Having the most famous name in American politics hasn’t spared Caroline Kennedy criticism over her nomination to be the next U.S. ambassador to Japan. Writers from across the political spectrum have questioned her qualifications or decried her selection as evidence of celebrity and fundraising power trumping substance in today’s Washington.

Ms. Kennedy’s nomination will undoubtedly be approved by the Senate, but she would help silence her critics by showing at her confirmation hearings that she understands that Japan faces a turning point in the coming years, as does the United States in Asia.

First, Japan appears to be ending a 20-year cycle of political realignment. High hopes for a viable two-party system seem not to have come to fruition. Japanese voters apparently prefer giving one party control over both houses of the Diet. The Liberal Democratic Party, which ruled Japan largely uninterrupted from 1955 to 2009, has been returned to power by an electorate disillusioned with the incompetence and unfulfilled promises of the Democratic Party of Japan. If LDP Prime Minister Shinzo Abe similarly fails to deliver economic growth and reform, Japanese voters may well settle for a permanently fragmented political system, as in Italy, thereby never reaching a truly stable realignment.

Second, Japan is at its most critical juncture for economic reform since the bursting of its bubble in 1990. Two-plus decades of stimulus spending, export-oriented strategy and regulatory tinkering have neither produced sustained growth nor ended the threat of deflation. Since taking office in December, Prime Minister Abe has embarked on a fiscal stimulus and monetary expansion policy that has given a short-term boost to the economy. Now Mr. Abe must deliver meaningful structural reform to stimulate growth, reduce regulation, and free up the labor market. If he fails, there may be no hope for serious reform that will revitalize Japan.

Third, Japan is beginning an unprecedented demographic decline that will test the fabric of its society. With the world’s most rapidly aging population, Tokyo’s biggest challenge will be finding enough workers to keep the economy going and provide enough tax revenue to pay for growing pension commitments. No major industrialized country has experienced the shrinking population that Japan likely will, and Tokyo’s policy approach will provide lessons for other governments in both Asia and Europe.

Fourth, there is a good chance that Ms. Kennedy’s tenure will see some type of military confrontation between Japan and China. Far from resolving the dispute over the Senkaku/Diaoyu Islands in the East China Sea, Beijing continues its intimidation tactics, slowly probing Tokyo’s commitment to maintaining control around the islands. With ships and planes from both countries drawing ever closer to each other, the chance for miscalculation or accident is dangerously high. As Japan’s only full treaty partner, America would be drawn into any conflict that breaks out—and Ms. Kennedy would be America’s public face and a key liaison to the Japanese government.

Finally, U.S.-Japan relations face numerous challenges. With its foreign policy bedeviled by disputes with China, South Korea, Russia and North Korea, Tokyo is nervous about any signs that Washington’s commitment to Japan is wavering. Ms. Kennedy will thus have to reassure Tokyo of America’s role in Asia even as U.S. military budgets continue to decline. Ms. Kennedy will also be the point person for ensuring that Mr. Abe’s government implements agreements to realign U.S. forces in Japan, particularly U.S. Marines on Okinawa. She will also be involved in Japan’s entry into the Trans-Pacific Partnership, tasked with highlighting the benefits of free trade in order to help Mr. Abe counter domestic opposition from agricultural and manufacturing lobbies.

Ms. Kennedy’s Senate questioners will probe her understanding of the threats facing Japan and the constraints on America’s presence in the Pacific. She can comfort observers in both Washington and Tokyo by showing appreciation for Japan’s unique role in hosting U.S. forces and providing public goods in Asia. Yet she can also show seriousness by addressing the weaknesses in the alliance and the need for further bilateral cooperation in an increasingly unsettled part of the world. As ambassador she will witness whether Tokyo has a plan to keep the world’s third-largest economy strong, and whether the years to come will see Japan and China live in peace or slide back toward conflict.

Mr. Auslin, a scholar at the American Enterprise Institute and a columnist for WSJ.com, is the author of “Pacific Cosmopolitans: A Cultural History of U.S.-Japan Relations” (Harvard, 2011).

A version of this article appeared August 12, 2013, on page A17 in the U.S. edition of The Wall Street Journal, with the headline: A Primer on Japan for Caroline Kennedy.