Toward a Kinder, Gentler Japan : Trade: A Japanese ministry decided that the best way to patch up its image across the world is to begin at home.

The Ministry of International Trade and Industry, acknowledging that Japan’s economic might is stirring “growing anxiety, even fear, in the international community,” pledged Thursday to switch the focus of its policies in the 1990s from promoting production to producing a better life for the Japanese people.

Japan, the ministry said, must reform its domestic systems and ways of doing business to bring them into “better harmony with the rest of the world” and make them more “transparent” to ease fears of the country’s economic power.

The new policy was spelled out in the fourth of MITI’s now famous “visions,” a report that the Industrial Structure Council presented to Kabun Muto, Minister of International Trade and Industry. The council was set up by MITI but consists of outside experts and intellectuals. MITI officials worked with the group for more than a year in preparing the report, and its submission Thursday constituted MITI’s approval.

The 10-year visions for industrial policy have been announced at the beginning of each decade since 1960.

This year’s report marked what the Yomiuri newspaper called a historical departure from more than 120 years of promoting national wealth and economic strength.

Economic success, the MITI council acknowledged, was “accomplished by emphasizing growth and production over human issues.” But now, it added, that approach must be replaced with a “human-oriented international trade and industrial policy.”

Average Japanese, the report said, are increasingly aware of “the gap between their own sense of fulfillment and the success of Japan as an economic power.”

“We regret that Japan put too much emphasis on business in the past decades and has failed to contribute to the well-being of the people,” said Kunio Morikiyo, director of planning at MITI’s secretariat.

The report gave rousing support to demands that the United States made to Japan in the Structural Impediments Initiative talks, the centerpiece of President Bush’s economic policy toward Japan. Just a week ago, American and Japanese negotiators completed a final SII report after a year of negotiations.

Echoing arguments made by American negotiators but without identifying them as such, the report called for reducing Japanese prices of goods and services to “international levels.” Regulations that protect production and distribution systems must be abolished, the document said.

The report also backed American demands for reform in land taxation, regulations on size of buildings, controls on the use of land and rental laws.

“The expanding bubble of land prices is a threat to stability which cannot be ignored,” the council warned. Land-price inflation, it said, is increasing disparities in wealth, distorting competition and threatening to “sap Japan’s economic vitality.”

The ministry also urged that private funds flowing overseas should be used to finance public works, and it echoed American charges that Japan “lags behind” in roads, sewers, parks and recreational facilities.

The report also criticized a slackening of efforts to achieve a government goal of reducing average working hours to 1,800 a year by March, 1993, and warned that achievement will become even more difficult when demographic changes tighten the labor supply in the late 1990s. In 1989, average annual working hours totaled 2,076, about 200 more than in the United States.

For the first time, the “vision” report put MITI solidly behind a greater role for women in Japan’s labor force. It predicted that more women will “seek work to achieve greater personal fulfillment” in the 1990s and called for more day-care facilities to raise the low ratio of women who return to work after childbirth.

“Under-utilized abilities of women” must be corrected to alleviate a tightening labor supply, the report said. Women’s insight also is needed to promote corporate activities centered on consumers, it added.

Men and women, MITI said, must “cooperate and share domestic tasks such as housekeeping, child-rearing and care for the elderly that until now have fallen mostly on women.”

The MITI council also said the Japanese government should double its funding of research and development to about 1% of gross national product by the year 2000. By comparison, the U.S. government now spends 1.2% of the American GNP on research, much of it in the defense industry.

The report called for Japan, through foreign aid, to “emulate the role the United States played in world development after World War II,” to combat “techno-nationalism” with “techno-globalism” by transferring technology abroad, to develop technology to combat global environmental problems and to expand imports of manufactured goods “to establish Japan as an important market for other countries.”