 So, welcome to this World Economic Forum session on Japan. It's, if I may say so, a particularly well-timed session because Prime Minister Abe has just won another term in office towards the end of last year, which will make him, if he completes his term, one of the longest-serving prime ministers, if not the longest-serving in post-war Japanese history, so really a historic figure. And somebody who obviously still feels that he's got a lot to do, both on the domestic front and on the international front. And I hope over the next hour, we're going to explore what Abe's Japan is going to be all about in the coming year. Just a little bit of logistical stuff. You'll find that you've got these headsets. I think English is on one, and Japanese is on two, if you need translation. Let me just introduce our panelists from the United States. We have the Honorable Jane Harmon, Director, President, Chief Executive Officer of the Woodrow Wilson International Center in Washington, DC. We have Mr. Nobuyuku Hirano, the President, Group Chief Executive of Mitsubishi. We have Mr. Takahiko Nakau, who is the President of the Asian Development Bank in Manila. So for these purposes, an international figure as much as a Japanese one. Representing the government, if I can put it that way, we have the Honorable Kentaro Sonora, Special Advisor to the Prime Minister, member of the Cabinet of Japan. And thank you for coming over from Tokyo. I know it's a very busy political time in Japan. And then we've got Dr. Hazel Takanaka. Once a government minister, now Professor Emeritus at Keio University and member of the Board of Trustees at the World Economic Forum. And Professor Takanaka, perhaps I'll start with you. As I mentioned, Abe's got a fresh start, but he's already been in office for a while. What do you expect his priorities to be in the next term in office, and what do you think they should be? Well, thank you very much for a nice introduction and it's my great pleasure here. Well, I remember 10 years ago, we had the Raymond crisis. At that time, we became all deep blue, and we are forced to smile on the stage. But we are smiling now spontaneously. It is indicating Japanese economy is basically really good. While we are in the so-called Great Moderation, the global economy is good. And also, going to the effort of Abe's government, Abe's not mixed, the Japanese economy distinctly changed. It is important to accelerate the speed of the change. That's what we are required for the government, I think. For example, stock price became almost three times since the inauguration of Prime Minister Abe. And yes, market capitalization is now reaching 700 trillion yen. This is 20% higher than its peak at the time of the bubble economy. And also, we are very interested in reflecting the demography. The working age population decreased by 5%. However, number of workers actually working in the market increased by 3%. This is indicating the rate of unemployment substantially declined. This is all the outcome of the Abe government. But still, we need more to do. For example, how to realize the fiscal consolidation? This is another important topic. And also, yes, assuming and accepting that Abe is quite doing well and the Japanese economy distinctly changed, based upon that, I would like to raise two points. One is, well, still, for example, in the world ranking of competitiveness, Japanese situation is not so much improved. Still, we need more effort. And also, in the case of the university ranking, ranking, Tokyo University, ranking is declining still. So we need more effort. And in this regard, one worry is a kind of complacency. Well, business people and government people are very optimistic. I'm also optimistic, but I should not be too optimistic on that. In Japan, we use the call Ichikyo, one strong, one strong, many weeks. Well, in the diet, LDP is very strong. The opposition party is weak. Inside the ruling party, Abe is very strong. It has no rivals. Under such circumstances, there is a risk we became in something like complacency. So we need more effort to promote reform. And the second point, this is our final point, is, well, as you mentioned, Abe government will become the longest lasting administration in the history of Japan politics. I really welcome that. Political stability is very good for economic development. At the same time, we should now ask what will be the legacy of Abe's mix? Well, as I mentioned, they're doing well. The economy is recovering. However, for example, as for long-lasting government, Nakasone government, they privatized the Japan National Railway. They privatized Japan Telegram and Koizumi government. They terminated the post-bubble error by supporting the non-puffing growing the banking sector. And they privatized the Japan post. So in that sense, what will be the legacy of Abe's mix? Well, if they're succeeding the constitutional amendment, this will be the legacy. If they completely stopped the deflation, this will be the legacy. It doesn't still be there on the way. But anyway, Abe government is doing well. It is very important for us to recognize first their effort. Then we expect them to accelerate the speed of the reform. OK, well, you raise a couple of important issues, which we'll return to later in the discussion. The constitutional reform, I think, is both really important and interesting and slightly mysterious sometimes to outsiders. I'd like to discuss why that's so important. And also, the whole question of our binomics and has it achieved its goals, doesn't have further to run. But I'd like to turn now to industry, Mr. Hirano. I mean, we heard an optimistic take that things are going, well, markets are up, industry is confident. You run one of the companies. We're still allowed to refer to Japan Inc. But one of the industrial titans of Japan. So how does it feel from your seat? Well, in fact, every new year, we have a new year party to host the clients. And when I address the big audience upon the podium, I clearly sense the difference between this year and the previous year. Last year, the people were a bit fearful about what's going on, the political scene in the world. Donald Trump's USA and the Chinese reform and Brexit Europe, what will happen. But now the people, I mean, CEOs on the floor, really regain their confidence. And they are ready to make the further investment, both in domestic and global. They are still very much keen in pursuing the acquisition to expand their business globally. So the mood among CEOs in Japan is much better than in the past several years' time. But having said that, I think there are the many issues. So we should not be too much complacent. That's my point. For example, the Japanese inflation rates, it's set as target of 2% by Governor Kroda when he inaugurated into office, but it's not there. And also wage increase is still weak. Of course, there is a kind of the magic there, while everyone working in the industry gains more than the previous year. But the average income doesn't grow as much. Because of the way of the participation of the laborers. I mean, more women's participation into the workforce and more senior persons' participation will push the average income of each individual over. So how to improve that kind of aspect, that's another important point. And also, we have the real long-term challenge in terms of the sustainability of this recovery of economy because of the aging population, further continuing the growing population. The population is not just aging. It's shrinking now, isn't it? Shrinking and aging. So it's a kind of double penalty imposed on us. So I think the Japan is kind of an advanced economy in terms of the lots of problems. So we need to address those issues in order to make our economy recovery more sustainable and deliver the real wellness to the society, the working people. So I think there are a couple of issues we need to further focus on. One of them is the society 5.0. I mean, we need not to be pessimistic. Explain to people who might not know that. How would you summarize society 5.0? Society 5.0 is different from industry 4.0. Industry 4.0, focus on the manufacturing industry or value chain of the supply. On the contrary, society 5.0 put more focus on the social welfare through industrial 4.0 and advanced technologies. So Japan is very good at the old robotics or IoT or big data and so on. So we should deploy all of all Japanese competitive ages to improve the quality of the life and wellness of the society. That's how we would like to pursue and address the problems we are facing right now. And further encouragement of the women and senior people to the workplace is another point. And third point is education. Now other administration is focusing on how to grow the people to be better qualified to do more creative job. And that's another challenge. So higher education and vocational training and also risk killing. If you fully apply information technology, then you will substantially reduce the current sort of the administrative job, operational job, routine works. For example, at our bank, we will reduce probably 30% of workforce in coming 10 years. Wow, 30% count. Yeah, that's right. We have to reskill both people who is capable enough to do new job being engaged in the higher technical skills or a more creative way of thinking. So that's another point. Just briefly, but beyond the company, I mean, you say you're going to shed 30% and presumably you're not going to be alone in that in Japan. So what are these people going to do? Well, but that's another good news. I mean, different from other part of the world, as I said at the beginning, the population is shrinking. So robotics or AI, IoT, all those are the friends rather than enemy or the party threatening our life in the future. But the point is how to reskill and change the mindset of those existing people to new, challenging job. So that's something the government needs to be very mindful together with the industries ourselves. So Jane and Harman, can I turn to you for an external view? The Japanese, Japan is like my own country. One of those countries that thinks it has a special relationship with the United States. And I think it's very true in the case of Japan. And yet, arguably, on his very first day in office, Donald Trump delivered a big kick in the teeth to Japan by pulling the US out of the TPP. Nonetheless, he seems to have built a close relationship with Shinzo Abe. So how do you see US-Japan relations in the Trump era? Well, first of all, I think I would fit in well in Japan since I am shrinking and aging. Think about that. But I am a recovering politician, as you know, Gideon. I spent nine terms in our Congress before fleeing the partisanship to head a really wonderful, nonpartisan think tank dedicated to the memory of President Woodrow Wilson. At any rate, I think that Prime Minister Abe has been very clever. Yes, the dumping TPP I personally think was a mistake. And Japan and a few other countries have led the effort to form TPP 11. When Justin Trudeau was here a couple days ago, he announced proudly that Canada is joining. And I think that TPP 11 will be very successful. And US leadership will, sadly, be diminished, because we're not in it. But at any rate, Prime Minister Abe moved swiftly after that to engage President Trump. And the golf outing, the gold golf club was brilliant. I'm sure I don't mean to diminish the fact that the conversation probably was too. This golf club was gold? It was gold. It was a gold. Gold color, I hope, not solid. I have no idea. But it was a golf driver with the big head that was gold. I mean, it was a good choice of gift for this president. So I'm just saying. And the meetings have gone well. I mean, Trump was also in Japan. And I think on a short list of world leaders that President Trump truly likes, Prime Minister Abe might be at the top. I'm looking at his government. Yes, I think that might be true. And I think that's very helpful to Japan and helpful to the US. There are very tough issues in the region, no question. I think the economy is the good news story. And exports are surging, of course, then watch out for Wilbur Ross, who's going to say trade deficit, trade deficit. But I don't think the Trump administration's definition of trade deficit is exactly right. I think I got a tutorial here yesterday that it's more based on investments and savings than it is on the zero sum game of who owes who money. But at any rate, I think the economy is surging. That's a good thing. But India is surging in the region. That's a question mark. China has risen. That's another question mark. North Korea still has an arsenal of missiles and nuclear weapons. It hasn't mastered the reentry cycle yet. But it is obviously worrying to the region that North Korea is surging ahead. And hopefully, this pause for the Olympics will lead to serious conversation. And certainly, the experts at the Wilson Center think a freeze for freeze is the best outcome that we could expect now. OK, well, we'll come back to Korea in a second. But Mr. Nakau, as I said in a way, you're an outsider. You work at the ADB in Manila. How do you think Japan, well, if we were having this conversation 20 years ago, we would have assumed that the Asian economy was as Japan was kind of at the center of it. Now I think people increasingly think, well, maybe China is at the center of it. So what future is there for Japan in an Asian economic system when China is looming larger and larger? Yes, it's very true that 20 years ago, or 30 years ago, Japan was the top of a flying-geese model. And other countries are following Japan in many ways, including how to develop. But today, of course, it's more networks. Some countries have more advantage in some sectors. Some countries have some competitive edge in some sectors, like Korea, China, India, and so on. So in that regard, Japan's presence is now lower. We should accept it. And even 10 years ago, China's size of GDP was smaller, or half of Japan. But today, it is 2.5 times as much. And the US is three times instead of two times. So we should accept it. But at the same time, if we look at the productivity or the growth rate, the working population per capita GDP is growing higher pace than that of the United States, like 1.6% vis-a-vis the US 1%. So there are many people's working population working hard, and they are growing. But at the same time, because of the Yen's rate, and also the nominal growth is smaller because of deflation, our presence is Japan's presence. By the way, I'm not representing Japan. I'm an international organization. I shouldn't say we, but Japanese. Anyway, so we are doing, Japanese are relatively doing better. And if we look to some infrastructure, like in Yokomo, we had an annual meeting last year, there were people that are so impressed by the beauty of infrastructure, the coherence of the society, and the safety of the society. So Japan still has many things which are attractive Asian countries, and our Philippine friend, Chinese friend, Hong Kong friend. They really love to go to Japan and regular visitors, like twice or three times a year. So Japan has so many things which are attractive Asian countries. So the question is whether Japan can continue to have productivity gains, more innovative and interesting, and also the presence in the other economy can be higher by our efforts. But it's, in a sense, too pessimistic that we lost, Japan lost 25 years of decades totally. Some things are better, although we have challenges like aging, shrinking population, and poor families like single mothers, we should look at those things. But as a whole, society still keeps coherence compared to other countries. And I would like to mention some measure to do, but after. OK, we'll come back to it. Yeah, because Mr. Sonora, we should hear from you now. Thanks, as I say, for coming over from Tokyo. Give us a sense of how you, from within the cabinet, see the task ahead for the new government. And I think people would be particularly interested to understand this argument about constitutional reform. What would the prime minister like to do, and why is it important? If I may, I'd like to speak in Japanese. Please wear the headset. Currently, on a global basis, we are exploring the world eye diplomacy. And especially, we place emphasis on free and open Indo-Pacific initiative from Asia through India to Africa that will contain more than half of the global population. And the management here should be considered as a global public good, and make it a good clearing point for a growth in the current century. I think there are three points in this initiative. One is the rule of law. The second is the freedom of navigation. And the second is that the countries around should strengthen the solidarity or connectivities to enjoy economic prosperity. And the third is the capacity building to enforce the flow of the sea, because there are pirates and some such illegal actions. And probably, the point I should like to refer to here would be economic connectivity. And I was thinking that there are three points to it. And the people ask, if we will be building ports in the harbor, roads, or railways. Well, that may be one aspect, but it's not all. The second important point is the capacity building, human resources building. And what sort of infrastructure to support it? The third would be the institutions and systems building in various countries like customs and customs clearance system. But it's to say, the improvement of overall infrastructure, as well as human resources development, as well as institutional improvement, we are trying to tackle these three aspects concurrently. And in order to enforce that, there should be cooperative efforts to have the transparency and also the openness to everyone and economic good resources. And also, there should be fiscal sustainability so that to burden some, a lending would not add to the burden on the borrowing side. And that would mean the money from the private sector, government sector, as well as international financial institutions such as ADB under the leadership of President Nako. It's not that we alone can make good results. Last year, we had a director general's discussion starting between four countries, US, Australia, India, and Japan, so that in the Pacific region could be the center of growth where Japan can join in. So ABEC government is pursuing this. And this idea we had from back in 2007, but we are emphasizing this again in terms of relationship with outside. Thank you. For instance, to hear you talk about the Indo-Pacific, which is this phrase that Donald Trump is also using. What you didn't mention much in your remarks, but I felt that was in the background, is China. And how much of Japanese foreign and economic policy is now driven by a need to respond to the remarkable growth in China? And to focus the question, do you see yourself now as an economic and strategic competition with China, or is there still room for a cooperative relationship between China and Japan within the Indo-Pacific? As I mentioned, the international standard, which we will abide by. Everybody should come in. We have no intention of excluding any particular countries. We probably are talking about a Belt One Road, and we've been on this Indo-Pacific initiative before that. And this year, I think the Japan-China relationship will see a drastic improvement. And we will explore where we can cooperate together between China and Japan in terms of one Belt One Road concept. OK. Yes, the change of the Japanese diplomatic policy towards China, if I would, that's very good news for industries, too. I mean, in the past, we have observed the good time and bad time. And the problem for industry and industry leaders, the political and diplomatic instability between those two countries. So it has been the largest single market for Japanese companies to make investments. But when we almost completed the expansion of a business in China, the leaders asked themselves whether this is the good choice because of the instability of the relationship. It maybe, maybe, you know. Well, definitely, this business became the target of big protests some years ago. That's right, that's right. And so the people now, I mean, then thought about the diversification and identifying the alternative destination of their investment. That was mainly ASEAN countries and possibly in India. So we need to have a sort of well-balanced relationship across the Asian region. So when I attended the future of Asia conference hosted by Nikkei Shimbun last July, I suppose, Prime Minister Abe declared that he believes this One Route One Belt has potential subject to what he commented. So transparency and fairness, openness, and economic feasibility and the fiscal soundness of that project. So subject to those conditions, perhaps we, Japanese industries, we will become a bit more positive and cooperative in choosing and selecting the appropriate project with which we can work together. That's where we are now. Yeah. Sorry. Dan, you wanted to add something. I just wanted to add, I think that China's Japan's largest export market. And exports are increasing highest ever in this last month. Also, the US pulling out of TPP changes the whole geopolitics of the region because we are a smaller factor and less protection in certain ways as a trading partner, even as a defense partner. That's why Japan is reconsidering its constitution. I'm going to be interested in how that works because I have no idea. But I think the Trump doctrine would be Asia needs to do more for its own defense. And the US will only have bilateral deals that we think are fair. And that's why there's some criticism now of the bilateral deal with South Korea, which I thought was pretty fair to the US. But the Trump administration doesn't. And this focus on trade deficits, which is very, it seems to me, doesn't give the full picture. So I would just say with respect to Japan and China, Japan has to think about a region where China is a hopefully bigger friend. Has to. Otherwise, it seems to me, Japan is putting itself at some risk. And I think China will become more dominant. And one last comment on One Belt, One Road. I don't think I could misunderstand this. But I think China's view is that it has come up with the idea and the architecture, but that other countries are invited to invest as well. And this could be a win-win. Dr. Takanar, do you say that way? Yes, one thing about China. Well, I've been doing good, as you mentioned. Prime Minister Abe had a very good personal relation with President Trump. At the same time, he's a very strong advocate of free trade now. And actually, he concluded the DPP-11. And also, the Japanese government is going to conclude the EU-Japan EPA. This covers 30% of the total GDP of the world. So in that sense, we are now well-balancing to a trade balance. Abe himself has a very explicit philosophy on this. Japan should be a proactive contributor to the world peace. This is one thing. And the second one is Japan should be the promoter of the multilateralism. And in that sense, well, so it is very important to watch China in this regard. But China's GDP, in terms of that term, it's a 2.5 times of that of Japan. In that sense, we cannot ignore China. One serious problem for us is relating to the forced industrial revolution. Yesterday, Chancellor Merkel raised this point that the state capitalism, under state capitalism, they are gathering big data. And this is of the competitiveness based upon the big data from here on. In that sense, how to cope with this kind of a cope of the state capitalism? In this regard, inside of the government, we are discussing very seriously how to establish a big data in Japan and the government of Japan this year, sorry, last year, established a kind of controlling power, the committee, to gather big data, asking the private sector and the public sector both. And also, the government is going to establish the so-called regulatory sandbox, regulatory sandbox to promote the business startup, to promote the accelerate the regulation. So combining this effort, the Japanese are well-watching very carefully China and considering the nature of state capitalism, Japan is also promoting the domestic reform, economic reform, that's the important point. Okay, President Nacau, I mean, in a sense, you're at the heart of this odd partly cooperative, partly competitive relationship because of course, everybody was wondering about what is the continuing role of the ADB now that the Chinese have set up the AIIB in Shanghai. Do you talk to the AIIB and how do you see the two roles of the organization? About the AIIB itself, I have already more than 10 times of discussion with the President Jin because he was the Vice President of Asian Development Bank before, was during the time of Mr. Koda. But we have a very similar kind of background from Mr. Financing International side and we know finance and we know developing countries. So we share very good kind of discussions with him and we are co-financing already four projects and we are doing more and they are trying to follow international standards but procurements and environmental and social impacts and so on. So we are co-financing, we're cooperating. And about China itself, China became a member of Asian Development Bank in 1986 but we still kept Hong Kong, China and Taipei, China as a different membership. So ADB is in a sense very good system to engage all these countries and continue lending to China for climate change which is renewable, water and urban powers and so on. Those are very appreciated by the Chinese government. So I have a regular meeting with the Minister of Finance of China and we share discussions about bubble or not and Japanese experiences of dealing with the United States pressures and other issues and how we can support China. So that kind of element should be there although there are different views between China and Japan still but it is also true that we have learned a lot from Chinese cultivations and civilizations and also they learned a lot from major restoration and also after Cultural Revolution Japan supported Chinese development a lot and Japan was the biggest export orientation to China at that moment and a lot of ODA finance for ports and airports and so on. So we have had such a good relationship and we should promote this idea although there are differences and we should ask China to stick out here to intellectual property rights and other rules. We should have rules more about these things but we should cooperate. There is no other option, at least in economic arena. One simple question to Mr. Nako, may I? May I? Well, if I'm not mistaken in year 2008, 2009 you have a research institute in Tokyo, right? ADB Research Institute. ADB Research Institute submitted a very interesting proposal to establish the fund for infrastructure. The demand for infrastructure is very strong so US, Japan should establish a new fund. However, both government ignored. What kind of discussion was done at that time and during that time China established AIIB. That's my recognition. I'm sorry, this is a very solid question. But we established a new fund in the ASEAN several years ago but ADB itself is now becoming larger because of a more capital, because of income and so on. So we will continue to play an important role to fill the infrastructure gap in Asia but we can cooperate with AIIB. Okay. Yeah. Yup. You know, I already with two gentlemen said and China is the most important market for Japanese industry but also Mr. Shijin Payne made clear he will be the global leader of free trade and globalism upon the Davos conference last year. Yeah. But on the contrary to what he proposes, there are many problems in addition to what you commented in terms of property issues but also free flow of the data or disclosure of source code or obligation of putting the server on site. You know, those restriction constraints over the data well become the very big obstacle for global companies to run the business and not only in China but also globally. And on the top of that, the another issue is state-owned enterprise. In addition to over capacity issue which China government is very seriously addressing. I appreciate that initiative and some visible outcome has been observed in the past several years but still in the Made in China 2025, they kind of made clear they will continue to support the state-owned government initiative to acquire the company in order to get the high technology and advanced, you know, the industries. You know, intellectual properties. So those, you know, the initiatives, perhaps described as market-distitutional policy and actions, that should be in question. And we, together with perhaps other, you know, the US and European countries needs to let them think about those policies will be really serious impediments for them to become that real leader of the global economy. Okay, I will now let the audience do some of the work and ask them for questions. I think do we have microphones around? Yeah, over here. So if you want to stick your hand up, if anybody who has a particular question to any member of the panel conscious there are also people behind me. So we're all being very cautious. So I, if there are no questions from the audience, I've got plenty of my own. So I'm happy to continue. Mr. Sonora, I mean, one of the things that's been quite striking about this particular Davos is you have had leader after leader, stand up, Macron, Merkel, Narendra Modi, all saying I'm against protectionism. I'm in favor of free trade and the global system as it is. And it seems by implication they're criticizing Donald Trump. I'm sure that Japan is also, as you said, very much in favor of the liberal, open rules-based order. How much do you think that order is actually under threat? Just as you said, there is TPP and the EUEPP in this stuff. And we did make a political decision to go through the stable government between U.S. and Japan. We have a U.S.-Japan economic dialogue led by Vice President Pence and the finance minister. So I think we've taken up and the table says that free and fair trade groups to be expanded globally through U.S.-Japan cooperation. But in my notes, the anti-Japan provisions or excessive export subsidy and are the share that be prevented and eliminated through the cooperation between the U.S. and Japan in essence, in others. The multilateral free trading regime or money. But we made some different views between U.S. and Japan when it comes to their international rule and the need to abide by that. There is a common perception that we should be doing that. I'm not very worried. And I don't know if U.S. would come back to TPP, although we hope so. Jane looks a bit skeptical about that. I'll ask that lady a question. But can I just ask Jane following up on that? I mean, there seems to me to be almost a contradiction or a tension, if you want to be fairer, at the heart of Trump's approach to Japan because Japan's crucial security partner in the Pacific. But equally, it's as Trump would say bad on trade. Do you think he's ever going to resolve that contradiction or it's just going to be there? I don't think he minds contradictions. I don't think he thinks that way. He thinks in a transactional way. He thinks about trade agreements in a transactional way. I think the relationship has to be managed very carefully by Japan and Japan is doing that. And I think Japan is successful because Prime Minister Abe has the golden touch here. He really has figured this out. And more so than many other leaders. I just wanted to say one thing about what Mr. Harano said about China. I agree with him. And I think the Trump administration is right to focus on intellectual property theft and other challenges. The forcing of companies, yes, to abide by Chinese rules if they want to do technology in China. And I also think we haven't mentioned the cyber issues and they surely relate to defense. But the cyber capacity of China and North Korea and possibly their ability to proliferate it to non-state actors is a big threat for the whole world but certainly in Asia because China is in Asia. Okay. The lady over there had a question. Thank you. I have a question about South Korea because, you know, China is very, very important for Japan's relationship and also in big player in Asia. But also right now we have a quite shaky relationship with South Korea, Japan-South Korean relationship over historical issues. So I think South Korea can play a very big role in tackling the issues with North Korea. So I wonder what you have, what kind of prospect do you have for China? I'm sorry, South Korea and Japan relationship. I think that's one for you, Mr. Sulu. Oh, yeah. I'm sorry. I'm sorry. I'm sorry. I think that's one for you, Mr. Sulu. Yeah. I mean, I mean, I mean, I mean, I mean, I mean, I mean, I mean, That is the basic cooperative relationship, and our view on this remains to be changed. But then, as we have come to this, the final and irreversible agreement and on the course of moment issue, they start to think something happened, which comes to the sense of trust on both sides and as the people that will be difficult for the government of democratic countries to manage, international understanding, international community should be kept in and complied with. We've been asking for this, and by abiding by the international agreement, we should start on the course to regain a stable relation. We have no intention of excluding Korea from the government framework because the U.S.-Japan-South Korea relationship is the fundamental framework for us. So I have a question regarding Japan's competitiveness. Mr. Takenaka mentioned about the declining Tokyo University rankings, and Mr. Hirano mentioned about retooling the workforce, which is a problem that most other companies have. But what do you think we need to address? How do we need to address the issues about education? Because it's been going on forever, and the number of people studying abroad is decreasing. I think that's an issue, but I don't see any policies in place to actually accelerate the process. So what do you think needs to happen, and what is the government doing, or what is the private sector doing about it? Well, thank you very much for raising a very controversial question. As for Tokyo University, I have been proposing to privatize Tokyo University. In the government, I privatized Japan Post. The CEO of Japan Post is sitting here today. But anyway, I say, or even in the case of the United States, the federal government is spending a lot of money for science and technology. However, Harvard is a private university. Princeton is a private university, and Cambridge Oxford is a private university. So now, the government is providing some grant to Tokyo University and Kyoto University, etc., etc. So a very sound competitive environment is not realized. So this is a lot of exaggeration I understand, but this kind of method is needed to be employed as for the university. Higher education is very important as for the company. Well, in the case of Japan, business startup ratio is low, half of that of the United States. At the same time, business closing ratio is also half of that of the United States. So the metabolism of the industry, it's quite low. In order to strengthen that, two policies are actually being tanked by other government. One is to strengthen the corporate governance. Corporate governance code was approved by Tokyo Exchange three years ago. And now, many companies, 96% of the listed companies are employing independent outside board members. This is one issue, but still we should strengthen more. Another one is the fundamental labor market. This is the current challenge of the government. This is very difficult. But anyway, in this current discussion, the bill of the amendment of the labor standard law will be put and deliberated. This is the first time in the 70 years history of this basic law. So in that sense, I expect the challenge of the government. Yes, when we are talking about the Japanese presence or profiling world economy, what we should do is, of course, in addition to diplomacy, in addition to other acts, what is most important is to keep to make Japan interesting, vibrant and attractive economy. And to do that, what kind of things can we do? And first is that we should take in the kind of very strong growth based on the demand of consumers and the investment in ASEAN. ASEAN is growing very much, and it's more market oriented. India is doing so, and China is also growing. So we should take in this dynamism of the economies of these countries more seriously than before. And that is one thing. And so we should invest more. And when I visited Hong Kong two weeks ago, the very senior officials said that Japan doesn't invest as much as it is needed because there are many opportunities. But because of kind of fears from the serious financial crisis before, companies have been very timid. But there are many chances in Japan. If we look at the chances of the demand from Asia. And the second point is maybe we should pay more attention to value added. That is we should sell the good things in a more pricey way. Instead of just making it cheaper. So that kind of mindset, how we can market, how we can brand our products, our Japanese products, and how we can based on the very perfectionistic craftsmanship which many people love. How can we make money about it? And then we need to invest more in the R&D. And also we should make companies more innovative. And so there are many chances within the companies. SME, small and medium sized companies are there. Also, even in big manufacturing companies, there are so many seeds of new ideas. And we should unleash those things in some way or another through the corporate governance. And also we should have more diversity. We are now hiring more people from 150 students from abroad in Japan now. They want to work in Japan and we are hiring more. But we should have a diversity from the perspective of talent and women and also many other things. And we should make our life balance better. Without happy life, we cannot be innovative. And finally we need to raise the revenue raising capacity of government to support people, to secure the public education, to secure the kind of support for the R&D and also read distributions of income is important. So we should make the public sector also strong. Okay, we'll start a question over here. Hi, I'm Raki. I'm a global taper from Tokyo. After I arrived in Davos, what made me even more proud of being Japanese is that everyone loved Japanese culture in Japan itself as a country. But my question is why we are so pessimistic? I was wondering if it's our natural characteristic or because of our situation. And if so, how we can change our mindset or we can just stay as it is. Can I say something? First I want to point out that every question has been asked by a woman. Thank you for looking up. And it is certainly true that getting more women into the workforce in Tokyo is something the Abe government is addressing. That's also good. Japanese products are very popular in the U.S. The auto industry is huge. Japanese auto industry in the U.S. And U.S. workers are hired to produce Japanese cars and other Japanese products. So just as an American woman, I'm very optimistic about Japan. It's these men sitting around who are pessimistic. Yeah, well I think as far as I can see as an outsider, a lot of what connects what Prime Minister Abe is trying to do is actually precisely to restore a sense of optimism, dynamism, and to combat any sense of decline in the nation, say on the contrary. Japan can go forward. And that's perhaps an appropriate theme to it to end. We've got about 10 minutes to go. I mean, looking forward, you could paint, I'm afraid, kind of a gloomy perspective for Japan, because you could say, if I were to make the gloomy case, I would say, okay, you know, it is a much admired country. It has a wonderful sort of culture, envied lifestyle. As you said, tourists love going there. But it is aging. It is shrinking. And it has a, it's unwilling really to tolerate immigration to boost the population. And it has a slightly scary neighbor in the form of China with their big historical grievances against Japan, which have not been resolved in the minds of the Chinese. On the contrary, if you look at, say, Chinese television, there's all anger towards Japan. And so, although I think there are lots of positives, undoubtedly, for Japan, you can make a case for being concerned about the future. So I'd like to ask you all to end by trying to make the optimistic case, if you can, and to say, in 20 years' time, if Abe Nomics works and if Abe's reorientation of Japan works, what will Japan's domestic and international situation look like? What's the goal? Mr. Sonora? Sorry. They cannot even form a decision. So far the government has kept talking about the taking measures about a small number of things. And now the tackle is heavy. But now with this terrible government, the current government is thinking One of them is that the United Nations is a, they take for granted and so we have to take measures on that basis. It means that more senior people should come forward, and the current minus minister of Japan is 77 years old. It looks like more participation of women in this, of course, and it's increasing and I think it's exciting, excited, excited, this is the way it is. And the third is the way of, of, of working, and the third is the way of, of, of working. And with this, we will overcome these issues and the result of that, Japan will be the first country in the world which overcome the declining population and the age of 940, 120 years later will be 65 years old. And by then, if Japan overcome these problems and together with young Japanese, we can export our model to other countries. We like to see Japan as such, 20 years from now. So, so Japan. So it's not the dark gloomy. Okay, so Japan still is a trendsetter. Mr. Hirano, do you, looking forward, do you feel optimistic? Well, I mean, you know, as everyone commented, Japan has its own strength in many, you know, the areas. But the reason why we have been pessimistic probably is, a, we have suffered from the persistent two decays over, you know, deflationally, you know, the environment. So as Governor Krueger, Bank of Japan, you know, repeated the comments, wiping away those, you know, very solidly installed mindsets among the 100 million population isn't so easy. But if I analyze into why it is a case, I think that's the, you know, the people became less confident about the future. So then why, there are many structural issues or structural impediments in each address, such as the social security issues. You know, the reason why people do not want to spend, despite the fact the wage increase at the household is as high as 2%, which is higher than Japan's GDP growth rate right now. Why? Because they feel their future is not secured. So I think the social security reform is one of the critical policies that the Abe administration needs to pursue. And on the top of that, another point is fiscal consolidation. Of course, at this point of time, you know, Japanese, you know, the sovereign debt exceeding 200% of Japan's GDP is sustainable, actually, because, you know, the more than 90% of Japanese sovereign debt is held in the hands of Japanese investors, including institutional investors, individuals, and by us. So we would not change our minds overnight. So at this point of time, it's safe, but over 10 years, 20 years, is that really sustainable? That's a very deeply rooted question in every people's mind. So we have to address the fiscal consolidation issue. So from the banker's viewpoint, perhaps, those two, in addition to what everyone has commented already, is the fundamental challenge and the political, you know, the initiatives of the administration with the overwhelming support from the voters in Japan. And actually, another four years' time should maybe make the utmost effort over other, you know, the political agenda. Okay. So we've got three minutes left, which gives a minute to interview. So just an impression, but what's your sense? Are you optimistic about Japan in 20 years' time? Oh, yes, I'm optimistic. Of course, but in my impression, senior people are relatively optimistic. Younger generations are likely to be pessimistic. I'm afraid that. 20 years ago, Paul Krugman wrote a very interesting book, Diminished Expectations. When expectations are high, well, there are a lot of complaints. Well, we have high expectations still because we have a lot of resources. Japanese culture is nice. Japanese environment technology is nice, etc. So we have a lot of discussions. This is because we believe that we have a high potential. Compared with this high potential, what has been done is still limited. This is exactly what we are discussing. So I'm always optimistic. And this will be, this potential will be realized, I believe. Jane, I mean, looking at Japan from Washington must be very interesting over the last 20, 30 years because 30 years ago, Japan was the country that was going to take the world over much as in the way people talk about China now. How do you see the future of Japan now? Well, I've already proclaimed myself as an optimist. And if there are 17-year-old Japanese women who are very involved already in Japan's future, how could we lose? I think that Japan is viewed by the Trump administration and by those in America, both in the business side and the political side, as a very valued ally and someone we want to stay close to. We didn't discuss changing the Constitution and what will happen if Japan separates itself a bit and develops its own defense, at least defensive defense capability more than it has. That will be a big change. I think that will happen. I think that's going to happen in Europe too, as at least the Trump administration proclaims America first. Other parts of the world are taking that seriously and focusing inward. I'm not sure that's a bad thing. I think that the global order must be sustained, but can it be modernized and reconsidered to some extent in a multi-polar world, which we now have? The answer is yes. And Japan is one of the important powers in this multi-power world. President Bacow. Yeah, there are many reasons to worry about the future, but there are several reasons that we can be optimistic. And why is that, again, the Asian countries are growing and there is a very strong demand for the attractive Japanese product, including tourism. And when we were more industrial power, people didn't pay so much attention to these details, but it is really craftsmanship which many Asian countries love. So there is a chance there. And also behavior of young people are changing and women are changing. And I think young people are more adventurous and they have more startups compared to the previous time. And also women are more active and make things more interesting. And also, I would say, they have very strong views to connect to the Asia, for instance. They don't regard America as superior than Asia anymore, and it is part of Asia. So there are many, and also there are changes for the behavior of men. And many younger, more shadows over. Ministry of Finance now cook and send these to the national school. But when I was 45 years old, I already cooked every meal for my family because my wife and my wife are right there in the paper. So if I bossed this, my wife is always scolding me. I'd like to ask her if his wife would be... She should be down instead of just bossing as if I'm exceptional. But young people's behaviors are changing. So there are changes to the Japanese society. Of course, there's optimism, maybe. It's a herd, I think. Absolutely. Then you were obviously at the forefront of social change in Japan. So congratulations on that. I'd like to... We've come to the end of our time, but it's been a great discussion, full of interesting insights and I think interesting questions which we'll see unfold over the coming years and I'm sure have opportunities to discuss at other Davos meetings. But for now, I'd just like to say thank you very much to all of you on the panel and to the audience for your attention.