Japan is entering a new era, literally, on Wednesday. The Reiwa period began as of the stroke of midnight. Crown Prince Naruhito became Emperor Naruhito, seated atop the Chrysanthemum Throne, as his father, Akihito, abdicated due to age and infirmity.
Naruhito, 59, is the first Japanese ruler born after World War II. He has also lived as a "regular person" -- there are shock reports that at one point he did his own laundry. So there's optimism that he can bring some new ideas and continue Japan's current resurgence. Investors should hope that sunnier outlook is sustained.
The Heisei Era that ended as Akihito, 85, stepped down was a time of peace but had plenty of disaster. Most notably there was the 1995 Great Hanshin earthquake that killed 6,434 people and destroyed much of the port city of Kobe. Then there was the 2011 Tohoku earthquake and resulting tsunami that caused the Fukushima Daiichi nuclear disaster and lead to a casualty count of 18,430 dead or missing. The emperor was the face of consolation, immediately visiting the bereft and bereaved.
For those outside Japan, it was most notable as a time of economic stagnation. Akihito ascended to the throne in 1989, right as another era in Japan, that of the economic and property bubble, deflated. For the vast majority of Akihito's rule, Japan has been trying to re-find itself economically.
It appears, just as the new ruler takes his seat, to have found its feet. The Topix index of all major stocks in Japan has more than doubled since October 2012. What's more, business surveys largely point to optimism, industry is spending on capital investment, and investor-friendly reform is creeping in at the edges in terms of corporate governance. There might even, soon, be a glimmer of inflation to encourage economic activity.
Naruhito will be the figurehead as Japan determines how to live in an Asia increasingly dominated by China. Naruhito's first words as emperor were to thank his father for being such a good example, and to pledge to "always think of the people and work on improving myself." He also said he hoped for "the happiness of the people, a more prosperous nation and world peace."
It is perhaps revealing that he spoke of self-improvement and economic advance. Naruhito, whose grandfather Hirohito was Japan's war-time emperor, becomes the first Japanese emperor to have studied abroad. He attended Oxford in the 1980s, supplementing his education at the private Gakushuin University that traditionally educates Japan's royalty. Naruhito, who wrote a thesis about the Thames River in the 18th century while at Oxford, has shown an interest in environmental issues.
Japan's royals are forbidden from political statements, and even Naruhito's speeches today were vetted by the government. Prime Minister Shinzo Abe just met last Friday with U.S. President Donald Trump. Abe appears intent on preserving Japan's "special relationship" with the United States, even as Trump has pulled the nation away from its international role in economics and as a peacekeeper in Asia.
Abe invited Trump and his wife, Melania, to a state visit from May 25 to 28. That means they will be the first heads of state to meet the new emperor in the Reiwa age. Emperor Naruhito will also have a crowning ceremony in October that many heads of state will attend.
On Wednesday, Emperor Naruhito participated in a ceremony to accept the privy seals of Japan as well as two of Japan's three "Sacred Treasures." The sword Kusanagi is a symbol of valor. The comma-shaped jade jewel, Yasakani no Magatama, is a symbol of benevolence. Or at least he accepted packages said to contain them. Only the emperor and the most-senior priests have ever seen the real items. These two of Japan's three "Sacred Treasures" are protected by Shinto monks. The Yata no Kagami mirror, which represents wisdom, remains at the Ise Grand Shrine, the most-important Shinto sanctuary.
Akihito is now "emperor emeritus" and plans to withdraw from public life. He has always been soft-spoken. True to form for a man who repeatedly expressed "deep remorse" for Japan's wartime past, he said as he stepped down on Tuesday that he and his wife would "pray our country and people around the world will experience peace and happiness" in the Reiwa period. He said he is "deeply grateful to the Japanese people, who have supported and accepted me as a symbol."
It remains to be seen if his son will continue his father's example, serving mainly as a figure of solace and consolation, or if he will be more of a social compass, a symbol of Japan's future. It's notable that his era's name, chosen by a panel of experts and vetted by the government, is the first to come from a Japanese classical tome. All the previous ones took their name from Chinese literature.
The character for "rei" means "auspicious," while "wa" means "peace" or "harmony." Although the words come from a poem about the beauty of plum blossoms, the character for "rei" can also mean "order" or "command." Some commentators have suggested this may have a more nationalistic subtext, approved by the Abe administration.
The role of the emperor has been purely ceremonial in Japan since World War II. Prior to that, monarchs had absolute power, considered direct descendants of the sun goddess Amaterasu. But the ruler still retains gravitas, the figurehead of the nation, first succor on hand in times of disaster and need.
Naruhito will also oversee a country that is aging and shrinking in population. Its 126 million population now is forecast to fall below 100 million by 2053. Prime Minister Abe has made half-hearted attempts at policies to encourage immigration and to encourage women to enter the work force. But they have only partially worked, in a country where it's rare for men to do much about the house. Many women, when they do return, work part-time.
So the role of Naruhito's wife, Empress Masako, will be very important. She is educated at Harvard and Oxford and was pursuing a promising career in the foreign ministry as a diplomat before she got married.
Masako has been diagnosed with an "adjustment disorder," a condition related to depression, and has been a sheltered presence since the birth of her daughter in 2001. She has, by many reports, felt great pressure to produce a male heir. The couple's only child, their daughter Aiko, is now 17. If and when the new emperor dies, or himself steps down, the throne would pass first to his brother, Akishino, who is 53, and then that brother's son, Hisahito, now 12.
There have been moves to change Japan's constitution to allow females to inherit the throne. There are also moves to adapt the constitution to allow Japan to have armed forces, rather than the "Self-Defense Forces" it has now. Naruhito will contend with these decisions.
Many Japanese people have expressed great hope and optimism that Emperor Naruhito will inject new life into the role of monarch. Perhaps, like Britain's royals, he will humanize his position and family, in keeping with our privacy-free era. We can only hope that Japan continues to be an important economic and peaceful presence in Asia, and that the Reiwa era is one of innovation and advance.