Japan’s lucky leaders

This week’s U.S.-South Korean trade agreement fills Japan’s political leaders with envy. The latest reports of North Korean belligerence fill them with dread. Suspicions that a record-breaking Chinese high-speed train was built with Japanese technology fill them with anger.

It’s not easy finding good news in Japan. Following two decades of economic inertia, dynamic growth feels like ancient history. At nearly 200 percent of GDP, Japan’s gross government debt has reached dangerous levels. The population is aging, and a third of Japanese young adults don’t have jobs. China’s shadow is lengthening across East Asia. Americans once worried that Japan was buying the U.S. economy. Today they fear the U.S. will repeat Japan’s mistakes.

Yet, Japan’s beleaguered leaders have three important advantages.

First, the Democratic Party of Japan (DPJ)-led government and the country’s business elite are finally realizing that they have to work together. The DPJ won control of government in 2009 after a half century in the wilderness during the nearly uninterrupted rule of the Liberal Democratic Party (LDP). The DPJ’s longstanding ties with trade unions and its leaders’ anti-business rhetoric have badly damaged the party’s credibility with Japan’s industrial elite.

But the LDP won’t be staging a comeback in the near future. To accomplish much of anything, the DPJ government needs the business elite to succeed. The business community, in turn, needs much better relations with the government. The two sides seem now to recognize that they have no choice but to build stronger, more durable ties. That’s a foundation for better days ahead.

Second, China’s rise — and a growing appetite in Beijing for confrontation with Tokyo — has accomplished something that U.S. and Japanese diplomats haven’t. It has put the U.S.-Japanese relationship back on track. Once Washington and Tokyo stop bickering over placement of U.S. military bases, they can make progress on more serious security issues.

None of these issues could be more important than a renewed push for progress on the Trans-Pacific Partnership (TPP), a multilateral free trade pact that might one day integrate many of the Pacific Rim’s largest economies. Washington is already negotiating to join. Japan’s government has finally begun to show interest. In part that’s because, with the DPJ in power, Japanese farmers won’t have a veto over the pact as they did with the LDP in charge. It’s also because China’s expansion has Japan (and others in the region) looking to balance Beijing’s growing weight by strengthening its ties with the United States.

Most importantly, Japan’s leaders can count their blessings that angry large-scale demonstrations aren’t common in Japan. Despite 20 years of economic malaise, Japanese leaders don’t face the kind of public outrage we’ve seen this year in Europe. There’s no Japanese tea party. Japanese students aren’t as in to property damage as their South Korean counterparts. And unlike China, rising unemployment poses no threat to the survival of Japan’s government.

And if its luck really begins to turn, perhaps Japan can get its economy back on track … just in time to host the World Cup in 2034.

Ian Bremmer is president of Eurasia Group and author of The End of the Free Market: Who Wins the War Between States and Corporations?