With only a little imagination, the sharp upward inflection of Japan's angular islands gives the appearance of a scorpion's tail, the sting residing in the northern-most reaches of Hokkaido. This is how the world sometimes seems to see Japan: a mysterious culture with a legacy of aggression, not quite integrated into the global order despite being the second largest economy in the world.

In Kobe recently, where I was attending a medical conference, I was politely corrected for my appalling social etiquette. I sat for a group photograph at the end of the meeting with my legs crossed, hands clasped together resting on my knee. A grave error, my host informed me.

When a Japanese man sits, he should rest his right hand palm downwards in his lap. His left hand should cover the back of his right hand. Why? In Japan's Samurai days, a man would have carried a sword on his left side. His right hand would have been free and ready to unsheath his sword at the first sign of threat. A left hand shielding the right, preventing access to the weapon, would send a message that the stranger comes in peace.

"Everything", my new teacher told me, "has a meaning in Japan."

Yet these quiet and respectful traditions sit uncomfortably with more modern tensions in Japanese society. Last week a 14-year-old girl threw herself from her apartment balcony. Her suicide note read: "I've gotten tired of life". Japan's suicide rate is three times that of Britain. Newspapers run editorials pondering the meaning of this violent existential crisis afflicting Japanese culture.

To add to Japan's misery, its fertility rate has just hit an all-time low. In 2005, an average of only 1.26 children were born to women aged between 15 and 49 years. In 2007, the first wave of baby boomers will start to retire. The Japanese call this the "2007 problem" - the beginning of a precipitate decline in the country's workforce and skills base, anticipating economic stagnation and even reversal.

By 2050, Japan's working population will have contracted by a third.

One priority for the the new prime minister, Shizo Abe, and his government is therefore to escalate his country's sexual appetite. Sex is the only sure way to pull Japan out of the grip of its self-imposed sterility. To be sure, women need to be encouraged to produce more children. They also need to be pushed into work. That will require a massive state programme of family welfare support.

Yet just at a moment when the state should be reaching out, it is dramatically withdrawing. Government allowances for single parents are soon to be axed. Mother-child family payments provide about ?100 per month for each child below the age of 15 years. But this largesse costs Japan 2.7 trillion yen annually. Too much, Abe's government says, for the country to bear.

A surprising sense of fragility inhabits the Japanese persona. To my outsider's eye, Japan seems a strong and successful nation, poised to contribute substantially to global wisdom. The best example, perhaps, of this evolving role is the growing and compelling case for Japan to become a permanent member on the UN security council.

Instead, many Japanese are acutely fearful. They worry about an emerging China, a China that jeopardises Japan's pre-eminent economic position in the East. Japan is concerned, with good grounds, that China will block its hopes for a more substantive engagement in world affairs.

This geopolitical choreography is forcing Japan to turn away from its global ambitions. In office for only a few months, Shizo Abe is already curbing his much-vaunted internationalist vision, replacing it with economic policies that are protectionist, even isolationist. Abe seems to be relying on regional alliances - for example, promoting a stronger Indonesia - to shore up Japan's weakening political position. Meanwhile, the country is also struggling to square its imperial past with its multicultural present.

Japan tacks between pride in its techno-urbanism and reverence for its rural spiritualism. The birth of an imperial son - Prince Hisahito, now three months old - to Prince Akishino breathed new life into the Japanese monarchy, still a symbol of immense cultural importance to many Japanese.

Yet some find it hard to come to terms with their new dependence on immigration to support Japan's ailing economy. A Sendai court recently instructed the city to pay a large fine to a disabled Pakistani man who was refused travel on a city bus. Racial tensions lie very close to the smooth surface of everday life.

These internal and external predicaments have encouraged Japanese politicians to re-evaluate their postwar policy of international self-effacement.

The Abe administration is currently presiding over a proposal to upgrade the defence agency, created in 1954, to a full ministry. The downplaying of defence after the second world war was indicative of a new Japan, one that rejected militarism and colonialism.

But with Japan's horizons now narrowing, a strengthened national identity, bolstered by a more muscular military, may be one way to offset regional and global diplomatic setbacks.

Japan has no reason to lack confidence in its achievements. Kyoko Yonemoto, a 22-year-old violinist from Tokyo, recently became the first Japanese citizen to win the prestigious Paganini International Violin Competition. She graduated in Paris and now lives in the Netherlands. She won the Moscow-based award for her performance of a concerto by Dvorak.

Her victory is a metaphor for Japan's prospects if only it would leap into the foaming river of globalisation. But there is a lesson for the west here too. Our attention has been captured by the emerging might of China and India. By virtue of their sheer size, and to some extent our greed, both countries have distracted us from a more objective appraisal of Asia's balance of powers. We are at risk of badly misdiagnosing the region's symptoms of unease.

Japan's geographical physiognomy is as much a hook holding east and west together as it is a scorpion threatening those who come too close. A world without a fully integrated and engaged Japan will be a world that is never quite bound together in harmony.