Japanese economy may give second place to China, but after several years of stagnation, it seems that the economy is ready to thoroughly shake themselves
When the car driven by young drivers, ahead of more experienced on the old, "gnashing of teeth" jalopy, the spectators throw in a slower car, only a glimpse, and the drivers themselves can only show the appropriate gesture of his thumb downward. Given that today's young racers from China, and their super-laden economy defies global recession and claim second place in the rating of Japan's largest economies, increased attention to this country quite understandable. And it's sad. Japan deserves more than a fleeting glance, and has therefore not rude gesture.
Perhaps it should be recognized that part of my regrets is the result of personal sympathies. I was a correspondent (The Economist) in Tokyo for some time in the 1980's, when it was Japan, not China, it is surprising and awe around the world. As in modern China, it was assumed that, since Japan's economy is developing rapidly, they did everything right. Since 1990, when the Tokyo stock market close to collapse, and the economy has entered a phase of stagnation, public opinion is unfolded in the opposite direction: Japan, apparently, did everything wrong.
This view was particularly evident when the West, in the manner of Japan, began to sink in the credit crisis in mid-2007. Japan became a clear example of how not to deal with the consequences of financial collapse. (Version cribs how to do better: to quickly stimulate economic growth, vigorously to print money, fast and totally punish and cleanse banks, but beware of too quickly raise taxes, so as not to stifle the recovery). It's time to look at Japan with fresh eyes. This view has shed light on the 4 main things: the moment when China will overtake Japan is not interesting to anyone but statisticians, despite all the talk, China's economic development is useful to Japan; obsession with production and ignoring the service sector - a major weakness of Japan; slowly and with a bang , but Japan still entered the path of political reform, in which lies the potential for a return to its former strength.
Statistically, it's simple. Do you remember the Germans when in 1970 Japan overtook Germany as the second largest economy in the world? With a much larger population (now 120 million against 82 million Germans), it was natural that the Japanese production will be more time to achieve the level of performance in Germany. Also with China, only more so, because its population of 1.3 billion people, which is 10 times more than in Japan. Thus, China's economy "will surpass" Japan only when their per capita income will be at least one-tenth higher than the Japanese. And if China has not kept its currency artificially cheap - he would have overtaken Japan.
Comparison of the criterion of per capita income helps to explain why Chinese is useful for overtaking Japan. Be "beat" in the neighborhood with lots of new customers - it's a great opportunity. China is already the largest trading partner of Japan, and it sells to China than to buy. If the Chinese currency will be overvalued this year, and especially if the market will set its exchange rate, terms of trade will be better than it is for Japan, as sales of goods and for services.
Japanese manufacturers are among the best in the world, even if the brands such as Panasonic, Sony and Toyota, no longer able to easily circumvent the competitors, as it was before. Industrial production provides one-fifth of Japan's GDP, against one in eight in Britain. In the meantime, those who think that Britain's salvation lies in the rise of factories, should be aware that this is the industrial strength did nothing to save Japan from nearly two decades of stagnation. Production obsession Japan has made only worse: in order to reduce labor costs, the Japanese government in 1997-2006. recite reform in order to create two-tier labor market. The second level includes the underemployed and working not under contract, they receive lower wages, fewer social guarantees and no privileges.
This group now accounts for one third of the total workforce. It is Japan's "working poor", and it is the reason why the once known egalitarian country now corresponds to the British level of income inequality. Japan is the only country in the OECD, which recorded an absolute increase in poverty over the past two decades. Meanwhile, wages are falling, and not only those working on the second level: Last Friday, the Japanese government has forecast that in 2010, nominal wages will fall, 4 th consecutive year.
What is the discrepancy between the great Chinese market and falling Japanese income? This distinction lies between corporate interests and national. Individual companies are succeeding because of low labor costs and excellent nearby market. However, the country will benefit only if it leads to a large increase in income from the parallel creation of new productive, well-paying jobs throughout the economy. The problem in Japan is that its a healthy industrial production has not crossed with a much larger service sector, which, including the private and public sectors, amounted to 70% of GDP. The government disregarded the lack of regulation in the service sector. Indeed, creating jobs for the poor, they made even worse by offering for the services sector of ultra-cheap labor.
Now the crucial issue, as well as the main reason to watch for Japan is to whether it is possible to change this situation. It is fully capable of a country that has stepped up its services sector, low-wage workers and saved his side has a huge Chinese market. To accomplish this, Japan needs a real revolution, which may well be considered the changed political environment. Five months ago, voters shifted the party that ruled the country the past 60 years by selecting the central-left in vglave with Hatoyama Yukio (Yukio Hatoyama), who has promised big changes: the restoration of the welfare state, an end to the suffocating power of bureaucracy and a more balanced relationship with the United States and China .
Can he? Last November, I had an interview with the new prime minister, and I left impressed. Though criticized for his leadership qualities are often associated with fear, like a rabbit caught in the beams of headlights - he was amazingly sincere, straight and consistent in what he was saying, like Barack Obama. Priority in his actions - this is an increase in pensions and benefits, it costs a lot of public money, and in these straitened times will be hard to persuade voters to additional costs. His party is also surrounded by scandals concerning the collection of funds only when needed public support.
The wise old tokiytsy say that in Japanese politics is only an inch forward - pitch black. Even in this case is to peer into this darkness. Something began to change in Japan, and it is not only the air flow from the Chinese surpassed racers.
When the car driven by young drivers, ahead of more experienced on the old, "gnashing of teeth" jalopy, the spectators throw in a slower car, only a glimpse, and the drivers themselves can only show the appropriate gesture of his thumb downward. Given that today's young racers from China, and their super-laden economy defies global recession and claim second place in the rating of Japan's largest economies, increased attention to this country quite understandable. And it's sad. Japan deserves more than a fleeting glance, and has therefore not rude gesture.
Perhaps it should be recognized that part of my regrets is the result of personal sympathies. I was a correspondent (The Economist) in Tokyo for some time in the 1980's, when it was Japan, not China, it is surprising and awe around the world. As in modern China, it was assumed that, since Japan's economy is developing rapidly, they did everything right. Since 1990, when the Tokyo stock market close to collapse, and the economy has entered a phase of stagnation, public opinion is unfolded in the opposite direction: Japan, apparently, did everything wrong.
This view was particularly evident when the West, in the manner of Japan, began to sink in the credit crisis in mid-2007. Japan became a clear example of how not to deal with the consequences of financial collapse. (Version cribs how to do better: to quickly stimulate economic growth, vigorously to print money, fast and totally punish and cleanse banks, but beware of too quickly raise taxes, so as not to stifle the recovery). It's time to look at Japan with fresh eyes. This view has shed light on the 4 main things: the moment when China will overtake Japan is not interesting to anyone but statisticians, despite all the talk, China's economic development is useful to Japan; obsession with production and ignoring the service sector - a major weakness of Japan; slowly and with a bang , but Japan still entered the path of political reform, in which lies the potential for a return to its former strength.
Statistically, it's simple. Do you remember the Germans when in 1970 Japan overtook Germany as the second largest economy in the world? With a much larger population (now 120 million against 82 million Germans), it was natural that the Japanese production will be more time to achieve the level of performance in Germany. Also with China, only more so, because its population of 1.3 billion people, which is 10 times more than in Japan. Thus, China's economy "will surpass" Japan only when their per capita income will be at least one-tenth higher than the Japanese. And if China has not kept its currency artificially cheap - he would have overtaken Japan.
Comparison of the criterion of per capita income helps to explain why Chinese is useful for overtaking Japan. Be "beat" in the neighborhood with lots of new customers - it's a great opportunity. China is already the largest trading partner of Japan, and it sells to China than to buy. If the Chinese currency will be overvalued this year, and especially if the market will set its exchange rate, terms of trade will be better than it is for Japan, as sales of goods and for services.
Japanese manufacturers are among the best in the world, even if the brands such as Panasonic, Sony and Toyota, no longer able to easily circumvent the competitors, as it was before. Industrial production provides one-fifth of Japan's GDP, against one in eight in Britain. In the meantime, those who think that Britain's salvation lies in the rise of factories, should be aware that this is the industrial strength did nothing to save Japan from nearly two decades of stagnation. Production obsession Japan has made only worse: in order to reduce labor costs, the Japanese government in 1997-2006. recite reform in order to create two-tier labor market. The second level includes the underemployed and working not under contract, they receive lower wages, fewer social guarantees and no privileges.
This group now accounts for one third of the total workforce. It is Japan's "working poor", and it is the reason why the once known egalitarian country now corresponds to the British level of income inequality. Japan is the only country in the OECD, which recorded an absolute increase in poverty over the past two decades. Meanwhile, wages are falling, and not only those working on the second level: Last Friday, the Japanese government has forecast that in 2010, nominal wages will fall, 4 th consecutive year.
What is the discrepancy between the great Chinese market and falling Japanese income? This distinction lies between corporate interests and national. Individual companies are succeeding because of low labor costs and excellent nearby market. However, the country will benefit only if it leads to a large increase in income from the parallel creation of new productive, well-paying jobs throughout the economy. The problem in Japan is that its a healthy industrial production has not crossed with a much larger service sector, which, including the private and public sectors, amounted to 70% of GDP. The government disregarded the lack of regulation in the service sector. Indeed, creating jobs for the poor, they made even worse by offering for the services sector of ultra-cheap labor.
Now the crucial issue, as well as the main reason to watch for Japan is to whether it is possible to change this situation. It is fully capable of a country that has stepped up its services sector, low-wage workers and saved his side has a huge Chinese market. To accomplish this, Japan needs a real revolution, which may well be considered the changed political environment. Five months ago, voters shifted the party that ruled the country the past 60 years by selecting the central-left in vglave with Hatoyama Yukio (Yukio Hatoyama), who has promised big changes: the restoration of the welfare state, an end to the suffocating power of bureaucracy and a more balanced relationship with the United States and China .
Can he? Last November, I had an interview with the new prime minister, and I left impressed. Though criticized for his leadership qualities are often associated with fear, like a rabbit caught in the beams of headlights - he was amazingly sincere, straight and consistent in what he was saying, like Barack Obama. Priority in his actions - this is an increase in pensions and benefits, it costs a lot of public money, and in these straitened times will be hard to persuade voters to additional costs. His party is also surrounded by scandals concerning the collection of funds only when needed public support.
The wise old tokiytsy say that in Japanese politics is only an inch forward - pitch black. Even in this case is to peer into this darkness. Something began to change in Japan, and it is not only the air flow from the Chinese surpassed racers.
The Times
January 25
January 25
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