Both Japan and China`s economic prosperity have been felt all overthe world for the past fifty years. It has been the outmost attentionfor a growing and developing nation to become one of the mostinfluential and one of the leading economic countries all over theworld. For over fifty long years, Japan and China have become two, ifnot the largest growing economies in Asia. Several powerful andemerging countries all over the world that fully compete on thecountries` economic progress are USA and various European countries.From these details, one can expect several economic uprisings as wellas economic crisis that both powerful countries had endured toachieve such kind of present economic condition to compete on some ofthe best and the most powerful countries in the world at present. Bycomparing these two of the most stabilized and well-developedcountries in Asia, one can clearly determine the pros and cons ofknowing their respective economic histories and know the underlyingfactors to be considered in assessing the economic situation of bothcountries at present.
Theeconomichistory of Japanis one of the most studied economies for its spectacular growth inseveralperiodsof classical methods of ups and downs.Thereare certain periods in Japan`s history wherein it achieved its climaxeconomic growth, while there are periods wherein it has experienced asevere economic crisis that had resulted to its own economicinstability and economic conflicts. In JapaneseEconomic Success and the Curious Characteristics of Japanese StockPrices, RandallMorck and Bernard Yeung stated that "Japan’s economic historysince the Meiji Restoration in 1868 suggests that Japanese know moreabout achieving and sustaining economic growth than most others,"1proving that Japanese natives are equally competitive in achievingfor economic uprising and individual economic progress. Japan’spolitical, financial, and business leaders have presided over what isprobably the greatest “rags to riches” story in the history ofthe world.2After the Meiji Restoration in 1878, Japan had been considered afeudal country, a little different economic and political state incomparison with other countries such as China and the United States.Japan`s economic outburst has well started in the late 1970s, by thetime that Japan`s per capita GDP, measured at purchasing power parityin current US dollars, and the average per capita GDP of otherleading free market economies has unexpectedly increased at asurprising rate, from a negative GDP of -2,000 in 1975 to a rise of1,500 in 1990s.3Fromthe 1960s to the 1980s, overall real economic growth ofJapan hasbeen called a"miracle"and"unexpected":a 10% average in the 1960s, a 5% average in the 1970s and a 4%average in the 1980s.Bythe late 1980s,Japan had moved from being a low-wage to a high-wage economy.However, several economic elements and determining factors haveshaped the future of Japan`s economic growth. There are basicallythree major reasons for the economic status of Japan to becomeunstable and inconsistent as what Takeo Hoshi explained in his WhyDid Japan Stop Growing?.4The first observation is that Japan was catching up with moreadvanced and more powerful economies such as the United States andChina. They have become so much focused on competing with the bestand the strongest countries in terms of its economic development,such that several things have been left out. Secondly, worldwideglobalization on financial stability and the collapse of the fixedexchange rate regime meant that by the end of the 1970s, Japan couldnot merely depend on an undervalued money currency to enhance itsexports of goods and services. Lastly, the whole of Japan`s totalpopulation had been so much diversified such that the aging and thedeclining fertility also eventually reduced the domestic saving thatsupported economic expansion during the rapid economic growth period.From these instances in Japan`s economic status, the Japanese stockmarket and real estate market both collapsed spectacularly. Thesethree major reasons have greatly weakened the Japanese economy forthe past decades, yet they still managed to become the leadingeconomic countries in Asia.
Onthe other hand, China has become a consistent and a brilliant nationfor several decades already. China’sremarkable economic boomfor severaldecadeshas spawned numerous discussions of China’s riseand economic prosperity.For the previous years, China`sgreat boom has enabled themto regain some of the global economic weight and leverage that theyhadenjoyed wayback theQing andMing dynasties. In Wayne Morrison`s China’sEconomic Rise: History, Trends, Challenges, and Implications for theUnited States,5China`seconomic outburst and economic power had greatly considered as one ofof the greatest economic success stories in modern times. Chineseeconomy is more of an industrial economy, one that is more focused onmanufacturing, producing, and distribution of goods and services toother countries all over the world. Beyond that, China’seconomic boom, along with the success of nearby Asian countries such as HongKong, Taiwan, and Singapore, demonstrates that Chinese culture is notinimical to economic progress. Indeed, the opposite perspective,which sees Chinese society as unusually capable of producingindividuals who can operate effectively in market systems, helps toexplain China’s historic prominence as well as its recent economicsurge.Thereliance of labormarkets,farming and agriculture, handicraft materials, etc.on a complex monetary system that used copper cash for smallpurchases and silver coin, ingots, and bullion to manage tax paymentsand wholesale transactions injected the variable exchange ratebetween copper and silver into the economic lives of all Chinese.6
Moreover, the introductionof social economic reforms had led China to rapidly increase theireconomy, from an overwhelming example of the annual GDP of China from1953 to 1978, to an abrupt increase of 6.7%.7Wayne Morrison also mentioned that by these economic reforms,economic control of various business enterprises were given toprovincial and local Chinese governments which were generally allowedto operate and compete on free market principles, rather than underthe direction and guidance of state planning. Althoughthese reforms remain incomplete- privatebusinesses, for example, Chinesebusinessmen and traders stillconfront formidable legal, administrative, and institutional barriers- theycreated sufficient momentum to overcome the friction and drag linkedto a host of less critical inefficiencies associated with pricedistortions, imperfect markets, and institutional shortcomings (forexample in banking, property rights, and corporate governance)- allof which retarded growth and increased its cost without endangeringthe ongoing boom.
InEconomicReform and Openness in China: China’s Development Policies in theLast 30 Years, ClemTisdell mentioned three significant events in China`s notable successin their various economic reforms.8The first major event in China`s economic growth is when moderateleader Premier Zhou Enlai died in January of 1976.9He was in favor of implementing social economic reforms and wasuphold by the ideals of Mao Zedong that he had managed to seek forthe "four modernization" concept of attaining economicreforms for economic development of the country. Second, the death ofMao Zedong in 1977 for which China had been described as a "CulturalRevolution" and meant to achieve "A Great Leap Forward"motto of attaining economic prosperity.10This incident paved the way to implement various economic reforms indifferent localities all over China. Lastly, the political wildernessof Deng Xiaoping in 1978 sought to believed that there was a need foreconomic and social reforms in China.11His positive new approach of transforming China by economic reformswas his main objective in molding the country into its best possibleeconomic development and prosperity.
Businessenterprisesandtradings flourishesdespite remaining barriers to the expansion of private businesses.BothJapan and China’sefforts to harvest the promising economic opportunities must confrontformidable obstacles. Althoughat present state, variousinternational media and NGOs tend to exaggerate the dangersbrought by various economic plans. Political roles made by variousgovernment organizations have played a significant role intransforming the countries` economy to its peak state. Nonetheless,thebiggest danger, however, lie elsewhere,and must be planned carefully in the future.
Morck,R., and Yeung, B."JapaneseEconomic Success and the Curious Characteristics of Japanese StockPrices."1-29.Paper presented in conference on: DesigningFinancial Systems in Asia and Japan – Towards a Twenty-FirstCentury Paradigm: HitotsubashiUniversity, September 24-25, 2001.
Morrison,W. M. "China’sEconomic Rise: History, Trends, Challenges, and Implications for theUnited States."1-37.Congressional Research Service,February 3, 2014.
Hoshi, T."WhyDid Japan Stop Growing?"1-76. NationalInstitute for Research Advancement (NIRA),December 29, 2010.
Tisdell, C."EconomicReform and Openness in China: China’s Development Policies in theLast 30 Years." 271-294.Economic Analysis & Policy,Vol. 39 No. 2, September 2009.
11. Randall Morck and Bernard Yeung. Japanese Economic Success and the Curious Characteristics of Japanese Stock Prices, paper presented in conference on: Designing Financial Systems in Asia and Japan – Towards a Twenty-First Century Paradigm, Hitotsubashi University, September 24-25, 2001. 1.
22. Ibid., 23.
33. Ibid., 23.
4. Takeo Hoshi. Why Did Japan Stop Growing? (National Institute for Research Advancement (NIRA), December 29, 2010), 2.
55. Wayne M. Morrison. China’s Economic Rise: History, Trends, Challenges, and Implications for the United States. (Congressional Research Service, February 3, 2014), 1.
66. Ibid., 2-3.
88. Clem Tisdell. Economic Reform and Openness in China: China’s Development Policies in the Last 30 Years (Economic Analysis & Policy, Vol. 39 No. 2, September 2009). 273.
99. Ibid., 273.
10. Ibid., 273-274.
1111. Ibid., 274.