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JAPAN: Tokyo braces for impact as Wuhan outbreak continues to grow

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  • While Japan only has four confirmed cases, the Wuhan coronavirus outbreak is increasingly the most important issue on the Japanese government’s agenda.
  • Aside from evacuating Japanese nationals from Wuhan and implementing preventative measures to contain any outbreak in Japan, the Abe administration is closely watching for wider economic and political effects.

As the Diet’s ordinary session has commenced, the political agenda has become increasingly dominated by the question of how the Abe government will manage the worsening Wuhan coronavirus outbreak. Japan itself has seen only a handful of cases, but the administration is nevertheless grappling with how it will manage the hundreds of Japanese nationals working in and around Wuhan; its preparations for handling a surge in the number of cases in Japan itself; and the longer-term economic impacts, particularly if the outbreak severely curtails outbound tourism from China. While in the near term Prime Minister Shinzo Abe may benefit from the health crisis, which could crowd out lingering political scandals, the multifarious challenges associated with the outbreak mean that there could be risks for the prime minister over the medium term.

The most immediate challenge is ensuring the safety of Japanese nationals in China itself. Wuhan is a major site for Japanese investment, including automakers like Honda and Nissan, and the government believes that there are more than 500 Japanese residing in Hubei province. The Abe administration will send two chartered airplanes to Wuhan on Tuesday, 28 January to ferry any Japanese citizens who want to return home.

But the return of Japanese nationals from Wuhan will call attention to the Abe administration’s next challenge, preventing the spread of the virus in Japan itself. Returnees will be required to remain quarantined at home for two weeks to limit the potential for contagion. The administration is prepared to take wider-reaching measures to contain the pandemic. Both the cabinet and the ruling Liberal Democratic Party (LDP) have established crisis management offices. On Tuesday, the cabinet will recognize the new coronavirus as a “designated infectious disease,” a designation that would enable the government to impose restrictions on suspected patients and enforce hospitalization, while also providing public funds for treatment. This would be only the fifth time the Japanese government has used this provision and the first since the Middle East Respiratory Syndrome (MERS) outbreak of 2014. Thus far there have been only four confirmed cases in Japan itself, but by acting swiftly the government is both bracing for an increase and neutralizing criticism that it was slow to appreciate the risks.

In the meantime, the Abe government and business federations are bracing for a blow to Japan’s economy. Economic and person-to-person links between Japan and China are substantially denser than during the 2002-2003 Severe Acute Respiratory Syndrome (SARS) outbreak, which could make it difficult for Japan to avoid at least a modest slowdown from the pandemic. Nearly 10 million Chinese nationals visited Japan in 2019 – just under a third of all tourists – making China the world’s largest source of tourists to Japan. By comparison, in 2003, fewer than 500,000 Chinese visited Japan. Chinese tourism has been an important source of demand for Japanese retailers and other service providers, as spending by Chinese tourists has been estimated at roughly 37% of total tourist spending. The Japanese government had looked to China to compensate for the loss in tourism from South Korea amidst Tokyo’s disputes with Seoul – Japan has gradually relaxed visa requirements – but Beijing’s ban on outbound tour groups that took effect on Monday, 27 January will surely damage Japan’s economy. Japanese manufacturers, with extensive supply chains in China, may also be affected, negating some of the benefits from the “phase one” trade agreement between the US and China. With a large stimulus package already prepared for submission to the Diet, the Abe administration is unlikely to introduce new fiscal measures until the scale of the economic impact is more apparent. A prolonged health crisis could, however, lead Bank of Japan (BOJ) Governor Haruhiko Kuroda to reconsider the relatively sanguine view of the risks to Japan’s economy he took in his 21 January press conference, a view that rested in part on an optimistic view regarding the likely impact of the new coronavirus.

Finally, the pandemic could affect Japan’s relationship with China itself. Thus far the two governments have coordinated closely, for example on the arrangements for the evacuation of Japanese nationals from Wuhan. If, however, the crisis widens and it appears that the Chinese government was not fully transparent with the Japanese government or the international community, Japanese public opinion could make it difficult for Abe to accord Xi a state visit later in the spring, which the two governments have been negotiating. However, if Beijing’s stringent measures keep the outbreak contained in China, it is possible that – aside from the economic costs due to the temporary disruption of tourist flows – the broader bilateral relationship will be unaffected by the virus.

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JAPAN: Tokyo braces for impact as Wuhan outbreak continues to grow

While Japan only has four confirmed cases, the Wuhan coronavirus outbreak is increasingly the most important issue on the Japanese government’s agenda. Aside from evacuating Japanese nationals from Wuhan and