Welcome to Dr Lincoln's blog

Welcome for visiting my blog. Hope you enjoy the visit and always welcome back again. Have a nice day!


China and Japan are vastly different

Comments on John Lee “Japan's economic demons dog China”, 25/05/2011, http://www.businessspectator.com.au/bs.nsf/Article/Why-Japans-past-haunts-China-pd20110524-H6AP4?OpenDocument&src=sph&src=rot

John Lee's article is interesting, although it may be a bit simplistic to extrapolate the implications of the Japanese case to China.

The Japanese suffered not only from lack of innovation in policy approaches to its bubble burst in the late 1980s and the early 1990s, but also the lack of successful experience and precedence in dealing with that.

Further, it was a victim of its earlier success in rapid catch up with the US and in many areas exceeding the latter.

Another point is that lacked the political strength to do what it should have done in standing up against the US and other, re the Plaza Accord that forced its currency too much too rapidly.

The US fed response to the GFC has been different to that of the Japan’s, though its ultimate success still remains to be seen. If it’s successful, it will be an innovative approach and a precedence for policy approaches.

While China’s story may have some limited similarity to that of Japan’s, the two cases are vastly different.

It is inevitable to have large share of investments in the economy if it starts with very low infrastructure, low physical capitals and low housing stocks, as a low income developing economy has.

They are two countries with very different social, cultural and economic affairs and structures.

By the way, the income level and the level of infrastructure are still low now and have a long way to go to catch up with industrialised countries.

PS: while China may not fall into the same trap that troubled Japan, it does not necessarily mean that it will not encounter problems of its own.

No comments:

Post a Comment