THE GROWING CONFLICT

From the middle of the 1960s, ongoing foreign, especially American, pressure on Japan to liberalise its economic policies had been gaining momentum, and by the end of the decade the urgings approached a demand. It was judged hugely unfair that the Japanese had virtually unlimited access to US and other foreign markets, both to sell their exports and to set up subsidiaries, buy real estate or take over local companies, while they kept their own borders shut.

The Japanese deep-seated resistance to any kind of foreign presence in or access to their economy had caused them, ever since regaining their independence in 1952, to effectively ban all new direct foreign investment into the country and limit imports to raw materials and other necessities. Originally the argument for such a policy was persuasive: Japan was recovering from defeat and its industry was vulnerable to foreign takeover. There was a reasonable fear that the market would be swamped with mass-produced goods manufactured by efficient, well-financed American companies.

As Japan's export-driven economic policies of the 1950s was replaced by the Ikeda government's 1960 income-doubling plan, consumer spending became respectable again after the long years of frugality in the interest of national reconstruction. The result was an unprecedented economic boom marked by strong consumer demand and a rapidly rising standard of living for most sectors of the population. By the end of the decade, every US and European businessman and banker worth his salt was looking for ways to get a foot in the door of this fast-expanding market. But Japanese businessmen and bureaucrats were adamant about keeping control of their economy. The visitors were politely received and well entertained, but they were essentially given the runaround.

Instead of ‘reconstruction phase,’ the key words the Japanese hosts now employed to fend off foreign advances were ‘not ready.’Japanese industry, although admittedly ‘somewhat recovered’ from the postwar shambles, was still ‘very weak and undercapitalised,’ and needed more time to face the ‘cold winds’ of foreign competition. Besides, the ‘unique culture’ of the Japanese would make it ‘very difficult’ for foreign companies to succeed here,