In the 1990s and into the new century, increased Japanese sympathy toward Taiwan and antipathy toward mainland China led to a series of moves to improve treatment of Taiwan, including enhanced transportation links, a higher level and frequency of official contacts, posting of a military attaché, and expressions of support for Taiwan's participation in regional and international organizations. Nevertheless, Japan remains firmly wedded to a One China policy that opposes both the use of force by the mainland and a declaration by Taiwan of independence from China. Japan's willingness to cooperate with the United States to defend Taiwan is increasingly in doubt. The sources of Japan's supportive but restrained policy include the decline of traditional ties with Taiwan, the increasing size of the mainland market, and above all a perception of security risks that ultimately diverges sharply from that of Taiwan. Serious cooperation in defense and diplomacy requires shared (or complementary) threats, not just shared adversaries.
Books reviewedPeter A. Hall and David Soskice (eds.), Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, New York: Oxford University Press, 2001.J. Rogers Hollingsworth and Robert Boyer (eds.), Contemporary Capitalism: The Embeddedness of Institutions, Cambridge: Cambridge University Press, 1997.Torben Iversen, Contested Economic Institutions: The Politics of Macroeconomics and Wage Bargaining in Advanced Democracies, Cambridge: Cambridge University Press, 1999.Torben Iversen, Jonas Pontusson and David Soskice (eds.), Unions, Employers, and Central Banks: Macroeconomic Coordination and Institutional Change in Social Market Economies, Cambridge: Cambridge University Press, 2000.
For three decades Japanese auto producers, supported by the Japanese government, deployed with extraordinary success market and nonmarket strategies to access the small and fragmented but rapidly growing car markets of Southeast Asia. The last half-decade has presented a series of unexpected challenges, including extended recession and financial reform in Japan; the lingering effects of the financial crisis in Southeast Asia; and the entry of new competitors from South Korea, North America, and Europe. These pressures have split the industry into two. Leaders Toyota and Honda have defended and extended traditional Japanese production networks. Weaker players such as Nissan, Mitsubishi, and Suzuki have accepted subordination to the leading western firms, which are rationalizing their Japanese partners and using them to enter Japan and other Asian markets. This article explores production, trade, and investment data, industrial policies toward autos in Japan and Southeast Asia, and brief case studies of Toyota and Nissan to illustrate the challenges to, and varying responses of, Japanese auto producers in developing Asia. These firms remain committed to Southeast Asia, but the days of Japanese dominance are drawing to a close.