Japan has been overtaken by China as the world’s No. 2 economy. Its flagship company, Toyota, recalled more than 10 million vehicles in an embarrassing safety crisis. Its fourth prime minister resigned in three years, and the government remains unable to jolt an economy entering its third decade of stagnation.
For once-confident Japan, 2010 may well mark a symbolic milestone in its slide from economic giant to what experts see as its likely destiny: a second-tier power with some standout companies but limited global influence.
As Japanese drink up at year-end parties known as “bonen-kai,” or “forget-the-year gatherings,” this is one many will be happy to forget.
With a rapidly aging population, bulging national debt, political gridlock and a risk-averse culture slow to embrace change, Japan’s prospects aren’t promising. And a tense, high-seas spat with China has intensified fears of its neighbor as a military as well as economic threat.
A few optimists hope Japan can harness its strength in technology and its “Cool Japan” cultural appeal – from fashion and art to “anime” cartoons. The country needs to shed its reliance on manufacturing, they argue, and find new growth areas such as green energy, software engineering and health care for its elderly.