The following is a transcript of an interview with Shinzo Abe, Japanese prime minister, by David Pilling, the FT’s Tokyo bureau chief.

Financial Times: You are the first Japanese prime minister born since the war. There are still some issues hanging over from the war. Do you think your premiership will be one in which Japan becomes, in a sense, a normal country, with a normal constitution, a normal military with a normal – perhaps a less apologetic – sense of its own history?

Shinzo Abe: Sixty years ago as a result of the war, Japanese people themselves suffered damage and also caused tremendous damage to many people in Asia. Taking those lessons to heart, Japan has travelled through those 60 years defending and protecting freedom and democracy as well as basic human rights, and as such has contributed to world peace.

On the conviction that Japanese people should themselves write a constitution that befits the new age of the 21st century, I judge that it is incumbent upon us to exercise leadership and put the constitution amendment on the political agenda.

There are three reasons by which I judge we need to revise the Japanese constitution. The first is that the current constitution was written before Japan became independent after the war. The second point is that with 60 years past, there are provisions within the constitution that no longer befit the reality of the day. Third, new values have emerged since and I believe that by taking up those values and to encourage the spirit of writing our own constitution, we shall be able to open up a new era for Japan.

FT: What specifically in the constitution doesn’t fit the values of today and do you think that in your term in office the constitution will actually be revised?

Abe: Speaking of values, we have for example the idea that global environmental conservation is very important. Also, the right to one’s privacy is another.

Now speaking of provisions that no longer fit the times, one typical example would be Article 9 [which renounces Japan’s right to wage war or to maintain armed forces]. I believe this article needs to be revised from the viewpoint of defending Japan, and also in order to comply with the international expectation that Japan make international contributions.

My term of office is three years and the president of the Liberal Democratic party can sit for up to two terms. Within that term of office, I shall strive achieve the revision.

FT: I would like to move on to China. You pulled off something of a diplomatic coup in mending relations with Beijing. Clearly the Chinese were prepared to change their attitude towards Japan. What do you think explains their very different attitude towards you versus their attitude towards Junichiro Koizumi? What fundamentally has changed?

Abe: Looking at Japan-China relations, especially in economics, we both need each other. The Chinese were strongly aware of that and they probably deemed that if they allowed the political tension to persist, that could have a negative impact on the Chinese economy.

They became aware of that over a few years and probably decided to act on it on the occasion of a changing government in Japan.

FT : How robust is the new relationship? I mean, I know you have not said either way whether you are going to Yasukuni shrine or not. But if for example, let us say that in a year from now you decided that “I’m the prime minister of Japan, why shouldn’t I go?” Is the relationship now robust enough for the Chinese to accept that?

Abe: Japan and China have agreed to build a strategic and mutually beneficial relationship. Our two countries are going to be tested whether we will be able to build that relationship. And towards that end both our countries are required to make efforts.

As a mechanism to achieve that we shall have summit meetings and ministerial meetings from time to time. And by so doing it is important that we mutually make efforts to build a relationship of trust.

FT: Will Hu Jintao come here early next year?

Abe: It’s not fixed yet. At any rate we would like Chinese leaders to visit Japan next year.

FT: If I could move on to North Korea. No country, with the possible exception of South Africa, has willingly given up a nuclear bomb. Kim Jong-il has shown that he is prepared to let his people suffer. Isn’t changing his regime really the only way of securing a nuclear-free Korean peninsula?

Abe: We will need to negotiate with the Kim Jong-il regime and as such I believe it is necessary that we make his regime aware that should they continue with their current policy line, they will only find the situation surrounding them worsen by the day. The economic as well as the food situation is only going to get tougher.

To that effect it is necessary for the international community, including of course China and South Korea, to co-operate in order to make UN Security Council Resolution 1718 truly effective.

FT: Is there no Plan B? What happens if food and luxury items etc are kept out of North Korea, but Kim Jong-il simply allows people to suffer and becomes even more resolute, perhaps even starts firing the odd missile? There could come a point when you are dragged into something that looks like a military conflict. Are you prepared for that?

Abe: We are convinced that this problem needs to be resolved diplomatically and in a peaceful manner. And I think this is the consensus of the international community including the United States.

But I also think Chairman Kim Jong-il and the regime are aware that if they resort to force, that will spell the end of them.

The end of them? Yes, the end of them. And they are fully aware of that I think.

FT: As this is the Financial Times, I would like to ask you a little bit about your economic policy. It is said that Japan is a country of US-style taxes with a European-style welfare system. That’s been fine during a period of fast growth with a majority of the population in work. But now the pyramid is shifting, with a lot more older people and much slower growth. In a sense, you now have to choose between the two.

You seem to lean towards the lower taxes, lower welfare model, with more private provision of welfare. Is that your vision? And can you sell that to a Japanese public who are used to a very generous and benevolent government?

Abe: The major reason for the increasing cost of social security is the aging society. We are making some plans to optimise or to reduce the pace of rise in social security costs.

We have to make these efforts to bring in greater efficiency so we can control rising social security costs and I believe there are still various means available. There are various means, including digitalisation of social security claims.

Our intent is to continue to maintain the public social insurance system. We will strive to limit the rise in social security costs and at the same time we shall also work on the Japanese public regarding their perception of the tax burden and perhaps ask for their [greater] contribution to the social security premium and payments at the window as they receive service.

We need to engage in discussion regarding the right balance among these different means.

I believe various roles for private insurance will arise in the future, but we are not thinking of cutting back on the public insurance system.

FT: The latest CPI numbers seem to suggest there is some risk of Japan falling back into deflation in terms of the headline rate. It depends on some technical factors, but it could happen. Under those circumstances would it be foolish for the Bank of Japan to raise interest rates and are you prepared to tell them so?

Abe: It is for the Bank of Japan to make judgments about monetary policy.

To grow out of deflation is a common objective of both the government and the Bank of Japan. And we believe that unfortunately we have not yet reached that target of growing out of deflation. So we would hope that the Bank of Japan would underpin the Japanese economy through its monetary policy.

FT: You have spoken about 3 per cent nominal growth, with 2 per cent real growth and 1 per cent inflation. Would you like the Bank of Japan formally to set an inflation target or around 1 per cent?

Abe: That is not in my mind. In the first place, I would like to encourage investment in innovation in order to increase potential growth.

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