The death of Emperor Hirohito in January 1989 brought to an end the longest imperial reign in Japanese history, removing a powerful symbol of continuity. In November 1990 Emperor Akihito became the 125th emperor of Japan and the first under the post-war constitution.
The start of the Heisei era coincided inauspiciously with the onset of economic recession. Over the preceding decades, thanks to close co-operation between government and industry, a strong work ethic, mastery of high technology and a comparatively small defence allocation, Japan had developed into one of the world's largest economies. Already the largest supplier of automobiles, washing machines and watches, Japan had emerged in the late 1980s as the second largest overseas aid donor and a leader in biotechnology-related fields.
However, in 1989 over-investment, coupled with domestic policies intended to counter the effects of speculation in the stock and real estate markets, brought a stock market crash which signalled the end of the so-called 'bubble economy' and ushered in a decade of stagnant economic growth.
With recession came political change - in 1993 the LDP lost power for the first time in four decades to a coalition of opposition parties. Although it has since won several elections and is currently the party of government under Prime Minister Shinzo Abe, the LDP has in recent years lost considerable ground to the opposition Democratic Party of Japan, indicating that after decades of one-party rule Japan has evolved into a two-party democracy.
The Great Hanshin Earthquake of January 1995 devastated a large area of southern Hyogo Prefecture around Kobe City, taking the lives of 6,433 people. Two months later members of the Aum Shinrikyo cult planted bags of sarin nerve gas on the Tokyo subway, killing 12 and injuring 5,500 others.
Over the past decade government efforts to revive economic growth have met with limited success, and these were further hampered in 2000 to 2001 by the slowing of the global economy. However, since 2005 the Japanese economy has begun to show clear signs of recovery.
Today Japan continues to maintain close economic and military relations with its key ally the United States, foreign policy as before hinging on the US-Japan security alliance.
Japan is a member-state of the United Nations and currently serves as a non-permanent Security Council member. It is also a member of the G8, APEC, 'ASEAN plus three', and ASEM.
Japan is involved in an ongoing dispute with North Korea over its abduction of Japanese citizens, its missile programmes and its nuclear intentions. Japan is also involved in several territorial disputes with its neighbours concerning the control of outlying islands.
Controversially, the past 10 years have witnessed Japan's re-emergence as a military power. A proposal during the Gulf War of 1993 by Prime Minister Toshiki Kaifu to create a UN peace co-operation corps that could be sent abroad in response to resolutions from the United Nations (something expressly forbidden by Article 9 of the 1947 constitution) sparked a political crisis. Ultimately Japan, a major importer of Middle East oil, played no military role in that particular conflict, although it did pledge billions of dollars to the war effort and also sent mine sweepers after war as a part of the reconstruction effort. However, in 2004 Junichiro Koizumi's cabinet sent a 600-strong contingent of Japan Self-Defence Forces to Iraq at the request of the USA, in order to assist the US-led occupation. This controversial deployment marked a significant turning point in Japan's history and its legality is hotly contested on the domestic front.
