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Will China copy Japan’s economic mistakes?

Popularity 1Viewed 1951 times 2013-8-6 16:13 |System category:News

Lately a friend told me a story of how two extra-large suitcases were found to be suspiciously empty when a Chinese woman tried to pass the New York Customs and Border Protection check point. Upon asking, the lady replied: I plan to shop along the 5th avenue. Why do I need to bring any clothes?

This short story reminded me a piece of somewhat-relevant history. Around 20 years ago, on the heels of a three-decade long “Economic Miracle”, Japan was experiencing its infamous “bubble economy”. At the time, the price of Tokyo’s prime neighborhoods rose to levels approximately 350 times more expensive than comparable land in Manhattan, New York. The land underneath the Tokyo Imperial Palace was rumored to have been worth as much as the entire state of California. Intoxicated in the speculative mania, numerous Japanese families flew to New York, Paris and London, visiting, dining and shopping. However, the collapse of the bubble ruthlessly threw the country into a long period of economic stagnation soon afterwards.

These two contrasting cases clearly reflect a prevailing view nowadays. As close neighbors, China and Japan are highly interrelated. The two nations not only enjoy similar culture and form a solid economic tie, but also share the same growth pattern and development strategies. The only difference may be that Japan seems to be one step ahead. Based on this notion, a widely accepted view claims that China is doomed to follow Japan’s path of late 1980s, fail in igniting its growth engine and be trapped in a “lost decade”.

Does this make sense? Yes and No. After a decade’s double-digit impressive growth, resources to support the fascinating growth performance are approaching the bottom. This is like Japan years ago before the curtain had fallen on the prosperous feast. Nevertheless, history may replay, whereas no one knows which scenario would come. Critics dimming the future of China may be right on almost all conditions when compared with Japan. Yet China has an advantage as well: they could learn from Japan’s mistakes. .

As the bottom line, no one-fits-all answer exists on strategizing a nation’s growth pattern. Instead of maintaining skepticism and criticism upon spotting Chinese travelers shopping abroad, it would be beneficial to reflect what and how to learn from China’s close neighbor.

(Opinions of the writer in this blog don't represent those of China Daily.)

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Dailiwang

Ph.D Candidate, China Center for Economic Research, Peking University

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