Japan stands accused of purveying a defective developmental state model of
growth to the East Asian states which was responsible for the onset of the
currency crises from 1997 onwards, and then of failing to provide the neces
sary leadership for the stabilization and recovery of the region. Japan's p
osition of economic dominance and its nascent political leadership role in
East Asia are now seen to be under attack. However, this article argues tha
t over the longer term Japan is continuing to exercise considerable covert
economic and political leadership in the region. Examination of Japanese po
licy makers' perceptions of the East Asian crisis reveals that they see the
region as hit above all by currency crises which have transmuted into econ
omic ones, but that the model of export and DFI-powered growth in the regio
n is still fundamentally sound. Japanese policy makers contend that Japan i
s not responsible for the occurrence of the crises, nor are the USA- and IM
F-prescribed solutions likely to hold the key to the restoration of growth
in East Asia. Instead, they quietly lay the blame for the crises upon China
for undercutting the competitiveness of East Asian exports and moving ahea
d of the ASEAN-4 in the regional production cycle. Hence, Japanese policy,
as manifested in the New Miyazawa Initiative, has concentrated upon regeari
ng existing developmental models, and has gradually begun to restore a meas
ure of confidence in Japanese economic leadership and to set the agendas of
both the USA and multilateral institutions towards the crises.