The Rise of Japan's New Prime Minister Naoto Kan, and Lessons for China

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Unless China shifts its policies toward more democracy and tends to the interests of the rising urban middle class, it risks ending up in the same cul-de-sac as Japan.

The rise to power of Japan's new prime minister, Naoto Kan, holds important lessons for Asia's development model, particularly rapidly urbanizing China.

More than anyone else in Japanese politics, Prime Minister Kan has led the democratic revolt of the urban consumer and citizen against the powerful bureaucracy allied with the old rural politics of the Liberal Democratic Party that ruled Japan for decades. That alliance, which once fostered the "Japanese miracle," ended up strangling the nation's potential and miring it in stagnation because it didn't adapt to the very conditions of prosperity it had produced or to a world transformed by globalization.

Back in 1999, when the Democratic Party of Japan had first gained a majority in the upper house of the National Diet (Japan's bicameral legislature), I sat down for a long talk in Tokyo with Mr. Kan. In those days, he was hailed as Japan's "Tony Blair" because of his "third way" approach that embraced globalization and sought to reform the overbureaucratized state.

"What Japan needs is a party of the consumer and taxpayer," Kan said then, "not one whose power rests on the rural constituencies and big construction companies and then is subordinate to the bureaucracy. It is the politicians that are elected who should govern, not the bureaucrats."

I asked if he agreed with Taichi Sakaiya, who headed Japan's Economic Planning Agency, that it was time to end the system of "administrative guidance" that had built Japan into an industrial giant because such a system was not flexible enough to compete in the globalizing economy.

Kan went further than agreeing with Sakaiya. He agreed with Japan's chief foreign critic. "I have long agreed with Karel van Wolfren's book, 'The Enigma of Japanese Power' that criticized the shadow power of the bureaucracy and the lack of a center of political accountability," Kan said controversially. "Eighty percent of the policies in Japan are made by bureaucrats and only 20 percent by elected political leaders. In our current system, a minister, including the prime minister, has no final power. Can you even call that a government?"

Unlike Japan, China does have a powerful political center: The Communist Party Politburo that directs the bureaucratic elite from its Forbidden City compound of Zhongnanhai. But is a strong, one- party center in China that lacks accountability any different in the end from Japan's unaccountable bureaucracy?

Will this modern mandarinate that has competently moved China from a peasant economy to the factory of the world be able to transcend its Maoist roots and respond to the new conditions and constituencies it is creating any more than did Japan Inc.'s Ministry of International Trade and Industry? Unless it shifts its policies toward more democracy and tends to the interests of the rising urban middle class, it risks ending up in the same cul-de- sac as Japan.

To be sure, China's rural population remains massive. But China is urbanizing at a speed and on a scale never seen before. In Mao's time, only 20 percent of the population lived in cities. Today it is 40 percent and is predicted to reach 80 to 90 percent in the coming decades.

With more than a billion inhabitants, yet lacking less arable land than India and short on energy, China has embarked on a colossal effort to organize its immense population into megacities with tens of millions of people. The McKinsey Global Institute projects at least 15 such megacities with 25 million residents - each the population size of a major country. …


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