The US ambassador to Tokyo, Mr Tom Foley, who is something of a crusader for deregulation in Japan, says former pessimists now share his "innate belief" in the recovery of the Japanese economy.
"I'm struck by the fact that a year ago it was very hard for me to find in the international financial community, with their highly paid experts and forecasters, anyone optimistic about the Japanese economy," he said in an interview in the US embassy in Tokyo.
"It was a kind of a contest of pessimism when you got several of them in a dinner party or at a reception. Now it's become dramatically different.
"Japan is a very large and complex economy, so a lot of things are happening at the same time. I think it is a little difficult to say in absolute terms that everything is improving or everything is not improving. There are still areas of the Japanese economy that are stagnant; there are other areas where there is some visible progress.
"The Japanese, with our urging but for their own purposes, have stimulated the economy with very large infusions of public money. They stabilised the bank sector, the Japanese premium has disappeared; there is the beginning of restructuring of Japanese corporations, including banking.
"Investment is improving. The unemployment level is still high and consumer confidence and consumption are still marginal. There are a lot of different sectors of the Japanese economy that are moving backwards or are not moving. There are differences about the speed of the Japanese recovery.
"It's our strong view, and we've been criticised for expressing it, that the structural changes that need to be taken in Japan cannot happen too fast.
"It is absolutely critical that the investment climate be improved for foreign direct investment in Japan. The very heavy infusion of government funds - macro-economic stimulation - cannot continue for ever and the private sector needs to take up the burden of the Japanese recovery and that for us means foreign competition."
Mr Foley, a former Speaker of the US House of Representatives, is pressing hard for a lowering of interconnection rates in telecommunications, which he says are three to four times the OECD standard, inhibiting both foreign and Japanese firms from entering the market. The US government has asked for 41 per cent reduction this year.
"It's our top priority for deregulation, followed by pharmaceuticals, medical supplies, housing, energy, agriculture, insurance, automobiles and automobile parts," he said.
The so-called big bang in financial services is the best example of successful deregulation in Japan, Mr Foley said, and was providing many foreign companies with new opportunities for financial services in Japan that were not possible before.
He dismissed the notion - entertained by some Japanese - that the US feared a resurgent Japan.
"That's absolutely wrong because in the first case our trade problems occur not because the Japanese are flooding the United States with products, except in steel - that is not then a major problem.
"But, it is a problem that we cannot export to Japan, not only because there are still some restrictions and still some trade barriers, but more commonly because the Japanese economy is in recession. It's hard to sell American cars in Japan when the Japanese aren't selling Japanese cars in Japan.
"For us the most important thing is whether the momentum of recovery will continue. We clearly see that recovery occurring; it is slow but it can be faster and it can reach levels that are higher."
:quality(70)/cloudfront-eu-central-1.images.arcpublishing.com/irishtimes/VR3765MFOBH2NMV2QNICYDF67M.png)