Downing Street Years - Margaret Thatcher [307]
Japan
Japan is not only a great economic power and a leading democratic nation in the region, but of great importance to Hong Kong. The confidence of Hong Kong is much affected by the confidence of Japanese investors there, who also regard it as the gateway to mainland China. For reasons of wartime history, the Japanese were shy of making public statements about China. But they had close contacts with and a deep insight into what was happening there. So I always sounded out Japanese politicians on their impressions of thinking in Peking.
However, the main subject of (often difficult) negotiations with the Japanese during my time as Prime Minister was trade. We pressed the Japanese to open up their markets to our goods, to liberalize their financial and retail distribution systems and to work towards the reduction of their huge and destabilizing balance of trade surpluses with the West.
Much of the criticism of the Japanese was unfair. They were everybody’s scapegoat. The Japanese should not have been blamed for prudently saving more — and so having more to invest at home, overseas or, indeed, financing the US budget deficit. Nor should the Japanese have been blamed for producing first-class cars, cheaper video recorders and advanced cameras, bought eagerly by western consumers. Yet in both cases they were.
Far more important was to ensure that their markets should be as open to our goods as ours were to theirs. In fact, in addition to tariffs, which of course were subject to GATT regulations, there were two big obstacles. The first was that their distribution system was inefficient, fragmented and overmanned and their administrative system was difficult to get around. The second was a cultural difference. For example, Japanese consumers automatically prefer to buy home-produced goods: government action can do little to change that. More potentially amenable to international pressure was that the Japanese offered terms of aid which we could not match and so secured foreign contracts.
The Japanese have also regularly been pilloried by western governments for not taking a more active international role in upholding security when we — and even more so Japan’s immediate East Asian neighbours — would not wish Japan to rearm and act as a great or even a regional power. As was shown in the Gulf War, Japan is increasingly willing to pay for others, particularly the United States, to uphold international order and security. The fact that, in both the economic and security fields, much western criticism of Japan is unfair does not, however, mean that we should be anything other than tough-minded and realistic in dealing with Japan. But the Japanese must also be treated with genuine (and deserved) respect and their own sensitivities understood.
My second visit to Japan was in the autumn of 1982 on my way to China and Hong Kong. It set something of a pattern. I stressed to my hosts — both politicians and businessmen — my concern at the difficulty which British companies faced in penetrating Japanese markets. The Japanese themselves had promised action to deal with this, but it was a long time in taking effect. There were, though, more positive elements to the visit. I met members of the Keidanren — the Japanese CBI — and was struck by the fact that the top Japanese industrialists I encountered seemed often to be engineers, people with a practical understanding of the manufacturing processes of their firms and able to contribute to innovation. This was in marked contrast to Britain