1999 witnessed Japan’s political sitution in the period of transition to a new institution. Thanks to the big gap of forces between the ruling parties and parties not in power, and the ease of tensions in Japan’s critical economic conditions, the Obuchi Cabinet survived the last year of the 20th century in a relatively smooth state. Japanese economy, beginning to get out of recession and culminated in a positive growth for the first time after 6 quarters of sustained negative growth with stock market strongly booming up and Nikkei average soaring up to $18000. Japan tended to act more and more on its own in its diplomacy so as to gesture as a major power in saying “No” to all others. Accordingly, the Japanese foreign relations were characterized by being dependent on but not intimate with the U.S., close but suspicious with China, and enduring but not yielding to Russia. 2000 is a campaign year for Japan’s general election. Although the coalition cabinet led by LDP will remain intact with no major changes, the destiny of the Obuchi cabinet, already on the decline, will be directly determined by the results of the election. In the latter half of this year, Japanese economy is supposed to move out of the “dark cave” of inertia after evaporation of the bubble economy, and to transform from the model of administrative command to an independent recovery driven by public demand. Japanese foreign policy will go on ahead with readjustment this year, and its basic tendency is to focus Japan-US relations as an axis while stressing multilateral dialogues and co-operations. First of all, on the top agenda of Japanese foreign policy is to seek rapproachement with North Korea. Japan’s second priority is to reinforce its ties with ASEAN member countries. The third, Japan will continue to further its relations with Russia. And the fourth challenge for Japan is to improve Sino-Japan relations and push forward their bilateral co-operations. 1999 witnessed Japan’s political sitution in the period of transition to a new institution. Thanks to the big gap of forces between the ruling parties and parties not in power, and the ease of tensions in Japan’s critical economic conditions, the Obuchi Cabinet survived the last year of the 20th century in a relatively smooth state. Japanese economy, beginning to get out of recession and culminated in a positive growth for the first time after 6 quarters of sustained negative growth with stock market strongly booming up and Nikkei average soaring up to $ 18000. Japan tended to act more and more on its own in its diplomacy so as to gesture as a major power in saying “No” to all others. but suspicious with China, and enduring but not yielding to Russia. 2000 is a campaign year for Japan’s general election. Although the coalition cabinet led by LDP wil l remain intact with no major changes, the destiny of the Obuchi cabinet, already on the decline, will be directly determined by the results of the election. In the latter half of this year, Japanese economy is supposed to move out of the “dark cave ”of inertia after evaporation of the bubble economy, and to transform from the model of administrative command to an independent recovery driven by public demand. Japanese foreign policy will go ahead with readjustment this year, and its basic tendency is to focus Japan- US relations as an axis while stressing multilateral dialogues and co-operations. First of all, on the top agenda of Japanese foreign policy is to seek rapproachment with North Korea. Japan’s second priority is to reinforce its ties with ASEAN member countries. Japan will continue to further its relations with Russia. And the fourth challenge for Japan is to improve Sino-Japan relations and push forward their bilateral co-operations.