In Japan, Rural Economies Wane as Cities Thrive
In regions like Akita, downtowns have emptied, factories have closed, and an exodus to Tokyo of youths seeking jobs has left behind towns that are predominantly for the elderly.
NOSHIRO, Japan — The only outward sign of conflict here is the red flags of protest, but this small logging city on Japan’s remote northern coast is seething.
A proliferation of national chain stores outside town has already forced the closing of about half of the city’s once teeming central shopping district. Now, many in this normally restrained rural community see the megamall being built nearby, by a company based near Tokyo, as the final nail in the coffin of their economy.
“We don’t want to fight, but we are desperate,” said Seiji Yanagihara, an official with the Noshiro Chamber of Commerce, which opposes the mall. “Tokyo is eating all the goodies, and not even leaving us with scraps from the table.”
Japan’s $4.7 trillion economy has expanded for the last five and a half years. Urban centers like Tokyo and Nagoya, the seat of the Japanese car industry, are thriving, as seen in the building boom decorating Tokyo’s skyline with glittering new high-rises.
But in regions like Akita, the mountainous northern prefecture that is home to Noshiro, downtowns have emptied and factories have closed, and an exodus to Tokyo of youths seeking jobs has left behind towns that are predominantly for the elderly.
There is widespread concern here that these changes are turning Japan into a nation divided into winners and losers, split geographically between prosperous cities and the depressed rural areas. Many here attribute this growing disparity to Japan’s embrace of American-style economic liberalization, begun in the 1990s to end the nation’s decade of stagnation.
The measures to open up markets helped revive cities like Tokyo and lowered prices for Japan’s long-suffering urban middle class. But elsewhere in Japan, they are seen as bringing unwelcome and wrenching change.
And now, with recent signs of a coming economic slowdown in Japan, divisions could deepen. On Monday, Japan’s top central banker, Toshihiko Fukui, warned of ripples from the housing downturn in the United States, one of Japan’s largest overseas markets. He said he was particularly concerned about the impact on Japan’s small and midsize companies, many of which are in rural areas.
The new economic policies are blamed for undoing one of Japan’s proudest achievements after World War II, the creation of an egalitarian society that was almost uniformly middle class. They have also eroded one of the pillars of Japan’s postwar political stability, rural voters’ stalwart support for the ruling Liberal Democratic Party.
The changes began during Japan’s doldrums, when the government tried to revive growth by slowly but steadily deregulating entire swaths of the economy, like banking, insurance and groceries. As seen in Noshiro, some of the biggest upheavals followed the lifting of restrictions on large stores, a step originally urged by Washington to admit American retailers.
As in the United States, this has filled the countryside with large shopping malls and strips of chain stores, some American but most domestic, at the expense of town centers.
Rural areas also lost out in the 1990s because of the gradual dismantling of government-sanctioned price cartels, which had guaranteed jobs by protecting industries from “excessive competition.” As Japan’s markets opened, a flood of cheaper industrial and textile products from China and other Asian countries gutted local economies, which still depend heavily on manufacturing.
Rural areas were hit hard again in the early 2000s, when Junichiro Koizumi, then prime minister, tried to unshackle the private sector by shrinking the government. Akita lost thousands of construction jobs as Mr. Koizumi made deep cuts in public works projects, which had been a way to redistribute Tokyo’s tax revenue to the countryside.
The economic hardships have led to a growing sense of resentment that began to spill into national politics in July.
Angry rural voters handed the Liberal Democrats a crushing defeat in elections for the upper house of Parliament. This rural discontent has helped the opposition Democratic Party of Japan, which made closing Japan’s regional economic gaps the central plank of its campaign.
Many opposition politicians now talk about halting or rolling back American-style liberalization to protect traditional ways of life. Many blame Washington for having pushed Japan into opening markets. Stung by defeat, the chastened Liberal Democrats and their new leader, Prime Minister Yasuo Fukuda, have backed away from their support of economic liberalization and have begun emphasizing steps to fix regional disparities.
“The elections were the first scream of distress by Japan’s regions,” said Daigo Matsuura, an opposition Democratic Party member from Akita who defeated the ruling party incumbent in July for a seat in the upper house. “America pressured Japan into making these changes. The result was the birth of regional economic gaps.”
Whatever the cause, the widening of these gaps is apparent in government statistics. Over the last decade, Tokyo’s economy has grown 6.9 percent. Land prices in the capital are rising so fast that there is talk of a property bubble, and the city’s population has grown by 900,000, to 12.7 million residents, at a time when Japan’s overall population growth has flattened.
By contrast, Akita’s economy and population have both shrunk by about 7 percent in the last decade, and land prices have been dropping for 15 years. Akita’s average annual income has fallen to 2.3 million yen, or about $20,000, exactly half Tokyo’s average.
Last year, after the restrictions on building large stores were lifted, Aeon, one of Japan’s largest retail companies, proposed a 378,000-square-foot shopping center near Noshiro that would be the largest in northern Akita. The mayor and consumer groups in this city of 60,000 have supported the plan, saying it would bring more jobs and cheaper prices. But they face bitter opposition from the local business establishment, particularly merchants.
Residents say it is the first time they have seen the community so divided.
Opponents have erected red flags saying “Oppose Aeon!” and are seeking a referendum on whether to allow the mall. The notion that a company, and particularly one from near Tokyo, can come in and compete with their businesses runs against the grain in rural communities like this one, where a tradition of harmonious coexistence has made the creation of economic winners and losers abhorrent.
“This is the first time that I’ve seen people here so up in arms,” said Munenori Kitagawa, 64, owner of a women’s clothing store he inherited from his father.
Mr. Kitagawa opposes the mall. “We are fighting for our survival,” he said.
For all of Japan, the question now is whether this sort of reaction will be strong enough to stop or reverse economic liberalization. The central government has already begun to tighten restrictions on large stores, and many in rural areas are calling for more public works.
But many in Tokyo and regions like Akita say Japan’s soaring fiscal deficits make it impossible to return fully to the old ways, and many advocate opening markets further.
Some analysts and politicians fear that Japan is entering a period of political stalemate, with the government taking no significant steps in either direction.
“There is no more consensus on economic policy,” said Heizo Takenaka, a former economic policy minister who earlier this decade was an architect of many of the changes.
So far, regions like Akita have not adapted on their own to the changing economic environment. In interviews, local business leaders bemoaned their declining fortunes, but also quickly dismissed suggestions that they seek new opportunities in nearby emerging markets like China or Russia, which sits just across the narrow Sea of Japan from Akita.
Indeed, local leaders who have tried to make changes complain of running into a thicket of local interest groups and powerful bureaucrats in Tokyo — both forces against altering the status quo. Norihisa Satake, the mayor of Akita city, the prefecture’s capital, says he has hit such obstacles as he has tried to promote revitalization plans like expanding his city’s port for large Russian ships, luring tourists from Tokyo or even holding a one-day jazz festival.
“It’s hard to convince people that they need to adapt to economic changes,” Mr. Satake said. “It’s as if they still want to use horse-drawn carts to compete in the age of the auto.”
But in small ways, some in Akita are learning to adapt.
Arata Chinda, whose used-book store in Noshiro is one of only 10 shops left on a downtown commercial street filled with either shuttered storefronts or vacant lots, said sales at his store had fallen 90 percent in the last decade. But instead of giving up, he has found an alternative marketplace online.
Mr. Chinda, 60, says he now supplements his income by selling used fantasy card games, which were popular in Akita, to collectors elsewhere in Japan. But he said he is the exception.
“It will take 10 or 20 years for this city to think of new ideas,” he said. “By that time, the downtown will be nothing but a ghost town.”
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