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With a population of about 12.5 million, Tokyo is one of the largest cities in the world -- and one of the most intriguing and invigorating. As the nation's capital and financial nerve center, Tokyo has long been a major player in Asia. In a nation of overachievers, Tokyo has more than its fair share of intelligentsia, academics, politicians, businesspeople, artists, and writers, and it's the country's showcase for technology, fashion, art, architecture, music, and advertising. People rush around here with such purpose and determination, it's hard not to feel that you're in the midst of something important, that you're witnessing history in the making.

As for innovation, Tokyo has long been recognized as a leader. Indeed, Japan, once dismissed as merely an imitator with no imagination of its own, has long been at the forefront of all things technological, from robots and cars to audiovisual equipment and kitchen and office gadgetry. Walking through the stores of Akihabara, Tokyo's electronics center, provokes an uneasiness few visitors can shake, for it's here that the latest goods are sold long before they reach Western markets. Tokyo also stands at the center of Japan's cool pop culture -- anime (Japanese animation), Hello Kitty, Pokémon -- one of the fastest-growing subcultures in the world. In other words, this trend-setting Asian capital is in.

Yet despite outward appearances, all is not rosy in the land of the rising sun. Its unparalleled economic growth of the 1980s, generating both admiration and envy worldwide, has never quite recovered from the burst of its economic bubble in 1992. While the economy seemed to be on the mend by mid-2000, the 2008 international financial meltdown brought Japan's economy to a screeching halt, as demand for Japanese cars, electronics, and other exports dropped dramatically around the world.

Meanwhile, homelessness is so common in Tokyo that it no longer draws stares, even in the swank Ginza district. Crime, once almost unheard of, has been a major topic of concern for more than a decade. My former Tokyo landlady fears burglary so much that she no longer opens her door to strangers.

Another pressing long-term concern is a declining birth rate coupled with an aging population, with Japan's over-65 generation, which now accounts for more than 22% of its population, expected to double by 2055. Meanwhile, Japan's ratio of children ages 14 and younger is believed to be the lowest in the world, accounting for only 13.5% of the population. The government has predicted that Japan's total population could plunge by nearly one-third by 2055, causing tax-revenue shortfalls and a shortage of labor.

Discontent with the status quo played a major role in Japan's national elections held in August 2009, when the left-of-center Democratic Party of Japan (DPJ) defeated the conservative Liberal Democratic Party, which had ruled for all but 10 months since its founding in 1955. Whether the DPJ, which also cruised to victory in a Tokyo Metropolitan Assembly election, can truly effect change remains to be seen. Its first real test, critics say, will be in drafting the annual budget from April 2010.

Meanwhile, almost every Japanese company you can think of, from Sony to Toyota, has suffered devastating losses the past year, as exports to other countries plunged. All my friends living in Tokyo, both Japanese and foreign, have had to tighten their belts, whether it's because their annual bonuses have been drastically cut or because income from clients -- who are also having financial difficulties -- has dried up. In other words, the economic crisis isn't much different in Japan than elsewhere; it's just been going on much longer.

Yet oddly, more museums and other highly visible buildings are undergoing major renovations in Tokyo right now than almost any year I can think of, including the Kabuki-za and the Central Post Office (I find it encouraging that a proposed demolition of the post office building, built in 1931, caused such a furor that as much as 30% of the old building will be preserved). Although some of my favorite restaurants and hotels have closed as victims of the economy, new ones have sprung up to take their place. In other words, it's business as usual in Tokyo, though bargains abound in these troubled times, whether it's for goods, hotel rooms, or a meal. One of the most favorable results of the recession is Japan's growing desire to attract foreign visitors, with more English-language brochures, websites, and user-friendly services than ever before. Tobu, which operates train service to Nikko, introduced a train pass strictly for foreigners. There's also a new dedicated tourist bus that makes a circular route to Tokyo's major sightseeing districts, such as Ueno and Asakusa, making it easier to move around the metropolis.

One of the most fascinating changes in Tokyo over the past few years, in my opinion, is the explosion of personal expression, making it a mecca for seekers of cool, edgy design. Long gone are the same drab office clothes and nonquestioning conformity. Tokyo today is a kaleidoscope of various fashions, from hip street clothing to a wide range of personal styles that reflect a wide spectrum of international influences. The otaku (geek) culture has come out of the closet and into the mainstream, bringing with it such a newfound interest in anime (Japanese animation) and manga (Japanese graphic novels) that Akihabara is no longer a mecca just for buyers of electronics but also for those in search of pop culture. Tokyo's Design Festa, held twice a year, is one of the most exuberant art events you'll find anywhere, drawing more than 8,500 artists from more than 30 countries.

In many ways, Tokyo is more interesting and diverse now than it ever was. With the DPJ at the helm, and its promise to shift the country's emphasis from a business-oriented society to one that is more people-oriented, it will be very interesting to see what's coming down the road.

For the short-term visitor to Tokyo, however, problems that loom in the public psyche -- economic uncertainty, a revolving door of prime ministers, political scandal, and rising crime -- are not readily apparent (unless you go to Ueno or Yoyogi parks, where the number of homeless is nothing short of astounding). Crime, though undeniably on the increase over the past years, is still negligible when compared to levels in the United States, and Tokyo remains one of the safest cities in the world. (According to an article published September 11, 2007, in the Yomiuri Shimbun, the number of thefts and burglaries in the Tokyo metropolitan area decreased 30% to 50% after the arrest in 2006 of 16 Chinese suspected of operating two burglary rings.)

Although it's true that I am more careful than I was 20 years ago -- I guard my purse in crowded subways and I avoid parks after dark -- for Americans, such precautions seem merely self-evident. But while I'm cautious about theft and purse-snatching, I never worry about personal safety when I'm walking the streets of Tokyo. In fact, it never even crosses my mind. Violent crime -- especially against strangers -- remains virtually unheard of in Japan.

Moreover, while Tokyo remains one of the most expensive cities in the world, it now offers something that would have been unthinkable during the spend-happy 1980s, when only designer goods would do and expense accounts seemed unlimited: bargains. Tony French restaurants serve value-conscious fixed-price lunches, there are buffets virtually everywhere, secondhand clothing stores sell last year's designer wear, 100-Yen discount shops do a brisk business, and many hotels offer bargain rates on their websites.

Despite what the future may bring, I'm convinced Tokyo at street level will remain as it's always been -- humming with energy, crowded beyond belief, and filled with acts of human kindness.

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