16 May 2020
// global disease

Japan struggles with Covid-19

Japan's management of the Covid-19 pandemic has been much more troubled than Asian neighbours like Taiwan, Hong Kong and Korea, writes John West.

Prime Minister Shinzo Abe’s government has made many missteps in its management of the Covid-19 crisis. But as with most other countries, the post-Covid-19 world could offer new opportunities for Japan which has long suffered from a stagnant economy, world record public debt and a super-ageing society.

The first signs that Japan might face challenges with Covid-19 came during the early stages of the emerging crisis. In early February 2020, a cruise ship, the Diamond Princess, was in Japanese waters, when 10 passengers were diagnosed with COVID-19.

The ship then spent almost two long months in quarantine in the Port of Yokohama, during which time there were reports of confusion and chaos as the virus ran through the ship. Ultimately over 700 of 3700 passengers and crew tested positive for the virus, and there were fourteen fatalities.

With cases of Covid-19 also increasing in Japan during this time, “Where’s Abe?” became a familiar refrain in a nation hoping for leadership.

The 2020 Summer Olympics and Paralympics, scheduled to take place in July/August in Tokyo, were the pet project of Prime Minister Shinzo Abe. He had personally lobbied very hard to win the nomination in the wake of the 2011 tragic triple disaster -- earthquake, tsunami and nuclear meltdown -- as a symbol of Japan’s resilience. And with Japan now losing faith in Abenomics, Abe’s project for the revitalisation of the economy, the Olympics could have been his crowning achievement.

So, even when it was obvious that could no longer be held, Prime Minister Abe went to extraordinary lengths to try to convince the International Olympic Committee (IOC) that the Olympics could be held as scheduled, despite Covid-19. In a decisive move to give the impression that he had Covid-19 under control, Prime Minister Abe made the sudden decision to close Japan’s schools, apparently without consulting the education ministry thereby provoking the ire of parents and teachers. There have even been suggestions that Japan may have gone slow on testing Covid-19 in order to downplay the gravity of Covid-19 in Japan.

As the IOC ultimately decided to postpone the 2020 Summer Olympics to 2021, this has become a costly affair for Japan and also for Prime Minister Abe who was even rumoured to be planning an early election in a wave of post-Olympics popularity.

In mid-March, Prime Minister Abe made an initial declaration of a state of emergency for seven regions, including Tokyo, only after pressure from the Tokyo and Osaka governors, the Japan Medical Association and Nobel Prize-winning scientist Shinya Yamanaka. The state of emergency has since been expanded to cover the entire nation. The emergency declaration gives prefectural governors the authority to take emergency measures.

The state of emergency

But this state of emergency is much less stringent than the lockdowns of successful countries like Germany, Australia and New Zealand.

Governments have requested people to work from home and non-essential businesses to close or limit hours. But there are no penalties for non-compliance with these requests, in part because of a constitutional right to free movement. Over 60 percent of people recently surveyed said their government was not handling the coronavirus outbreak well.

In contrast to Abe, Tokyo Governor Koike Yuriko has emerged as a more decisive leader as she encouraged Tokyoites to work from home, avoid crowded spaces, and practise social distancing. Koike has been cutting a similar figure to New York Governor Andrew Cuomo with her daily press conferences.

Japan’s approach to Covid-19 may seem appropriate, as it has a quite low number of cases -- some 16,200 cases -- with 713 deaths. This is astonishing for a country with a super-ageing society and the densely-populated Tokyo, the world's most populous city.

Plausible explanations include the traditional high levels of cleanliness and hygiene in a country where the use of face masks and hand sanitiser is common, and its culture of limited physical contact.

But what is most worrying in Japan is the surge in cases since late March.

This has sparked concerns that Japan is headed for a situation like in the US and some European countries. Moreover, the country’s low rate of testing suggests that the rate of infection is much higher. As the US Embassy in Tokyo said “The Japanese Government’s decision to not test broadly makes it difficult to accurately assess the COVID-19 prevalence rate”.

Japan is reputed for its excellent healthcare system, with the most hospital beds per capita among OECD countries. Nevertheless, there are reports that the Japanese health system may already be overwhelmed by the Covid-19 crisis. The Japanese Association for Acute Medicine and the Japanese Society for Emergency Medicine said in a joint statement that the “collapse of emergency medicine” has already happened, a precursor to the overall collapse of medicine.

At the same time, Japan may also have a solution to Covid-19 in the form of Fujifilm’s anti-viral drug, Avigan, which was approved for manufacture and sale in Japan in 2014 and reportedly fights influenza by interfering with the virus replication process. It is now being tested for Covid-19 treatment in Japan, China and the US.

The economy

The Japanese economy has been heavily jolted by Covid-19, like virtually all economies the world over. According to the IMF, the Japanese economy is projected to contract by 5.2 percent in 2020 from the year before, the worst downturn since 2009 at the height of the global financial crisis, followed by a 3 percent recovery in 2021.

This country in demographic decline has long been dependent on the world economy for its economic growth. So it is taking a big hit from economic weakness in China (its biggest trading partner), supply chain disruptions in China, the drying up of foreign tourists and labour shortages, as tighter restrictions now apply to foreign workers.

The Japanese government has launched a record economic package of $1.1 trillion to soften the fallout from the pandemic. One notable inclusion in the package is subsidies of about $2.2 billion to incentivise the return of high value-added supply chains back home from China to Japan, and to diversify lower value-added supply chains to ASEAN countries.

The objective is to make Japan less reliant on China, so that the nation can better avoid supply chain disruptions. Tokyo's Governor Koike has also announced a $7.5 billion emergency economic package.

An opportunity

Looking ahead, Covid-19 could also prove to be an opportunity for Japan as the country is experiencing a wave of spontaneous digitalisation like many other countries. In Japan e-commerce, which has long been among the lowest of developed markets with only 7% of transactions online, has been taking off. Growing numbers of people are teleworking from home, at least for part of the week. And online learning is finally becoming a feature of the education system.

More generally, digitalisation provides an opportunity to liberate Japan from its hidebound corporate and bureaucratic cultures, which are part of the reason why Japan’s labour productivity is more than a quarter below the top half of OECD countries. Despite Japan’s image as a high-tech powerhouse with robotics and all sorts of gadgets, the reality in most small and medium enterprises (SMEs) is quite different.

As the OECD has highlighted, low SME productivity stems in part from low investment in new technology and digitalisation, lack of human capital and the advanced age of many owners. All too often, paper documents are signed with a red-ink stamp, paper filing systems are commonplace, as are fax machines, while high-speed Internet connections can be a rarity. However, there are already signs that teleworking from home is helping to digitalise and modernise Japan’s SME sector.

Some market analysts have also been speculating that the pressures on Japanese corporations from economic recession may also give rise to a wave of mergers and acquisitions, which could lead to efficiency enhancing corporate restructuring.


The leadership of Japanese Prime Minister Shinzo Abe, the man who initially inspired so much hope through his Abenomics programme to revitalise the economy, and his activist foreign policy to revive Japan’s international leadership, seems to be very quickly withering on the vine. Despite being Asia’s first mover in postwar development, Japan’s record in managing the Covid-19 pandemic compares unfavourably with neighbours like Hong Kong, South Korea and Taiwan.
Tags: japan, covid-19, shinzo abe

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