Heisei period

Corruption scandals and economic discontent broke the Liberal Democratic Party's hold on power in 1993, when a coalition under Hosokawa Morihiro formed the first non-LDP government since 1955. Its electoral reform of 1994 replaced multi-member districts with a mix of single-member constituencies and proportional representation. The LDP soon returned to power in coalitions, and under Prime Minister Koizumi Jun'ichirō (2001–2006) pursued market reforms including the privatisation of the postal service. In 2009 the Democratic Party of Japan won a landslide and governed until 2012, the first full change of government by election in postwar history.

Japan's international role expanded. A law of 1992 allowed the Self-Defence Forces to join UN peacekeeping operations, beginning in Cambodia. Official statements addressed the war's legacy: the Kōno Statement of 1993 acknowledged the involvement of the military in the 'comfort women' system, and Prime Minister Murayama Tomiichi's statement on the fiftieth anniversary of the war's end in 1995 expressed 'deep remorse' and a 'heartfelt apology' for colonial rule and aggression. Security legislation passed in 2015 allowed limited collective self-defence, a controversial reinterpretation of Article 9.

The Nikkei stock index peaked at the end of 1989, and land prices began a long fall from 1991. Banks were left with huge non-performing loans; the failures of Hokkaidō Takushoku Bank and Yamaichi Securities in 1997 and of two long-term credit banks in 1998 marked the height of the financial crisis, and public funds were used to recapitalise the banking system. Deflation set in from the late 1990s.

Companies cut costs, relocated production to China and Southeast Asia and hired more non-regular workers, eroding the model of lifetime employment for a growing share of the workforce. The global financial crisis of 2008 and the 2011 disaster hit exports hard. From 2012 the government's 'Abenomics' combined aggressive monetary easing, fiscal stimulus and structural reform. Despite stagnation, Japan remained a wealthy society with low unemployment, high life expectancy and world-leading firms in manufacturing, robotics and materials.

The birth rate stayed well below replacement level, and Japan's population began to decline in the late 2000s, making it one of the oldest societies in the world. Rural depopulation accelerated, while Tokyo continued to grow. Women's participation in the workforce rose, but gender gaps in pay and leadership remained large. Foreign residents increased steadily, and a law passed in 2018 created new visa categories for foreign workers.

In 2008 the Diet formally recognised the Ainu as an indigenous people, and in April 2019, days before the end of the era, a law promoting Ainu culture and prohibiting discrimination was enacted. The number of international visitors grew several times over in the 2010s, as Japan promoted tourism and relaxed visa rules.

On 17 January 1995 the Great Hanshin-Awaji Earthquake, of magnitude 7.3, struck Kobe and the surrounding area, killing more than 6,400 people and exposing weaknesses in building codes and emergency response; it also saw a wave of volunteering that is credited with the birth of modern civil society in Japan. Two months later, on 20 March 1995, members of the Aum Shinrikyō cult released sarin gas on the Tokyo subway, killing fourteen people and injuring thousands.

On 11 March 2011 the Great East Japan Earthquake, of magnitude 9.0, and its tsunami devastated the Pacific coast of Tohoku, leaving more than 18,000 dead and missing, and caused meltdowns at the Fukushima Daiichi nuclear power plant. It was the most destructive disaster in postwar Japan and led to a profound reassessment of nuclear power.

The Aum Shinrikyō attack led to a revision of the Religious Corporations Law in 1995, increasing state oversight of religious organisations, and deepened public suspicion of new religious movements. Participation in organised religion declined, although customs such as New Year shrine visits, Buddhist funerals and seasonal festivals remained widespread. Temples in depopulating rural areas faced a growing crisis of succession and funding.

Heisei was the era in which Japanese popular culture became global. Anime films by Miyazaki Hayao – Spirited Away won the Academy Award for Best Animated Feature in 2003 – and franchises such as Pokémon, launched in 1996, found audiences worldwide, as did manga, video games from Nintendo and Sony, and J-pop. The government adopted the 'Cool Japan' label to promote these industries abroad. Japanese food, from sushi to ramen, spread internationally, and washoku was added to UNESCO's list of intangible cultural heritage in 2013.

In literature, Ōe Kenzaburō received the Nobel Prize in 1994, and Murakami Haruki became one of the most widely translated authors in the world. Japan hosted the Nagano Winter Olympics in 1998 and co-hosted the FIFA World Cup with South Korea in 2002.

In a video message in August 2016 Emperor Akihito, then 82, indicated that age might soon prevent him from fulfilling his duties. Since the Imperial Household Law made no provision for abdication, the Diet passed a special one-time law in 2017. Akihito abdicated on 30 April 2019 – the first abdication since Emperor Kōkaku in 1817 – and Crown Prince Naruhito succeeded the next day, opening the Reiwa era.

Heisei is often remembered as a time of lost confidence after the triumph of the 1980s, but historians increasingly also emphasise its stability and adaptation: Japan remained peaceful, prosperous and democratic while confronting problems – ageing, stagnation, disasters – that other developed countries would face later. Emperor Akihito's reign, with its emphasis on reconciliation, closeness to disaster victims and the constitution, defined the modern image of the symbolic monarchy.