Shigeru Ishiba, Kazuo Ueda, Yoji Muto, and the Japanese Economy & Trade

Japanese Prime Minister Shigeru Ishiba held talks with Bank of Japan Governor Kazuo Ueda (2024)

Credit: Japan’s Cabinet Public Relations Office / Wikimedia Commons

The Japanese economy is in a very precarious situation. With the lost decades continuing, depending on who is asked, Japan’s economy is vulnerable to both internal and external shocks. Most recently, Japan’s economy has been threatened by American tariffs. Before then, Japanese investment in China was threatened by American threats to bar Japan from sharing semiconductor production technology with Chinese companies. Before that situation, Chinese economic coercion was a threat to continued economic interdependence between Japan and China. This helped to accelerate the Japanese economic strategy of China +1. Japanese Prime Minister Shigeru Ishiba, Bank of Japan Governor Kazuo Ueda, and Ministry of Economy, Trade, and Industry (METI) Minister Yoji Muto have been instrumental in both revitalizing the Japanese economy and securing Japanese trade relations throughout the world despite the countless challenges they have faced thus far. 

Economic Pioneers 

Shigeru Ishiba has been instrumental in formulating Japanese foreign policy to allow for cooperation on all sides to ease any tensions that may arise from possible trade disputes. On the domestic side, he has also managed to ensure economic stability despite challenges from both the Japanese Innovation Party and the Constitutional Democratic Party of Japan. While aspects of his economic plan, such as walking back promises to raise the ceiling on medical care expenses paid by individuals, have been challenged, the overall strategy has not yet been. Nevertheless, Ishiba’s political capital to initiate economic reforms has been heavily diminished by scandals and issues plaguing his already weak position. 

Kazuo Ueda has been a stabilizing force in the Ishiba administration. Having been in office since 2023, he has solidified his position and has taken on a wide variety of challenges under Kishida and Ishiba, from dealing with inflation rates to the most recent trade issues. With the Trump tariffs, he has also been challenged to raise rates, but not too much so that the economy will keep growing as part of the plan to challenge Japan’s incessant deflation. 

Yoji Muto, the Minister of METI, has been hard at work behind the scenes to ameliorate trade tensions from Beijing to Paris. Nevertheless, he has had his own failures in policy, with the end result of President Biden’s blocking of the Nippon Steel takeover of US Steel being a lawsuit by the former and failing to secure tariff exemptions on automotives with President Trump. On the flip side, the US Steel takeover deal is being reviewed again by the Trump administration, and the idea of a Japan-China-ROK free trade agreement (FTA) has recently been revived at a trade ministers’ meeting, including Muto. On the domestic front, he was one of the key figures in restarting nuclear power plants, a politically sensitive topic due to the Fukushima Disaster. This shows that while skilled, Muto has had failures in the past. 

All three of these men have been influential in their own right, but without each other, their plans for key issues may have failed. For instance, without the steady hand of Kazuo Ueda in the Bank of Japan, Ishiba may have had to select a less competent or agreeable person to take his place. This could have caused issues down the line if a crisis were to arise, such as the Trump tariffs. On the flip side, the whole process of anti-deflationary measures may not have been approached as quickly if someone else had become prime minister, meaning that Yoji and Ueda would have had their arms tied behind their backs. Internationally, they have ensured that the Japanese free trade regime will survive for the time being and shown that Japan will cooperate with nations both big and small in the region for years to come. Nevertheless, they must tackle a multitude of issues in the coming months and years. 

Other Key Issues 

The most pressing goal of this group, including the Japanese Finance Minister Katsunobu Kato, was to get out of deflation, which seems to be working, according to increasing bond rates. This has caused many issues, such as the rise in rice prices, which led to emergency releases of government stockpiles. While the inflationary pressures originating from the government may not have been the other cause, with the Trump tariffs also helping raise prices and lower incomes which leads to less purchasing power, the insistence on getting out of deflation since the time of the late Prime Minister Shinzo Abe has also helped lead to the reforms causing new issues. 

Internationally, some parts of economic cooperation have been spearheaded by Foreign Minister Takeshi Iwaya. Before economic deals were struck, he was able to set the stage for these later meetings to occur through diplomatic summits. While it is hard to determine what effect he has had since Ishiba has taken power, as there have not been any major FTAs signed, his presence right before the reemergence of the Japan-China-ROK FTA as a real idea shows that not only economic policy has had an impact on Japanese trade and economics, but that diplomacy for FTAs has played a role. 

Conclusion 

While only a small insight into the workings of the Japanese economy and a short list of who is responsible for government policy regarding both fiscal and monetary policy, it is important to look at the key players in the system and how they have impacted the way the policy has been carried out. With Kasuo Ueda’s steady hand, Yoji Muto’s problem-solving, and Shigeru Ishiba’s backing, the three have been able to make reforms in the Japanese economic system possible. This is not to neglect or minimize the roles of others, such as Foreign Minister Takeshi Iwaya or Finance Minister Kato’s own ideas and influence, but rather to show a small subsection.