duce.
IV. PRESENT MILITARY AND POLICE
SITUATION
Military Issues and Organization
45. Rearmament continues to be a controver-
sial issue in Japanese politics, although this
issue no longer revolves to any great extent
around the questions of whether Japan should
once again build military forces. General
support now has been obtained for the govern-
ment's defense program and there appears to
be a growing popular acceptance of military
institutions. The major issues in rearmament
now center around such important questions
as the eventual size of the military establish-
ment, the speed of military build-up, missions
to be assigned, and the relation of the mili-
tary establishment to Japan's new political
institutions.
-46. These questions, in turn, reflect a number
of uncertainties. Within the government it-
self, and throughout Japan, there is debate
over how much rearmament Japan can afford
without suffering a considerable decline in the
present standard of living. There is anxiety
over what commitments Japan must under-
take in return for US military -assistance. In
addition, there is a widespread fear of a re-
surgence of prewar militarism, a lack of a
strong sense of danger, and a questioning of
the utility of building extensive forces in an
atomic age. The major focus for political
opposition to rearmament is found in the so-
called "war renunciation" clause of the post-
war Constitution. By steering a middle course
between the groups that want to revise the
Constitution as a prelude to all-out rearma-
ment and those who want to "protect" the
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Constitution by prohibiting any build-up of
defense forces, the government has succeeded
in making modest progress in rearmament
without ..creating serious political or psycho-
logical reactions in Japan.
47. Despite these uncertainties, a defense re-
organization effective 1 July 1954 provided for
strengthening the Japanese defense forces
and gave Japan the nucleus for a modern de-
fense establishment. Under this reorganiza-
tion, the Prime Minister retains over-all con-
trol of the defense establishment, but he now
has a top advisory organ on defense matters,
the National Defense Council. _
48. Japan's armed forces are now organized
as the Ground Self-Defense Force (Army), the
Maritime Self-Defense Force (Navy), and the
Air Self-Defense Force (Air Force). Morale
in all forces is high, and the lack of a con-
scription law has not yet affected development
of the armed forces since ample volunteers
have been available. The recent authoriza-
tion of a reserve force, though presently limit-
ed to 15,000 men, provides the basis for further
strengthening the armed force in the event
of an emergency. Progress in attaining in-
creased combat effectiveness in all services
should be rapid during the period of this esti-
mate. Despite this progress, however, Japan's
forces will be able to carry out their mission
of defending Japan only in concert with the
US forces.
49. Ground Forces. The Ground Self-Defense
Force (Army) is currently organized into four
divisions plus supporting combat and service
units (including artillery, armor, and techni-
cal service). The Army will be expanded to
six fully equipped divisions of 12,000 men each
by April 1955. The four existing divisions of
the ground forces have a capability to conduct
combined arms operations with. units up to
regimental combat team in size. However,
for . extended operations, Japanese ground
forces would require US logistical support.
The two divisions, scheduled for activation
prior to April 1955, will attain the same level
of combat effectiveness shortly after activa-
tion since they will be filled largely with per-
sonnel from existing units.
11
50. The Northern Corps stationed in Hok-
kaido, which currently has one subordinate
division, has been provided with a full com-
plement of support units in preparation for
its expansion by an additional division., This
build-up is being undertaken in anticipation
of a withdrawal of US ground forces from
Hokkaido.
51. Naval Forces.2 During the period of this
estimate the Maritime Self-Defense Force
(Navy) will develop the capacity to make a
significant contribution to the defense of the
sea frontiers of Japan and within five years
has good prospects for achieving naval
strength comparable at least to that of the
Chinese Communists. Naval personnel are
still engaged primarily in training, with 6,600
men afloat and 3,300 ashore. By 1 April 1955
naval personnel are scheduled to expand to
about 16,000. Naval effectiveness can be ex-
pected to improve considerably as former Im-
perial Navy personnel take an increasingly
active role, and as modern ships and equip-
ment become available.
52. In the event of a national emergency,
there are legal provisions for the naval- forces
to be augmented by Japan's Maritime Safety
Board (MSB).3 Strictly a coast guard in con-
cept, the MSB has a personnel strength of
about 5,100 afloat and .5,000 ashore. About
15 percent of its vessels are in the process of
MSDF vessel strength includes: 18 frigates and
50 landing ships support large on five-year re-
newable loan from the US, and 33 minesweepers
and 72 auxiliaries and service craft. During
1954 and 1955 the US is scheduled to ' loan or
transfer the following vessels to Japan: 2 de-
stroyers, 2 destroyer escorts, 1 submarine, and 3
minesweepers. The MSDF FY 1953 building pro-
gram includes: 2 escort destroyers, 3 escort ves-
sels, 6 motor boat/submarine chasers, 4 mine-
sweepers, and 1 tender minelayer. FY 1954 pro-
gram includes: 8 subchasers, 3 motor boat/sub-
marine chasers, and 3 minesweeping boats. The
MSDF also has a small naval air arm.
8 About 50 percent of personnel are in adminis-
trative billets. The 410 vessels of the MSB in-
clude 95 patrol boats (100 to 1,000 tons), 207 har-
bor craft, 24 surveying boats, and 84 miscellane-
ous craft. Fifty-nine vessels are to be armed,
of which 8 have already received 3-inch, 40 mm,
and/or 20 mm guns. A few helicopters are also
available.
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being armed, the larger vessels to have weap-
ons up to and including three-inch guns.
53. Air Force. Japan's Air Self-Defense Force
(Air Force) has only recently been authorized
and has no operational capabilities at this
time. However, the Japanese desire a rapid
air force build-up. A program of retraining
of Japanese World War II pilots has already
been initiated under US direction. It is antic-
ipated that two squadrons will be equipped
with F-86 fighters during US fiscal year 1955
and one wing (three squadrons) by January
1956. The rapid development of an effective
fighting force is facilitated by a reservoir of
experienced air force personnel from World
War II and the prevalence of mechanical and
technical experience and aptitude among a
larger group of eligible personnel.
54. Tentative plans call for a force consisting
of 33 squadrons by June 1960. The defensive
role of the Air Force is emphasized by its
tentative 1960 force goals of 30 squadrons of
fighters, fighter bombers, and tactical recon-
naissance aircraft. During the period of this
estimate, we believe that Japan, with US
assistance, will be provided with a relatively
small but effective modern Air Force which
will be able to contribute substantially to its
own air defense.
Industrial Mobilization
55. Japan has the industrial potential and
the fundamental skills necessary to support
its armed forces. Realization of this poten-
tial depends on financing for plant conversion
and retooling, and on effective demand for
end-items. Some progress has been made
in rehabilitating the ammunition industry,
largely through US offshore procurement con-
tracting for. ammunition items. Japanese
shipyards now have a considerable capacity
for the construction of all types of naval ves-
sels. Aircraft production is in the planning
stage although repair and overhaul operations
are expanding. The aircraft industry has
produced a few small aircraft and a few ex-
perimental aircraft engines and is planning
the production of US-designed jet aircraft.
Japanese industry has produced about 25 per-
cent of the equipment requirements for the
ground forces, including wheeled vehicles, am-
munition, communications equipment, medi-
cal equipment and supplies, engineering
equipment and supplies, and quartermaster
items. Japan's present capability in arma-
ments production remains limited by general
economic and technological shortcomings
common to practically all Japanese industry.
In particular, there is a major deficiency in
the field of specialized electronics, and there
is a serious lack of costly special tools, research
facilities and staffs, and design and produc-
tion know-how. Moreover, all lines of arm-
aments are handicapped by the need to import
industrial raw material and by the shortage
of investment capital in Japan. The govern-
ment is reluctant to give financial assistance
to defense industries, and private investment
in this field is largely dependent on the
promise of offshore procurement orders from
the US. For these reasons, further major
expansion in the production of armaments
in Japan would require continued external
financial and technical assistance,. and in-
creased interest on the part of the Japanese
Government in the development of such pro-
duction.
56. No formal commitment has been made
by the Japanese Government to increase its
defense forces beyond the total authorized by
1955. At present, discussions on future plans
are underway both within the Japanese Gov-
ernment and beween Japan and the US.
Planning is complicated by uncertainties as
to the total scope, balance, and role of Japa-
nese forces in the .context of US plans for the
defense of Japan; and by the difficulties, of
interrelating US military economic assistance
with defense planning. Therefore, Japan's
military establishment in 1957 cannot be en-
visioned with any precision. However, it is
likely that Japan will continue a program of
gradual armament as long as it receives
MDAP assistance and as long as there is not
a serious deterioration in the economic situa-
tion. In the period of this estimate, Japan
will probably have forces in all three branches
capable of making a substantial contribution.
to its defense but by no means adequate to
assume full responsibility therefor.
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Police
57. The decentralized police system intro-
duced by the Occupation has been significant-
ly revised to provide a police organization
whose activities will be coordinated and to
a large extent controlled by the. new National
Police Agency. As a result of this reorganiza-
tion, police effectiveness will probably improve,
although the extent of national control and
the scope of police power are still not as great
as in the presurrender period. Japanese
police surveillance of subversive elements has
been steadily improving and is generally
good. Under emergency conditions, the po-
lice, with the assistance of the armed forces,
would be able to neutralize all significant sub-
versive elements.
V. PROBABLE DEVELOPMENTS
58. Japan's stability, strength, and orienta-
tion are peculiarly dependent on develop-
ments beyond Japan's control. While Japan
can improve somewhat its ability to compete
on world markets, in the next few years avoid-
ance of an economic crisis depends in great
degree on continued receipt of US assistance
in some form. Similarly, Japan can do much
to increase its military strength, but its securi-
ty will continue to depend in large measure
on US willingness and ability to defend Japan.
Finally, although Japan has some flexibility
of diplomatic maneuver, its foreign policy
alignment is predominantly determined by
factors in the international situation beyond
its ability to influence..
59. Moderate conservative governments will
probably continue to govern Japan through
1957. They will avoid policies and actions
that might jeopardize their tenure; they will
consolidate their hold by measures to central-
ize and strengthen governmental powers. The
conservatives will also trade on their ability
to secure from the US at least the support
necessary to avoid national crises that might
force them from office.
60. The chief threat to moderate conservative
tenure would probably arise in the event of a
prolonged and serious deterioration in domes-
tic economic conditions or in the event that
the Japanese became fearful as to their na-
tional security. In these circumstances, it is
possible that the Socialists might be voted
into power. We believe it more probable, how-
ever, that the- character of the Japanese Gov-
ernment would shift further to the right, ac-
companied by a revival of authoritarian tech-
niques of political and economic control. In
these circumstances the influence of the mili-
tary and ultranationalists might be strength-
ened significantly.
61. Over the next several years, Japan's de-
pendence upon a high level of imports will
almost certainly increase, because of a con-
population growth, a need to main-
tain approximately present per capita con-
sumption levels, increasing investment re-
quirements, and an expansion of the defense
establishment. Though Japan will make some
progress in raising indigenous production and
in taking other measures to curb this increase
of imports, and though it will probably suc-
ceed to some extent in enhancing its interna-
tional competitive position by improving in-
dustrial productivity, it will be unable to ex-
pand exports sufficiently to avoid continuing
balance of payments difficulties. This will not
be significantly altered even though trade with
Communist China will almost certainly ex-
pand, and though restrictions affecting Japa-
nese trade with the non-Communist world
are likely to be reduced. Devaluation of the
yen, a possible step in Japan's attempt to im-
prove its international competitive position,
is not likely to give more than temporary re-
lief. Thus, Japan will continue to have a
large balance of payments deficit, which can
be met only by a high level of US expenditures
or financial assistance.
62. Defense Outlook. For the next several
years, Japan probably will continue a program
of gradual rearmament. Particular emphasis
will be placed on the development of naval
and air establishments, and on defensive
rather then offensive capabilities. The pace
and scope of this rearmament will be consider-
ably influenced - by the nature and amount
of US assistance. Japan will be wholly unable
to undertake aggressive. adventures of its own
in Asia. Japan will probably refrain from uri-
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dertaking overseas military commitments and
will remain unenthusiastic about participa-
tion in regional defense organizations. Even
with gradual progress in rearmament, Japan
will probably continue to be reluctant to join
in an alliance with such neighbors as Korea
and Nationalist China, and will prefer to par-
ticipate in security arrangements backed by
the UN.
63. During the period of this estimate Japan
is virtually certain to maintain its US align-
ment even in the face of a drive for greater
independence of action. The foundation of
this US alignment will be Japan's continuing
dependence on US economic and military
assistance. The dominant political groups
will probably continue to believe that the best.
prospects for achieving national strength and
stability lie in continued close association
with the US. Only the Communists, Left
Socialists, and some ultranationalists will op-
pose this in principle.
64. However, numerous sources of friction
will continue adversely to affect US-Japanese
relations. US forces in Japan continue to
occupy land and installations desired by the
Japanese. They also serve as a reminder
that Japan is still subjected to foreign influ-
ence. Pressures will probably mount for the
withdrawal of these forces or for their restric-
tion to a few naval or air bases. Demands
for the return of the Ryukyus and Bonins
may increase. The recent incident involving
Japanese fishing vessels in the area of US
nuclear experiments at Bikini is indicative of
the way in which US-Japanese relations can
be set back by an issue that arouses deep emo-
tional response. Sensitivity to any action
that appears to the Japanese to accord them
less than economic, political, and social equal-
ity will continue to characterize relations
with the US.
65. Japanese relations with the US will be af-
fected, not only by frictions, but also by a
desire to assert a greater degree of independ-
ence. Partly in a desire to avoid war, to free
itself from foreign control over security af-
fairs, and to enhance the prospects of trade
with Communist China, Japan will constant-
ly reassess the desirability and feasibility of
achieving a more independent position, pos-
sibly in conjunction with an Asian third force.
Moreover, there will probably be some growth
in neutralist sentiment prompted by. US and
Soviet nuclear developments and by Japanese
wishful thinking as to the prospects of coex-
istence. Neutralist sentiment might increase
if Communist power should be extended fur-
ther in Asia or if war between the US and the
USSR appeared imminent. However, we be-
lieve that the Japanese Government will not
conclude during the period of this estimate
that neutrality is in fact desirable or feasible.
66. Japan will continue its attempts to better
its political relations and expand its economic
relations with non-Communist Asia, attempt-
ing thereby both to enhance its position in
Asian affairs and to reduce its dependence on
the US. There is, however, little prospect
that the obstacles that to date have prevented
closer relations between Japan and these
countries will be rapidly overcome. Repara-
tion negotiations with the Philippines have
been underway for several years and again
appear stalled. Similar negotiations with
Indonesia, which are at a much less, advanced
stage, will probably be at least equally diffi-
cult. Relations with Korea will probably
continue to be, exacerbated by Korean dis-
trust of Japanese intentions and by the in-
grown Japanese sense of racial and cultural
superiority. The best that Japan can proba-
bly achieve in the next few years is a gradual
broadening of its economic contacts in the
area. The Japanese will be particularly con-
cerned over developments in South and South-
east Asia because of the economic importance
the area has for Japan, and will make serious
efforts not to arouse distrust in these areas.
They have welcomed the settlement in Indo-
china insofar as tensions were eased; at the
same time they will watch carefully for signs
of US weakness or strength elsewhere in Asia.
67. Japan will probably take increased ad-
vantage of, if it does not actively promote,
opportunities for more extensive relations
with the Communist bloc and particularly
with Communist China. Informal commer-
cial and cultural relations with the USSR and
Communist China, therefore, are likely to ex-
pand. Japan probably will not be willing to
Me=
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 Declassified and Approved For Release 2013/04/25: CIA-RDP79RO1012AO04300030001-2
conclude a peace treaty or resume normal
diplomatic relations unless the USSR aban-
dons its insistence on the severance of Japan's
close alignment with the US and at least
tacitly recognizes the San Francisco peace
treaty.
69. In sum, assuming a continuation of US
assistance, we believe that Japan during the
period of this estimate will slowly gain in
strength, and will, within a pro-Western
orientation, attempt to pursue a more inde-
pendent foreign policy. It will seek to avoid
commitments to the US that would limit
future freedom of action1 and will attempt to
expand commercial and political relations,
particularly with the Asian mainland. Japan
will recognize its strategic importance to the
US, and will attempt to extract the maximum
in military and economic assistance from the
US. However, during this period Japan will
not develop sufficient strength to play a lead-
ing or stabilizing role in Asian affairs.
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 Declassified and Approved For Release 2013/04/25: CIA-RDP79RO1012AO04300030001-2
ZRYUKYU ~ . ?a ~ ' _
TAIWAN / ISUNOS. /~r/},
(FORMOSA) (U.S. ndm n sr ? ''`+ "?inawa{i
f I ratio \
I \
NOTE: The dashed ratline i an \
arbitrary frame dosigned for the y'
purpose of location; it is not a
boundary or territorial limit.
TRUST
Declassified and Approved For Release 2013/04/25: CIA-RDP79RO1012AO04300030001-2
 Declassified and Approved For Release 2013/04/25: CIA-RDP79RO1012AO04300030001-2
Declassified and Approved For Release 2013/04/25: CIA-RDP79RO1012AO04300030001-2