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Home > Debates Last Updated: 14:34 03/09/2007
Comment (June 10, 2005)

Comment on Toyoo Gyohten's Article "Japan's Stance Toward the U.S. and China"

Eric Schrang (University of Southern California)

A handshake, a bow, and a butting of heads, the United States, Japan, and China vie for position as the three largest world economies. While the United States respectfully shakes hands with Japan and China and Japan respectfully bows back to each, China seems to be butting heads rather than respecting the considerably stronger economic position the U.S. and Japan share as a team. Yet, while some question the power of the U.S. economy, a closer analysis reveals that the U.S. economy is quite impressive, particularly when teamed with the Japanese.

Mr. Gyohten's assertion that negative factors are gradually appearing and adversely affecting the present state of U.S. economic conditions, particularly the U.S. twin deficits - the budget deficit and trade deficit, the current status of these deficits may not be as perilous as they appear. In fact, the high U.S. consumption rate causing these deficits may likely be helping fuel the Chinese and Japanese economies. Moreover, the affirmative economic and political cooperation between the U.S. and Japan (as well as other democratic developed nations) renders China's fiscal importance to Japan as secondary.

Growing at a reasonably healthy 3.1 percent average since 2000, the American economy has demonstrated great strength and resilience despite major losses suffered in the September 11, 2001, terrorist attacks on New York and financing of two subsequent wars in Afghanistan and Iraq. As a result of these incidents, the U.S. budget deficit increased significantly. Nonetheless, when indexing the U.S. national debt by GDP the current ratio is a manageable 4.5 percent. Incidentally, this figure is smaller than or equal to six other years within the past twenty-five year time span (the highest index being 6.0 percent in 1983).

When looking more closely at the U.S. trade deficit, on the other hand, one may argue that 2004's $681 billion deficit represents only 5.8 percent of U.S. GDP. Taking the resiliency of the U.S. economy and its consistent growth within the last five years into consideration, despite major financial outlays, the trade deficit seems much less menacing.

The U.S. economy is even much stronger teamed with its long-time friend Japan which has maintained a slow but positive 1.5 percent average GDP growth since 2000. Mr. Gyohten mentions that Japan's position between the U.S. and China is a difficult one due to China's recently unfriendly attitude toward Japan and Japan's apparent lack of assertiveness with the United States in pointing out how important Japan is to the U.S. economy. However, the constructive and long-lasting geo-political and economic relationship Japan and the U.S. have shared for sixty years demonstrates a deep bond that could not easily be broken. Japan's great economic rise since WWII is in great part due to the amiable business relationship shared with the United States as the U.S. consumes nearly 25 percent of all Japanese exports (more than any other nation and almost 10 percent more than China consumes).

China, lacking the political and economic friendship the U.S. and Japan share with other democratic developed nations, is in an economically precarious position. Since more than 50 percent of the world's $55.5 trillion GDP is manufactured by the U.S., Japan, Canada, and the European Union (strong economic and political allies), China's economic stake of a modest 13 percent world GDP is much less impressive as China remains somewhat politically removed from the aforementioned allegiance. Potentially, China has much to lose economically as its image is repeatedly tarnished by acts of aggression and diplomatic apathy. Furthermore, China's overall poverty in terms of per capita GDP ($5,600 vs. the U.S. $40,100 and Japan $29,400) illustrates that China has a long way to go before claiming economic success.

Also, China needs the U.S. and Japan for much of its economic growth. The United States consumes more than 21 percent of all Chinese exports (more than any other nation) whereas virtually 20 percent of all Chinese imports are supplied from Japan (far more than any other nation). Furthermore, China's economy is also heavily dependent upon U.S. and Japanese consumption as more than 33 percent of all Chinese exports are consumed by the United States and Japan.

Mr. Gyohten points out that the U.S. is concerned about Chinese hegemony in a predominantly Asian economic community. Yet, the Japanese-U.S. partnership will not easily be replaced by a Japanese-Chinese connection. Ideologically, the Chinese government's view of Japan seemingly remains quite negative despite the fact that China's economy strongly depends on Japanese investment and consumption of Japanese imports. In addition, the Chinese government's mishandling of the recent anti-Japanese protests has built upon an already destructive image for China in the international community. China's recent insistence on Japan's apology for WWII violence (which was immediately offered within days with great maturity by Prime Minister Koizumi in Jakarta, Indonesia) is ironic in light of Japan's proven sixty year track record of being one of the world's most peaceful and philanthropic nations.

On the contrary, the Chinese government has been involved in several violent incidents within the last two decades. The 1989 Tiananmen Square student-led, pro-democracy peace rally ended in many deaths (ranging from a conservative New York Times estimate of at least 400 to some estimates claiming over 10,000) committed by the Chinese government's military mobilization against its own people. Within the last few months alone, in addition to the mishandling of violent anti-Japanese protestors, China's inability, or even inaction, to diplomatically constrain communist ally North Korea from nuclear build up sends an offensive message to the international community. Moreover, China's current and excessive military build up, although "no nation threatens China," as duly noted by U.S. Department of Defense Secretary, Donald Rumsfeld, shows which country is truly more prone to violence, needs to change course, and should be offering a heart-felt apology.

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