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A Paleolithic culture around 30,000 BC constitutes the first known habitation of Japan. This was followed from around 14,000 BC (the start of the Jōmon period) by a Mesolithic to Neolithic semi-sedentary hunter-gatherer culture, who include ancestors of both the contemporary Ainu people and Yamato people, characterized by pit dwelling and rudimentary agriculture. Decorated clay vessels from this period are some of the oldest surviving examples of pottery in the world. Around 300 BC, the Yayoi people began to enter the Japanese islands, intermingling with the Jōmon. The Yayoi period, starting around 500 BC, saw the introduction of practices like wet-rice farming, a new style of pottery, and metallurgy, introduced from China and Korea.
The Japanese first appear in written history in the Chinese Book of Han. According to the Records of Three Kingdoms, the most powerful kingdom on the archipelago during the 3rd century was called Yamataikoku. Buddhism was first introduced to Japan from Baekje, but the subsequent development of Japanese Buddhism was primarily influenced by China. Despite early resistance, Buddhism was promoted by the ruling class and gained widespread acceptance beginning in the Asuka period (592–710).
The Nara period (710–784) of the 8th century marked the emergence of a strong Japanese state, centered on an imperial court in Heijō-kyō (modern Nara). The Nara period is characterized by the appearance of a nascent literature as well as the development of Buddhist-inspired art and architecture. The smallpox epidemic of 735–737 is believed to have killed as much as one-third of Japan's population. In 784, Emperor Kammu moved the capital from Nara to Nagaoka-kyō before relocating it to Heian-kyō (modern Kyoto) in 794.
Byōdō-in (1053) is a temple of Pure Land Buddhism. It was registered to the UNESCO World Heritage Site.
This marked the beginning of the Heian period (794–1185), during which a distinctly indigenous Japanese culture emerged, noted for its art, poetry and prose. Lady Murasaki's The Tale of Genji and the lyrics of Japan's national anthem Kimigayo were written during this time.
Buddhism began to spread during the Heian era chiefly through two major sects, Tendai by Saichō, and Shingon by Kūkai. Pure Land Buddhism greatly becomes popular in the latter half of the 11th century.
Japan's feudal era was characterized by the emergence and dominance of a ruling class of warriors, the samurai. In 1185, following the defeat of the Taira clan, sung in the epic Tale of Heike, samurai Minamoto no Yoritomo was appointed shogun and established a base of power in Kamakura. After his death, the Hōjō clan came to power as regents for the shoguns. The Zen school of Buddhism was introduced from China in the Kamakura period (1185–1333) and became popular among the samurai class. The Kamakura shogunate repelled Mongol invasions in 1274 and 1281, but was eventually overthrown by Emperor Go-Daigo. Go-Daigo was himself defeated by Ashikaga Takauji in 1336.
Ashikaga Takauji establishes the shogunate in Muromachi, Kyoto. It is a start of Muromachi Period (1336–1573). The Ashikaga shogunate receives glory in the age of Ashikaga Yoshimitsu, and the culture based on Zen Buddhism (art of Miyabi) has prospered. It evolves to Higashiyama Culture, and has prospered until the 16th century. On the other hand, the succeeding Ashikaga shogunate failed to control the feudal warlords (daimyo), and a civil war (the Ōnin War) began in 1467, opening the century-long Sengoku period ("Warring States").
During the 16th century, traders and Jesuit missionaries from Portugal reached Japan for the first time, initiating direct commercial and cultural exchange between Japan and the West. Oda Nobunaga conquered many other daimyo using European technology and firearms; after he was assassinated in 1582, his successor Toyotomi Hideyoshi unified the nation in 1590. Hideyoshi invaded Korea twice, but following defeats by Korean and Ming Chinese forces and Hideyoshi's death, Japanese troops were withdrawn in 1598. This age is called Azuchi-Momoyama Period (1573–1603).
Tokugawa Ieyasu served as regent for Hideyoshi's son and used his position to gain political and military support. When open war broke out, he defeated rival clans in the Battle of Sekigahara in 1600. Ieyasu was appointed shogun in 1603 and established the Tokugawa shogunate at Edo (modern Tokyo). The Tokugawa shogunate enacted measures including buke shohatto, as a code of conduct to control the autonomous daimyo; and in 1639, the isolationist sakoku ("closed country") policy that spanned the two and a half centuries of tenuous political unity known as the Edo period (1603–1868). The study of Western sciences, known as rangaku, continued through contact with the Dutch enclave at Dejima in Nagasaki. The Edo period also gave rise to kokugaku ("national studies"), the study of Japan by the Japanese.
On March 31, 1854, Commodore Matthew Perry and the "Black Ships" of the United States Navy forced the opening of Japan to the outside world with the Convention of Kanagawa. Subsequent similar treaties with Western countries in the Bakumatsu period brought economic and political crises. The resignation of the shogun led to the Boshin War and the establishment of a centralized state nominally unified under the Emperor (the Meiji Restoration). Adopting Western political, judicial and military institutions, the Cabinet organized the Privy Council, introduced the Meiji Constitution, and assembled the Imperial Diet. The Meiji Restoration transformed the Empire of Japan into an industrialized world power that pursued military conflict to expand its sphere of influence. After victories in the First Sino-Japanese War (1894–1895) and the Russo-Japanese War (1904–1905), Japan gained control of Taiwan, Korea, and the southern half of Sakhalin. Japan's population grew from 35 million in 1873 to 70 million in 1935.
The Meiji Emperor (1868–1912), in whose name imperial rule was restored at the end of the Tokugawa shogunate.
The early 20th century saw a brief period of "Taishō democracy" overshadowed by increasing expansionism and militarization. World War I enabled Japan, on the side of the victorious Allies, to widen its influence and territorial holdings. It continued its expansionist policy by occupying Manchuria in 1931; as a result of international condemnation of this occupation, Japan resigned from the League of Nations two years later. In 1936, Japan signed the Anti-Comintern Pact with Nazi Germany, and the 1940 Tripartite Pact made it one of the Axis Powers. In 1941, Japan negotiated the Soviet–Japanese Neutrality Pact.
The Empire of Japan invaded other parts of China in 1937, precipitating the Second Sino-Japanese War (1937–1945). In 1940, the Empire then invaded French Indochina, after which the United States placed an oil embargo on Japan. On December 7, 1941, Japan attacked the US naval base at Pearl Harbor and declared war, bringing the US into World War II. After the Soviet invasion of Manchuria and the atomic bombings of Hiroshima and Nagasaki in 1945, Japan agreed to an unconditional surrender on August 15. The war cost Japan and the rest of the Greater East Asia Co-Prosperity Sphere millions of lives and left much of the nation's industry and infrastructure destroyed. The Allies (led by the US) repatriated millions of ethnic Japanese from colonies and military camps throughout Asia, largely eliminating the Japanese empire and restoring the independence of its conquered territories. The Allies also convened the International Military Tribunal for the Far East on May 3, 1946 to prosecute some Japanese leaders for war crimes. However, the bacteriological research units and members of the imperial family involved in the war were exonerated from criminal prosecutions by the Supreme Allied Commander despite calls for trials for both groups.
In 1947, Japan adopted a new constitution emphasizing liberal democratic practices. The Allied occupation ended with the Treaty of San Francisco in 1952 and Japan was granted membership in the United Nations in 1956. Japan later achieved rapid growth to become the second-largest economy in the world, until surpassed by China in 2010. This ended in the mid-1990s when Japan suffered a major recession. In the beginning of the 21st century, positive growth has signaled a gradual economic recovery. On March 11, 2011, Japan suffered the strongest earthquake in its recorded history; this triggered the Fukushima I nuclear accidents, one of the worst disasters in the history of nuclear power.
Japan has a total of 6,852 islands extending along the Pacific coast of Asia. The country, including all of the islands it controls, lies between latitudes 24° and 46°N, and longitudes 122° and 146°E. The main islands, from north to south, are Hokkaidō, Honshū, Shikoku and Kyūshū. The Ryūkyū Islands, including Okinawa, are a chain to the south of Kyūshū. Together they are often known as the Japanese Archipelago. About 73 percent of Japan is forested, mountainous, and unsuitable for agricultural, industrial, or residential use. As a result, the habitable zones, mainly located in coastal areas, have extremely high population densities. Japan is one of the most densely populated countries in the world.
The islands of Japan are located in a volcanic zone on the Pacific Ring of Fire. They are primarily the result of large oceanic movements occurring over hundreds of millions of years from the mid-Silurian to the Pleistocene as a result of the subduction of the Philippine Sea Plate beneath the continental Amurian Plate and Okinawa Plate to the south, and subduction of the Pacific Plate under the Okhotsk Plate to the north. Japan was originally attached to the eastern coast of the Eurasian continent. The subducting plates pulled Japan eastward, opening the Sea of Japan around 15 million years ago. Japan has 108 active volcanoes. Destructive earthquakes, often resulting in tsunami, occur several times each century. The 1923 Tokyo earthquake killed over 140,000 people. More recent major quakes are the 1995 Great Hanshin earthquake and the 2011 Tōhoku earthquake, a 9.0-magnitude quake which hit Japan on March 11, 2011, and triggered a large tsunami.
Some of the structural features for Japan's economic growth developed in the Edo period, such as the network of transport routes, by road and water, and the futures contracts, banking and insurance of the Osaka rice brokers. During the Meiji period from 1868, Japan expanded economically with the embrace of the market economy. Many of today's enterprises were founded at the time, and Japan emerged as the most developed nation in Asia. The period of overall real economic growth from the 1960s to the 1980s has been called the Japanese post-war economic miracle: it averaged 7.5 percent in the 1960s and 1970s, and 3.2 percent in the 1980s and early 1990s. Growth slowed markedly in the 1990s during what the Japanese call the Lost Decade, largely because of the after-effects of the Japanese asset price bubble and domestic policies intended to wring speculative excesses from the stock and real estate markets. Government efforts to revive economic growth met with little success and were further hampered by the global slowdown in 2000. The economy showed strong signs of recovery after 2005; GDP growth for that year was 2.8 percent, surpassing the growth rates of the US and European Union during the same period.
As of 2011, Japan is the third largest national economy in the world, after the United States and China, in terms of nominal GDP, and the fourth largest national economy in the world, after the United States, China and India in terms of purchasing power parity. As of January 2011, Japan's public debt was more than 200 percent of its annual gross domestic product, the largest of any nation in the world. In August 2011, Moody's rating has cut Japan's long-term sovereign debt rating one notch from Aa3 to Aa2 inline with the size of the country's deficit and borrowing level. The large budget deficits and government debt since the 2009 global recession and followed by earthquake and tsunami in March 2011 made the rating downgrade. The service sector accounts for three quarters of the gross domestic product. Japan has a large industrial capacity, and is home to some of the largest and most technologically advanced producers of motor vehicles, electronics, machine tools, steel and nonferrous metals, ships, chemical substances, textiles, and processed foods. Agricultural businesses in Japan cultivate 13 percent of Japan's land, and Japan accounts for nearly 15 percent of the global fish catch, second only to China. As of 2010, Japan's labor force consisted of some 65.9 million workers. Japan has a low unemployment rate of around four percent. Almost one in six Japanese, or 20 million people, lived in poverty in 2007. Housing in Japan is characterized by limited land supply in urban areas.
Japan's exports amounted to US$4,210 per capita in 2005. Japan's main export markets are China (18.88 percent), the United States (16.42 percent), South Korea (8.13 percent), Taiwan (6.27 percent) and Hong Kong (5.49 percent) as of 2009. Its main exports are transportation equipment, motor vehicles, electronics, electrical machinery and chemicals. Japan's main import markets as of 2009 are China (22.2 percent), the US (10.96 percent), Australia (6.29 percent), Saudi Arabia (5.29 percent), United Arab Emirates (4.12 percent), South Korea (3.98 percent) and Indonesia (3.95 percent). Its main imports are machinery and equipment, fossil fuels, foodstuffs (in particular beef), chemicals, textiles and raw materials for its industries. By market share measures, domestic markets are the least open of any OECD country. Junichiro Koizumi's administration began some pro-competition reforms, and foreign investment in Japan has soared.
Japan ranks 12th of 178 countries in the 2008 Ease of Doing Business Index and has one of the smallest tax revenues of the developed world. The Japanese variant of capitalism has many distinct features: keiretsu enterprises are influential, and lifetime employment and seniority-based career advancement are relatively common in the Japanese work environment. Japanese companies are known for management methods like "The Toyota Way", and shareholder activism is rare. Some of the largest enterprises in Japan include Toyota, Nintendo, NTT DoCoMo, Canon, Honda, Takeda Pharmaceutical, Sony, Panasonic, Toshiba, Sharp, Nippon Steel, Nippon Oil, and Seven & I Holdings Co. It has some of the world's largest banks, and the Tokyo Stock Exchange (known for its Nikkei 225 and Topix indices) stands as the second largest in the world by market capitalization. Japan is home to 326 companies from the Forbes Global 2000 or 16.3 percent (as of 2006).