China’s Econ Passes Japan’s. Let’s Take a Deep Breath, Shall We?

Is this little girl coming after you?

Beijing. July 2005.

Today, Monday, August 16, 2010, the headlines are blaring and everyone seems to have the vapors:

China Passes Japan as Second-Largest Economy

“SHANGHAI — After three decades of spectacular growth, China passed Japan in the second quarter to become the world’s second-largest economy behind the United States, according to government figures released early Monday.

“The milestone, though anticipated for some time, is the most striking evidence yet that China’s ascendance is for real and that the rest of the world will have to reckon with a new economic superpower.

“The recognition came early Monday, when Tokyo said that Japan’s economy was valued at about $1.28 trillion in the second quarter, slightly below China’s $1.33 trillion. Japan’s economy grew 0.4 percent in the quarter, Tokyo said, substantially less than forecast. That weakness suggests that China’s economy will race past Japan’s for the full year. . . .”

. . . and so on.

While all this may be true, so are these things:

+ China’s poverty rate is around 2.8% (that’s over 37 Million people in poverty). Japan’s total population is about 128 Million.

+ Japan’s poverty rate is, according to the CIA’s World Factbook 0%, “N/A.” Now I have, indeed, seen some homeless Japanese here and there, but compared to most industrialized countries, let alone developing countries, let alone China, Inc., the rate is negligible.

+ Japan’s economy still remains more robust than France’s, Germany’s, Brazil’s, Canada’s, the UK’s, Italy’s, Russia’s, Norway’s, Chile’s, Singapore’s, Ireland’s, Australia’s, Switzerland’s, India’s, South Africa’s, Spain’s, Malaysia’s, Egypt’s, Sweden’s, Ukraine’s, Mexico’s, Finland’s, Morocco’s, Poland’s, Israel’s, Saudi Arabia’s, Hungary’s, Colombia’s, and about 150 others.  Not too shabby.

+ Earlier this year The China Daily reported that China’s wage disparity between those living cities and the countryside is the widest since the launch of economic reforms in 1978:  “Song Xiaowu, president of the China Society of Economic Reform, said the widening urban-rural income gap has partly resulted in China’s increasingly ‘appalling income disparity between the haves and have-nots.‘”

+ Japan’s income equality is the second highest in the world, after Denmark (source:  scroll down to the middle of the page).

+ Life expectancy in China (male/female):  72/75.   Life expectancy in Japan79/86.  Life expectancy in the United States75/80.  (source:  World Health Organization).

+  In terms of Purchasing Power Parity (PPP), which seeks to, among other things, get a bead on actual living standards and buying power for a given country or region, depending on the source (the International Monetary Fund, the World Bank, or the CIA — they all use slightly different calculations), Japan ranks 23rd, 24th and 29th, respectivelyChina:  99th, 92nd, 102nd, respectively.

So let’s not throw in the towel for Japan, just yet.

Admittedly, Japan certainly has its own challenges and problems, too:  a rapidly aging society is putting — and will continue to put — a tremendous strain on the society (but elder care economic opportunities present, as well; depending on the degree to which Japan will welcome foreign investment and collaboration and imports in that sector); anemic economic growth that shows no substantive signs of abating; a cramped, unimaginative and too powerful bureaucracy that’s been a drag on an economic resurgence for almost 20 years; the inability to make a decent hamburger.  Personally, I don’t need a decent hamburger whenever I’m in Japan, but the inability to get one symbolizes some fundamental crack in, comparatively speaking, a generally well-run system.

All that said, I do still have a sentimental wistfulness — a natsukashii feeling, if you will — for days gone by in Japan, when it was peaking around 1990 and about to fall with the bursting of The Bubble.  Indeed, it’s difficult, nay, impossible, to imagine that those days will ever come again:


UPDATED (September 18, 2010):  “China Set to Lose 2% of GDP Cleaning Up Decades of Pollution.”


China, the world’s worst polluter, needs to spend at least 2 percent of gross domestic product a year — 680 billion yuan at 2009 figures — to clean up 30 years of industrial waste, said He Ping, chairman of the Washington-based International Fund for China’s Environment. Mun Sing Ho, a senior economist at Dale W. Jorgenson Associates and a visiting scholar at Harvard University in Cambridge, Massachusetts, put the range at 2 percent to 4 percent of GDP.

Failure to spend that much — equivalent to the annual GDP of Vietnam — may cost the Chinese economy half as much again in blighted crops, health costs and pollution-related expenses, He said: “The cleanup can’t catch up with the speed of pollution” if spending is less.


    • Brendan McGowan
    • August 17th, 2010

    Yup, I could see the Chinese GDP surge coming like the proverbial tsunami. The Japanese aren’t at all shocked by it though. Many of the companies I formerly taught English at, have added Chinese lessons as far back as ten years ago. They were well aware of the Chinese surge.
    As for the surpassing of America’s economy by 2025. I don’t see it. This isn’t Yankee pride talking. This is called limited resources. Do the world economists really think that China will boast 350,000,000 automobile drivers by 2025? How? By covering Africa with ethanol producing corn? The oil isn’t there.
    The Saudis are now injecting sea water into their wells to bring the oil up. It isn’t as easy as it once was to get to. They’re playing hedge games essentially. I look into my crystal ball, and I see a real sobering picture emerging about 2015 with an oil dependent world economy still plagued by anemic one to three percent growth per year.

      • letsjapan
      • August 17th, 2010

      Well and interestingly stated. Good points.

      Frankly, I (and I think I’m in good company here with many people) don’t think that Japan’s role as hubris-soaked, world-dominating, economic superpower ever really “fit” it. I’m talking about the ’80s here. I mean, I was happy for it and it was good to see and experience such an “upbeatness” to Japan. But a Japan in the role of “In the Top 5” economic powers over the next 25-50 years is, frankly, not a bad place to be. And if Japan will fish responsibly, there will still be great sushi. And it will remain a cutting-edge innovator in green technology and efficient power usage (it *has* to be). And its design and architecture will remain some of the coolest in the world (some of my favorite, in fact; but I’m biased).

      So I’m just not singing the blues so much over this.


  1. It’s not like Japan and China, or any of the world’s nations, are running in a track and field event. An expanding economy in one country does not necessarily imply contraction in a neighboring economy. There’s room for improvement all over the world.

      • letsjapan
      • August 19th, 2010

      I agree whole-heartedly. A concern, though, is the growing influence of China on global commodity prices, as well as the rumblings within the Chinese gov’t to start putting military bases all over the world. Sure, there are already American bases the world over, but putting Chinese bases in proximity to U.S. ones only tempts conflict.

      Thank you for stopping by, Meta.

      All kind things to you,


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