Compare and contrast political settings (major events) of both countries, China and Japan, in conjunction with analyses of their economic performances using following sources only.
The comparison of Chinese and Japanese economic development is a difficult task taking into consideration different political paths these societies chose in the 20-th century. To understand the evolution of Chinese and Japanese economies why should pay particular attention to structural impact of political institutions and process on economic policies.
Unlike Japan which in the end of the 19th century was completely isolated society, China became the object of colonial expansion of the world’s major imperial powers such as British and French empires, Portugal, Germany and later the United States. There is no denying the importance of the fact that this had negative effect on the development of Chinese economy and modernization of industrial and financial base. Being the raw material source for the dominant empires, China quickly transformed from feudal superpower to capitalist periphery with no prospects of development. Of course, this can’t help but affect class inequality within Chinese society and underdevelopment of the major spheres of economy.
In contrast Japan took dynamic direction of industrialization after Muzuhito reforms in the late 19 century which led to opening to foreign trade, investments which transformed Japan in the growing centre of the global economy. In the beginning of 20th century, economic development of Japan led to significant development of all major branches of 19th century economy – metallurgy, industrial manufacturing, shipbuilding etc. which formed rising capitalist class. It used these economic advantages as a tool for spinning off imperial quest for new markets which led to Chinese participation as aggressor in two World Wars.
Japanese economy as Chinese was devastated as a result of these wars, however Japanese economy managed to achieve advantages from strategic alliance with American state which provided it its investments, loans, know-how in exchange to geopolitical loyalty and military satellite position.
New approaches that developed in Japanese economy paying much attention to investments, social guarantees and effective utilization of sophisticated technology resulted in Japan becoming the leading the second largest economy after the United States. Japan became financial centre with Tokyo stock exchange as the Asian leading financial platform (Katz, 2002).
China also saw rapid modernization as a result of socialist program of industrial development started after the Communist revolution in this country (Grasso, 2004). Its results were significant. An important change of economic program in China began after Chinese communist party decided to introduce capitalist relations in this country under General Secretary Den. Following 80th market reforms in China and strengthening globalization China quickly transformed into growing market of capital investment and industrial outsourcing.
China transformed into one of the leading exporter of goods (its trade surplus with the United States is immense) and important financial centre (Chow, 2007). Due to effective control of Communist Party, China managed to go capitalist without negative consequences which were met for instance by former Soviet republics. Now, it is the third largest economy and economists predict that it may surpass the United States in a coming decades. Chinese gold and foreign currency reserves are ever growing to reach the mark of one trillion and are described as the largest in the world.
Unlike China recent decades were not so effective for Japanese economic development leading to long economic recession. It touch financial sector in the first place leading to the shortage of investments and business incentives( Francks, 1999). The level of manufacturing receded and Japan lost some of its major market in the varied nomenclatures of goods. With the inception of neoliberal model, the formerly dominant structure of socio-economic relations known as Japanese model became inefficient and Japan entered into the new Millennium with pessimistic predictions for the future.
Design and answer one essay question. In drafting your questions and preparing the answers, remember that in assessing your work I will consider breadth of coverage—do the questions collectively span the time period of the following books?
I drafted the following questions: What were the similarities and differences in economic reform programs in China in late 70th and Japan after the WW2?
There is no denying the importance of the fact that Japanese and Chinese society were tremendously different, the former being capitalist and the latter socialist and of course this deeply affected the political implications of economic reforms.
Chinese transition to capitalist began in late 70th with Party’s official authorities declaring the path of integrating China into global economy. The Party declared economic modernization and political stability the paramount of political program which is much similar with Japanese political platform which led to economic wonders in 60th and 70th.
As in Japan, a government made all necessary steps to increase productivity by introducing new management policies and technologies. As in Japan, Chinese government decided to choose export trade model as the main source for the effective economic growth (Francks, 1999).
There is no denying the importance of the fact that social policies which accompanies these reforms were also very much similar in China and Japan, however with some major differences. Chinese government decided to leave central planning as the basic instrument of economic activities, unlike Japanese authorities represented by LDP (the dominant party in Japan) which strongly adhered to the market economy principles. However, social guarantees of employment and low inflation were taken as priorities both in China and Japan which show that these reforms were still significantly impacted by Keynesian economics and policies (Katz, 2002).
Chinese reformed were mainly directed at the development of industrial, agricultural, banking and financial spheres. Japan followed the same root with the exception of agricultural sphere which traditionally was represented by booming fish industry.
Labor system reforms as it was noted above differed significantly in China and Japan. Japanese labor market was regulated by the system of qualified training and development of labor cadres as well as the system of lifelong employment which helped developed culturally specific corporate norms and values. However, as they developed within market economies, it was difficult to guarantee all social norms and standards.
Neoliberal market reforms in China as the history further showed created significant social inequalities between different classes, regions and groups, a situation which could not be positively tackled by the Chinese Communist Party (Naughton, 2007).
Market reforms in Chinese agriculture started with liberalization of land market and agricultural activities.
The prices were deregulated which led to their increased. Much of the land were given to private hands with peasants suffering from the lack of economic rights and perspectives. In Japan, as it was noted above agricultural reforms had to do with transition from feudal land ownership and production method to market economy which occurred in the early 20th century and the further reforms concerned the intensification of production, investment and technological changes. However, these goals were stated among the central in Chinese economic reform program, the negative consequences of the land market liberalization in China overwhelmed positive export surplus (Grasso, 2004).
Economic reforms in China also had to do with liberalization of foreign trade which resulted in establish joint ventures between Chinese and foreign firms.
The same situation characterized economic development of Japanese industrial and financial sector, especially in 70th and 80th.
There is no denying the importance of the fact that Japanese authorities paid more attention to innovative technologies and investment which transformed Japan in the leading manufacturer of cars, electronics and other goods during several decades.
Economic reforms transformed Japan into modern postindustrial economy with booming services sector. China is a long way to achieve the same, however, the facts shows that it is likely to do it if the government will cancel limitations on economic development in China which are left.
Besides this, economic reforms in China were characterized with the creation of special economic zones, free business heavens with low taxes and good business incentives.
These economic innovation were not used by Japanese authorities which paid more attention to stimulating investment through providing central governmental programs to every enterprise which desires to participate in them (Francks, 1999).
China and Japan were positively affected by their economic reforms. China got its economic momentum in early 90s when the annual growth of GDP was at least 8% a year. This mark was maintained through the decade. The level of exports and imports also increased transforming China into major exporter of manufactured goods and the second largest consumer of gas and oil.
Japanese economic development in 60-70th also followed the same increase in economic variables including export inflows and financial development. However, major differences in socio-economic and political structure of these societies which was noted above contribute to significant differences in the dynamics and direction of economic development.
References
Chow G. C.(2007) China’s Economic Transformation. London, Wiley-Blackwell.
Francks P. (1999). Japanese Economic Development: Theory and Practice. New York, Routledge.
Grasso J. (2004) Modernization and Revolution In China: From the Opium Wars to World Power. East Gate Book.
Katz R.(2002) Japanese Phoenix: the Long Road to Economic Revival. M.E. Sharpe.
Naughton B. (2007) The Chinese Economy: Transitions and Growth. The MIT Press.