''Japan will change.'' Recognition of that fact is spreading both within and outside of Japan.

The recent surge in the stock market in Japan, with foreigners in particular buying Japanese stocks, perhaps stems from this recognition.Since it took office in July 1998, the Cabinet of Prime Minister Keizo Obuchi has made deep and careful analysis of the economic situation, all the while taking bold and speedy measures.

Specifically, from the autumn of 1998, Japan, while conducting large-scale public-works projects and tax reductions, has been promoting a variety of structural reforms.

They have included financial-system reform, strengthening industrial competitiveness, the introduction of mobility into the labor market and emphasizing the importance of the creation of small and medium-sized enterprises.

These reforms are something that used to be considered as impossible only a year and a half ago.

Consequently, the reorganization of financial institutions has proceeded apace, and we have witnessed a significant number of mergers and acquisitions, as well as streamlining of operations, among leading manufacturers.

Furthermore, a move has begun toward seeking jobs in foreign companies and new start-up companies - a move that is taking place not only among young people, but also among midcareer businessmen. The expectation is that these companies will enable employees to bring their capabilities into full play.

Examples of this tendency are still few, but they are surely signs that a change in temperament is under way in Japanese society.

After the large-scale rises in gross domestic product in the first two quarters of 1999, the third-quarter statistics witnessed a decline of 1 percent. But this was still 0.9 percent higher than the same quarter of the previous year.

Based on the recent rising trend in mining and manufacturing production and indications of improvement in corporate profit, signs are evident that the Japanese economy is making a gradual but steady recovery.

In its Basic Policy for Economic Management, decided on Dec. 19, the Obuchi Cabinet made the firm decision to carry on the measures for economic recovery and structural reform.

The government is forecasting an economic growth rate of 1 percent for fiscal year 2000. The main impetus for this growth will come from an expansion in consumption and recovery of plant and equipment investment in private sector, but public works projects are planned to exceed those of fiscal 1999.

There is a deep-rooted misconception among a certain sector of media, both domestic and foreign, that Japanese public works projects are ''used profligately for political reason.'' However, current Japanese social capital is still lacking, and the needs of the populace remain high.

For example, the capacity of Tokyo railway lines during rush hour now stands at an overcrowded 237 percent, with commuters packed like particles of rice in a ball of sushi.

In large metropolitan areas, the cost for constructing 1 kilometer of private underground track runs between 20 and 30 billion yen ($19 billion and $27 billion). But in order to maintain and ensure transportation volume, this cost is far cheaper than the construction of new road networks, and also more environmentally friendly.

Furthermore, the substance of public works projects is also changing. The fiscal 1999 supplementary budget and the fiscal 2000 budget focused on public-works projects to drastically build up information infrastructure and improve welfare and nursing facilities.

The unit cost for Japanese public works projects is admittedly high, due in part to the aesthetic sense of the Japanese people and natural factors such as the large number of earthquakes and typhoons. And there is probably room for improvement.

However, it is nothing more than a myth that the large number of public works projects undertaken are merely to serve the interests of politicians or at the behest of the U.S. government.

Japan is not only taking the measures for economic recovery, but also progressing with fundamental structural reform, in a serious effort to create a society that befits a new era of wisdom.