Dear GA, 
Do software houses in Japan write code in English or Japanese? (ie.
English variable names, English comments) How about Japanese software houses
that sell libraries; do they use English APIs or Japanese ones?

I also am very interested in your question.
Hopefully we will get an answer.

Here's an interesting thread:

http://blogs.msdn.com/brada/archive/2005/01/24/359983.aspx

Nice blog Freud

Historically the Japanese used to make their own peculiar machines
- they were into graphics and touch screens well before the rest
- MS is very interested in the 'multi-lingual' stuff to counteract that

I've seen a printout of source of a version of MS BASIC (CP/M) that
was 'owned' by a Japanese manufacturer - obviously they understood it

- also later, quite a lot of ASM code from the same manufacturer that
was essentially English

- yet a UK company added Katakana (?) - MicroFocus COBOL and they made
a killing in the 1980s

I've run into very few Japanese coders on the Net, yet searching for
obscure stuff will often bring up Japanese pages.

My hunch is that the majority do not use English, but I've heard from
other sources that they have good written skills.

frde, thanks for an interesting comment.
I find it interesting that they added katakana as apposed to hiragana
- that suggests that they might use mostly English loan words.

It seems that Java is popular in Japan going on a few other points
I've heard with regards to Japanese internships.

I know that Sun produce a special version of their JDK for the Japanese.
I found this which I think points to being able to program without a
firm grasp of written English:
http://java.sun.com/j2se/1.4/ja/docs/ja/api/index.html
Of course, the method names and class names remain in English. Additionally,
I've noticed there is no Japanese documentation for Java 1.5 - so
maybe there isn't that much demand for a Japanese version?