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Japan's New Regional Reality offers a comprehensive analysis of Japan's geoeconomic strategy that reveals the country's role in shaping regional economic order in the Asia-Pacific. Saori N. Katada explains Japanese foreign economic policy in light of both international and domestic dynamics.

During the first few years of the 2020s, in the middle of COVID-induced supply chain disruptions, complex and overlapping economic arrangements have taken shape. The Japanese government has a vital role to play as a promoter of the Free and Open Indo-Pacific regional concept. This article examines Japan's geoeconomic strategy in the overlapping initiatives to keep the United States engaged and make China compliant of the emerging regional economic order.

Over the last 30 years, East Asia has progressed from virtually no intergovernmental arrangement in the 1980s to exclusive financial regionalism supported by strong centripetal forces in the aftermath of the Asian Financial Crisis (1997–1998), but this move has not yet produced coherent regional financial architecture. This article examines the evolution of Asia's regional financial architecture of the last three decades and discusses factors that have promoted and inhibited Asia's efforts toward financial regionalism. Since the Global Financial Crisis (2008–2009), the centripetal forces that aided the region's defensive regionalism have weakened, and the crisis has moved the region to seek multiple sources of financial stability from global to regional. On the one hand, given its export-promotion strategy, East Asia still relies heavily on the global financial architecture, and the region's US dollar dependence continues. On the other hand, the Global Financial Crisis has triggered China to seek reform in global financial order and some alternative solutions. For the latter, its monetary authority actively engages in internationalization of its currency, Renminbi, and promotion of the Asian Infrastructure Investment Bank. In this environment, coherent financial regionalism for East Asia is yet to emerge, as East Asian governments continue to search for monetary and financial stability. (Pac Rev/GIGA)

AbstractDespite a relatively healthy financial sector, the Japanese economy contracted 6.3% in 2009 during the global financial crisis (GFC) after the Lehman shock, the starkest drop among the OECD countries. Since then, the Japanese economy has been slow to recover, although the Japanese government has implemented multiple economic stimulus packages with a high aggregate value.By tracing the Japanese government's response to the GFC in the critical months of October 2008 through the end of 2009, this study argues that the Japanese government failed to manage the crisis decisively due to institutional constraints derived, ironically, from the experiences that Japan gained from a series of financial crises in the 1990s and 2000s. Financial crisis fatigue constrained the supply of Japan's fiscal and monetary measures against the GFC and slowed political response. Furthermore, it made Japanese society unresponsive to these measures.

After the devastating experience of the Asian financial crisis more than ten years ago, East Asia launched regional economic cooperation efforts. East Asia's mixed response to the global financial crisis a decade later, however, reveals how certain impetuses that gave rise to unified efforts to regional institution building in East Asia at the time of the AFC derived, fundamentally, from the region's defensive desire as it positioned itself within the harsh global economic and political environment of that time. The GFC triggered reorganization of global economic governance by discrediting neoliberal principles, introducing a new global governance structure and allowing reliance of domestic stimuli for economic recovery. Those shifts, in turn, led to the loss of East Asia's basic mandate towards regional cooperation. In other words, the focus of solving the region's economic vulnerability has now moved from regional arrangement to national and global stages. In particular, the East Asian governments now see less of a need to counterweight the predominant neoliberal voice through unified regional voice as the expansion of the forum to discuss global economic governance to G20 and IMF reform to provide East Asia more representation. (Pac Rev/GIGA)

In the last decade, East Asia has engaged in constructing numerous mechanisms to enhance regional cooperation in the areas of trade and finance. However, the region's economic architecture exhibits certain idiosyncrasies such as an eclectic institutional structure and a limited level of commitment shown by its members. These idiosyncrasies seem to prevent regional cooperation from becoming deeper and more coherent. This paper focuses on the political factors that have thus far shaped the institutional form of East Asian regional trade and financial cooperation, particularly in the three essential aspects of regionalism derived from the theories of regional institution building. The first aspect is the level at which governments are willing to compromise sovereignty and political autonomy for the sake of regional cooperation. The second is the progress in creating mechanisms through which the losers and the weak within a country or region can be compensated. The third is the clear definition of which members can benefit from such mechanisms. These three elements are useful in furthering regional cooperation and institution building by removing resistance and obstacles that work against functional spillovers. The paper argues that East Asia's economic institutions established through the cooperation efforts of the last ten years exhibit different qualities from those that have emerged in Europe, and thus fall far short of overcoming unexpected political tensions in the region. These deficiencies, however, contrast in two important fields of regional integration. In finance, the clearly defined member governments have difficulty compromising their respective national macroeconomic policy autonomy, while in the field of regional trade cooperation, the challenge is in redistributing the economic gains to those who stand to lose during the process of integration, or to the countries that have a long distance to catch up within a relatively well-defined group.