Yes, Pax Nipponica

Japan can become the global honest broker - the 1st AI Basic Plan shows the way, and PM Takaichi has got what it takes to inspire both the nation and the world

The primary lesson of the 21st century so far is that neither Pax Americana nor Pax Sinica is an acceptable solution for much of the world. Yes, the rivalry between the two keeps intensifying; but no, neither Washington’s nor Beijing’s version of “Might is Right” offers a credible answer to the aspirations of the Global South or the problems facing old-world Europe. And the more both Washington and Beijing leaders insist on a with-us-or-against-us approach to their allies, the greater the resentment against the hegemon will grow. Trust is eroding fast. And without trust, any attempt to re-write the rules governing our future will be fundamentally futile.

In my view, no nation is better placed than Japan to mediate between the two current superpowers, the United States and China. This is true for all aspects of policy leadership, not just trade, finance, technology and the economy but also diplomacy and global security. Japan is trusted and admired, but not feared. So Japan has got exactly what it takes to be the global “honest broker”.

Who needs walls when you can have Pax Nipponica — exemplary high trust governance in action: Tome-ishi (止め石, "stop stone") or Sekimori-Ishi (関守石, "barrier stone") in Kyoto’s Saihoji moss temple

To be sure, my vision of a Pax Nipponica is a next step evolution from the Pax Britannica (1815–1914) and the Pax Americana (1945–???). Both Britain and America ruled the world by brute force: Their currencies were the undisputed anchor currencies of the global financial system; their leading companies were the undisputed innovators and oligopolistic leaders of global commerce; their universities attracted and educated the best and brightest from all over the world; and their armies were the most advanced and dominant. Today’s Japan has none of this. There is literally no area in both hard and soft power where Japan dominates the world. And that’s precisely why Pax Nipponica is possible.

Japan is not threatening, not feared; but it is admired. Japan is the world’s only true post-industrial society, a frontrunner in many areas. It is a role model for having engineered the fastest and most successful economic development ever, for having a socio-economy resilient enough to survive the biggest deflation cycle in history without suffering social unrest and disruptive inequality. It is now teaching the world how to age gracefully and how to maintain and create equitable prosperity by enhancing asset income rather than relying primarily on employment income.

All over the world, Japan is admired for its exemplary balance between intense economic modernization and solid perseverance of national traditions and social norms; for having not just imported Western culture, but perfected and improved upon it in so many areas—from architecture and fashion to food and video games, and even sports such as male and female figure skating, golf, and baseball.

Make no mistake: Viewed from a global perspective, Japan is the most highly respected nation and culture in the East, West, North, and South of this world. Japan has what it takes to lead a global Pax Nipponica.

What’s Next for Japan?

What about the domestic perspective? Is Japan’s elite ready to lead and orchestrate a global Pax Nipponica? It is, of course, not quite right for a non-Japanese to answer this question. I personally think the answer should be yes. This is because the world desperately needs a trusted and honorable mediator, now more than ever. More importantly, in my view, the country stands at a historic inflection point—Japan’s elite needs to embrace and rally behind a new goal. Post-war, post-bubble, post-deflation, post-lost decades—Japan knows what’s behind it, but doesn’t quite know where to go from here.

It is not a coincidence, in my view, that the Liberal Democratic Party (LDP) has once again lost control of parliament, just as they did in the early 1990s when Japan had a similar breakpoint in the zeitgeist once the overarching post-war goal of catching up to the United States had been achieved. Now the overarching post-bubble goal of ending deflation and, at the same time, gracefully restructuring the baby boomer salarymen-based corporate culture has also been completed. Then as now, the LDP has no answer to “What’s next for Japan?”

Can PM Takaichi lead the way?

In her first months in power, Prime Minister Takaichi has shown admirable Machiavellian skills. She has not just turned the LDP from a divided and dominated-by-infighting-old-boys-club into a united and something-for-everyone-national-conservative-ruling party; but, more importantly, she managed to turn previously obstructive & entrenched opposition leaders into constructive champions for national policy pragmatism — nuclear power plants are re-starting, defense spending is accelerated, tax cuts for lower income voters paid for by tax hikes for the ultra-rich, and even the 10% cut in number of Members of Parliament (lower house) are all moving along much more smoothly than generally expected when she won the LDP Presidency in early October.

So yes, Takaichi deserves a 10-out-of-10 for getting things done. Whether she can turn from competent manager to admired and trusted national leader remains to be seen. Mobilizing fiscal resources allowed her re-unite Japan’s conservatives — the something-for-everyone LDP is back; and, after years of LDP fumbling (and yes, outright incompetence….New Capitalism anyone?), her getting-things-done leadership style has been rewarded by very high popularity ratings.

However, the welcome return to competent government alone won’t be enough to sustain the LDP’s popularity. For this, PM Takaichi must inspire and unite the Japanese people with a genuine new vision. In my personal view, her embrace of “National Re-birth” - 日本再起, Nippon Saiki - alone won’t be enough to unite the Japanese people. I am hopeful PM Takaichi will deliver both a national and global vision that inspires and unites the Japanese peoples by adding global purpose to Japan’s future ambitions. National Re-Birth merges with Pax Nipponica….

Beyond the Settlement of post-War Accounts

When I arrived in Tokyo almost 40 years ago, then-Prime Minister Yasuhiro Nakasone was promoting his Comprehensive Settlement of the Post-War Accounts (終戦政治の総決算 - Sengo Seiji no Sokessan). To me, as a German national, a lot of Nakasone’s arguments and reasoning made sense. To this day, I very much admire his central demand that there must be more to Japan’s national ambitions than economic centrism (keizai chushin shugi), and that Japan should unmark itself as a defeated country and build a post post-war system.

However, I have always been puzzled by how inward-looking, how narrowly focused on only Japan the elite’s call to settle post-war accounts has been. No global aspirations, no vision, and no demands on Japan’s elite to leverage the country’s strength and wisdom to build a better world and promote a better humanity. This is particularly true as Nakasone’s call for the “Settlement of post-War Accounts” evolved into the “Japan National Re-birth” hard-line patriotic ideology embraced by PM Takaichi and her - at the risk of oversimplification - Make-Japan-Great-Again conservative supporters.

Forty years ago, this was perhaps understandable, because Japan’s elite still needed to muster strength to say “No” to America: it was a big deal when Sony founder Akio Morita and then LDP heavyweight Shintaro Ishihara published an article by that title—「NO」と言える日本—in 1989 in Japanese. The English version was released in 1991. Was Japan’s elite really ready to revolt against their US masters, or was this just a sign of bubble-empowered hubris? Either way, it was and still is all “No” with zero insights or vision of the new “Yes” for which Japan should strive.

But that was then. In 2026, Japan has a unique opportunity to reset national ambitions and goals. It’s not about saying yes or no to America (or China). The world is waiting for Japan to say, “We propose to do it this way.” Japan has what it takes to be a global rulemaker and mediator between East and West, North and South.

Pax Nipponica is an ambition the world is waiting for, and one Japan’s elite should embrace. As a Japan optimist, I trust they will.

1st concrete steps towards Pax Nipponica: Japan AI Basic Plan

A first concrete example can be found, in my view, in the just released first Japan AI Basic Plan: while framed as a counteroffensive to correct Japan’s perceived backwardness in both AI investment and AI diffusion, the proposed strategy offers a pragmatic, well-thought-out and unified roadmap of how to leverage AI for both economic and social re-vitalization. Importantly, this is not a lobbying cry for greater capital spending on AI or data centers. The core is a clear ambition for Japan to become a role model of how AI can be trustworthy, embraced by all stakeholders, and become a tool to build (or re-build) social unity and national trust.

In refreshingly sharp contrast to the “move fast and break things” technologist-led policy directives coming from Silicon Valley and Washington, Japan’s policy elite commits to the following: The explicit purpose of AI is to empower a more human-centric society, a society where the real existing balance between technological progress and economic growth actually enhances the preservation of human values & cherished national traditions. Leading by example, Japan’s AI adoption thus becomes a best-practice benchmark for the world to adopt. Clear speak: technology is a tool, not a purpose.

Of course, all of this is easier said than done.

However, the report goes into great detail, offering concrete policy measures and institutional governance reform that will start to get implemented from 2026. A great summary of the many details and primary policy steps to be taken comes from Norbert Gehrke, the always insightful, concise and long experienced Japan technology policy expert:

“At the heart of this counteroffensive is the concept of “Trustworthy AI” (信頼できるＡＩ). This is not merely a branding exercise but a direct strategic response to the evolving market. The plan leverages Japan’s global reputation for quality and reliability to forge a competitive advantage in high-trust AI applications. Rather than competing on raw capital, Japan aims to lead by creating safe, secure, and transparent AI systems tailored to its robust industrial base, thereby accelerating domestic adoption and generating a virtuous cycle of development and implementation.

This entire strategy is driven by a clear and ambitious national vision: to become “the easiest country in the world to develop and utilize AI.” This goal serves as the guiding star for all subsequent policies, aiming to create an environment where government, industry, and citizens can confidently embrace AI….he central concept of "Trustworthy AI" serves as the unifying thread that connects the plan's ambitious economic, social, and diplomatic objectives, transforming a national reputation for reliability into a tangible competitive advantage.”

I highly recommend a thorough read of Norbert Gehrke’s full report:

Norbert's Japan FinTech Observer on the AI Basic Plan

Thank you for reading. As always, comments welcome. On a break from Tokyo in a finally sunny Northern California - many cheers ;-j

PS: A first version of Pax Nipponica was published in NIKKEI in October 2024, then here at Japan Optimist in December 2024, and more recently in the ACCJ Journal .

Saihoji Moss Temple in Kyoto on a rainy day mid-year