TOKYO — The popular Chinese imagination of Japan has followed along with Japan's evolution over the past four decades. In the late 1970s, when China started to reform and to open up to the rest of the world, Japan was Asia's economic power. Then, following the arrival of Japanese animé to China, Japan was the "Kingdom of Animé." In more recent years, China's neighbor has become a "shopping paradise" which attracts some six and half million visiting consumers each year.
These days, however, the Japanese don't look at their country and see this same happy, pleasant place. Instead, Japan's own sense of itself is increasingly dominated by the anxiety of a not-so-distant future where the country will become a so-called "ghost civilization." Indeed, the term "ghost city" has quietly become a popular Japanese reference.
A few days ago, a friend who works as an executive for a large company based on the northern island of Hokkaido came to visit me in Tokyo. Over dinner, he laid out his "Hokkaido collapse theory." He explained how originally only the Ainu people and animals lived in Hokkaido. But after the Meiji Restoration in 1868, the Japanese started to immigrate there. "Now," he said, "while the Meiji Restoration marks its 150th anniversary next year, Hokkaido's population is continuously falling." My friend concluded by saying that if this continues, Hokkaido will collapse and become a "ghostdo," a ghost city.
Yubari City, one of Hokkaido's important industrial towns, once had a population of 120,000 people. Today, it's only 7,000. Only Sapporo, the capital of Hokkaido, has not seen its population fall in recent years. All other cities in the region have experienced a drastic demographic depression.
I can recall the amazing things I had heard and experienced on my visit to the island two years ago.
One night, after dining with the mayor of Hokkaido City, we took a cab to the Noboribetsu Hot Spring Resort, a 15-minute drive at a normal driving speed. But our trip that night took 40 minutes because we were only driving 20-30 kilometers per hour.
It was nighttime. There were few cars on the wide highway. The taxi driver explained why he was going below the speed limit: "This area used to have a large population. Now the population has become scarce, so bears and foxes often come down from the mountains. These animals often rush to the roads so I'm obliged to drive slowly." When I recounted this story to my visiting friend from Hokkaido, he told me with a wry smile: "Just the other day, I ran into a deer!"
In fact, the ghost-civilization is not unique to Hokkaido. Last month, the Okawa Village of Kochi Prefecture located on rural Shikoku Island was obliged, in an unprecedented move, to abolish its village council. It's said that due to a dramatic demographic decrease the council could no longer operate. Now, the 350 adults living in the village simply have to gather directly to discuss the village's affairs. Like Athens in ancient times, Okawa Village is returning to the purest form of democracy.
According to Japan's National Institute of Population and Social Security Research, by 2040, most of the country's smaller cities will see a dramatic drop of one-third to one-half of their population. Certain metropolises that look like they're bustling today are going to be turned into ghost cities tomorrow. Japan's overall population of 126 million is projected to drop to 80 million in the next three decades.
If I were a young person living in Japan, I'd probably leave my own country
Behind these statistics is the monumental challenge of Japan's aging society. When the population falls to 80 million, about 35 million of those will be older than 65 years old. Since the government considers 15-65 year olds to comprise the labor force, one laborer will have to support one elderly person in the future.
One Japanese sociologist has predicted that the social system in Japan can't possibly be maintained unless personal income tax is doubled to 90%. If I were a young person living in 2040, I'd probably leave my own country. Alternatively, a movement demanding a lower income tax may arise. By this time, fighting in the Japanese parliament will switch from being between the ruling Liberal Democratic Party and the opposition Democratic Progressive Party to being between the ruling elderly and the younger opposition. In brief, Japan is awaiting a turbulent era.
Japan currently has 8 million empty housing units. Because young people normally don't live with their parents, children inherit an additional house or apartment when their parents die. In the past, children would have earned a substantial income by selling the property, but it is a buyer's market now and people are holding on to their properties.
In Japan, a mass of empty houses can't be sold. An hour's drive from Tokyo, rows of apartments stand almost completely uninhabited. Predictions suggest that in 15 years Japan will have 20 million empty houses.
While in China, the number of restaurants has been increasing over the past 25 years, Japan is heading in the opposite direction. Restaurants have decreased from 850,000 in 1990 to 350,000 today. In the same period, Japanese wine bars, once quite popular, have dropped from 250,000 to 50,000. The sharp drop in the number of Japan's restaurants and bars points to a drying up of vigor and vitality.
China should heed the lesson of Japan's ghost-civilization. China has a total number of elderly that is equal to the whole population of Japan, and it is still growing. Japan became rich before becoming an aging society whereas China is aging before spreading its wealth. Indeed, China's future demographic problems may be much worse than Japan has ever faced.
Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.
SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.
The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.
It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.
Seoul housing prices top London and New York
In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.
According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.
Average home loans are equivalent to 270% of annual income.
One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.
According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.
Playing the stock market
At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.
A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."
In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.
42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s
Game of survival
In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.
But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.
This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.
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