Prime Minister Yasuhiro Nakasone indicated today that he is pursuing a fundamental restructuring of Japan's export-oriented economy with the goal of bringing long-term solutions to its emotional trade disputes with much of the rest of the world.
In an interview, Nakasone pointed to a major commission report due in March as the main trade initiative that Japan would offer this spring.
Nakasone said the commission is looking at ways to avoid the build-up of huge foreign exchange reserves due to trade surpluses and to shift the economy away from dependence on exports for growth.
In the interview, Nakasone said he is warning business leaders that Japan is at a point where it must act or risk serious consequences.
"If one continues to win in the game of mah-jongg, no friend will come to play with you any longer," Nakasone said, referring to threats to raise barriers against Japanese goods in the United States and other Japanese foreign markets.
Japanese officials are trying to head off what they say may be a new surge in protectionist sentiments in Washington this spring. They also want to create a cordial atmosphere for an economic summit Nakasone is to host in May.
Nakasone said the Diet, or parliament, and public will begin debating the commission's recommendations before the summit convenes.
Nakasone made the comments in an interview with a group of reporters and editors from The Washington Post and Newsweek magazine led by Katharine Graham, chairman of the board of The Washington Post Co.
Some of the concepts being discussed by the commission go against the grain of the principles that built Japan's postwar prosperity.
Until recently, increasing exports and foreign surpluses were basic goals in Japan, which tends to view itself as a poor country with no resources and whose postwar accomplishments could be wiped out overnight. However, new ideas have gained a certain acceptance in theory among members of the ruling Liberal Democratic Party.
Impetus for change, or at least the appearance of it, has mounted as Japan finds itself the object of anger from virtually all of its important trading partners.
Japanese officials expect that pressure is going to mount again in the U.S. Congress this spring for legislation to block Japanese imports. Last year Japan had a $50 billion surplus in its trade with the United States. The European Community is pushing for more sales to Japan, and China, now Japan's second largest foreign market, has made a political decision to choke off imports to correct a deficit that totaled $4 billion for the first 10 months of 1985.
Almost every week Nakasone must receive a delegation from abroad that has come to press him for action. This week, it was European Community President Jacques Delors. Nakasone was reported to have agreed to a proposal from him to set up a special commission to monitor Japanese efforts to buy more European goods.
Many Japanese officials continue to feel that the basic cause of the surpluses is the superiority of Japanese goods. But they feel that unless something is done to satisfy what they view as foreigners' unreasonable concerns, there could be a breakdown in world trade.
The 17-member commission, headed by Haruo Maekawa, a former head of the Bank of Japan, and known formally as the Advisory Group on Economic Structural Adjustment for International Harmony, was appointed last fall.
Officials say its ideas have yet to take firm shape. But chief among them is a way to increase domestic demand. Japan built its postwar prosperity on keeping home consumption low. It stressed high savings and heavy investment in industry. Minimum spending went to such things as housing, sewage systems and parks.
But a consensus is now building in Japan that the country should start enjoying a bit more of its wealth and heat up the domestic economy. That, it is argued, would give Japanese a better standard of living and help the trade problem by absorbing more imports and consuming at home some of what would otherwise be exported.
The question remains of how this can be accomplished. Nakasone refuses to use what is regarded as the most efficient means, increased government spending, to stoke the domestic economy because of his long-term goal to reduce gaping domestic budget deficits that began appearing in the mid-1970s.
Attention has thus focused on somehow getting into circulation the big reserves of cash that have built up in the private sector. Much of this is flowing to New York to buy U.S. government securities that carry high interest rates.
Nakasone suggests deregulation, tax incentives and shorter work weeks as ways to increase domestic spending.
Another question being explored by the commission is industrial structure. Japan's postwar strategy was to make almost everything for itself, even if someone else could do the job more cheaply. Ideally, imports would be raw materials.
The commission is exploring the possibility of shutting down certain inefficient industries in low-technology lines of production and buying such goods abroad. Though politically difficult, this would bring about increased efficiency, it is argued, because the price would be lower, and would also address some of the complaints of newly industrializing countries such as South Korea and Singapore, which want to sell more here.
Nakasone said that in Japan, there is public support for change. But he noted that many people also wonder why all that Japan has done is not given more recognition abroad.
Among the public, he said, "there is an awareness that we Japanese must make greater efforts . . . . We would not be able to continue surviving in this international community given this enormous amount of trade imbalance."
But, he said, there is also a feeling of "why can't our trade partners understand such serious efforts made by Japanese in this context?" He said there is a perception that "American friends are too impatient. Given the fact that we are living in the free world, economic problems cannot be rectified or resolved overnight simply by using a gimmick, or magic."
As evidence that Japan is working to balance trade, Nakasone cited the government's "action program" to clear away import barriers, its recently completed negotiations on specific product areas with the United States, and its participation in successful efforts to drive down the value of the dollar.
He said that a decline in exports would be delayed, partly because previously signed sales contracts remain in force. But in six months, a drop should begin, he predicted.
It is unclear whether Nakasone will be around to keep working on this job after this fall, when his second term as ruling party president expires. That job carries with it the prime ministership. Party rules prohibit a third consecutive term.
There is talk of Nakasone somehow wangling an extension through some maneuver. However, even if he does not stay on, it is unlikely that any of the three new leaders most likely to follow him would approach the problem in a substantially different way.
On foreign affairs, Nakasone said he was "satisfied" with the recently concluded visit of Soviet Foreign Minister Eduard Shevardnadze, the first Soviet foreign minister to come here in 10 years.
"However," he said, "we must wait until we can ascertain that the Soviet side through its attitude adds substance to the words they have uttered so far."