Japan: An End to Pessimism

A flock of pigeons burst skyward into the midday Yokohama sun, released in celebration from their papier-mâché prison. Bands blared and confetti swirled over the waters of Tokyo Bay. Japan, the world’s biggest shipbuilder, was launching the world’s biggest ship: the Tokyo Maru, a bulb-nosed 1,006-ft.-long, 150,000-ton oil tanker.

The ship, built by Ishikawajima-Harima for the U.S.’s Caltex Corp. at a cost of $12 million, is notable for more than its size. Its valves, pumps and winches are so automated that the giant vessel requires only a 29-man crew. Its construction, from keel laying to launching, was accomplished in an extraordinarily speedy 140 days.

The launching of the Tokyo Maru symbolized a major change in the nature of Japan’s long-buoyant economy. Japan lives by trade, and for years that trade was produced chiefly by its light industry, which flooded world markets with cameras, transistor radios and miniature TV sets. Today, by contrast, Japan’s heavy industry, particularly steel and shipbuilding, accounts for the major portion of the country’s exports. Japanese yards have 7,800,000 tons of new ships under construction or on order, will sell 75% of the total to foreign buyers. Overall, exports rose 27% last year to $7.2 billion, are expected to increase another 19% this year.

The Japanese economy is still undergoing a bumpy readjustment after five years of explosive growth. A prolonged lag in domestic consumer demand has brought continued production cutbacks, especially in steel and textiles, and lower profit reports by corporations. In Washington last week, Japanese Finance Minister Takeo Fukuda let it be known that his country has decided on a strong dose of U.S.-type medicine. Japan will step up government spending and institute substantial tax cuts, which means that next year it will show its first planned deficit since the war.

Still, what some Japanese think of as a recession would be hailed as an impressive performance elsewhere. Last year the Japanese economy advanced 10.9%, a rate second only to Israel’s 11% and 4.3% more than that of the U.S. (although lower by 1.1% than Japan’s average rate for the previous five years). The mood of pessimism that set in more than a year ago has begun to fade, and there is already some talk of a full “recovery” by early next spring. One visible sign of the changing mood: the Tokyo stock market, after slumping badly during the spring and summer, has been rising steadily, staged a strong rally last month and regained all the ground that it had lost.