China surpassed Japan last week as the world’s second-biggest economy, so we asked our readers if the Chinese economic miracle would fare any better than the Japanese version. Most reckoned it would.
It is tempting to disagree, or at least cast some doubt on our readers’ resounding bullishness. First, it is worth pointing out that Japan was booming for a long time before its collapse -- indeed, it passed France to become the world’s second-biggest economy way back in 1968. On that time frame, China needs another two decades of growth just for its miracle to be as long-lived as Japan’s.
Second, China faces many of the same problems as Japan did -- a high savings rate at home and a huge trade imbalance with the rest of the world. And its reluctance to compromise at the G20 this past weekend suggests that China's leaders might struggle to address these problems. In a one-party state, the art of compromise has few opportunities to be developed.
China will need to be much more flexible if it wants to sustain growth and manage the transition to a more market-based economy. But its instincts are proving hard to re-wire. Unrest in the Middle East is making China even more paranoid about a social uprising on its own doorstep -- and therefore far less willing to admit to mistakes, for fear of fomenting revolution.
Even so, our readers are probably right. China’s continued economic rise looks assured; its population is vast, ambitious and capable of absorbing huge amounts of growth.
Ironically, it is also much more open than Japan was. China has courted foreign investment, albeit on its own terms, and is now a paid-up member of the global economy in a way that Japan has never quite been -- foreign visitors still struggle to use their phones and credit cards in Japan, and nobody ever went on CNN to talk about putting a can of Coke in the hand of every Japanese teenager.
In the end, 80% of our readers reckoned China would out-miracle Japan.
Last week’s poll article mentioned that McDonald’s has started offering wedding packages in Hong Kong, which prompted Next Media Animation (the Taiwanese news animator that found worldwide fame with its video dramatising the Tiger Woods sex scandal) to send us their latest effort.
Photo by AFP.
