When it comes to economic policy, Beijing and Tokyo have very similar goals. Both countries want to fight against the changes in their economy due to the mounting debt and rapid growth in population. In China, the government is trying to move the economy towards more domestic consumption and growth in the service sector. In Japan, the government is trying to haul the economy out of years of deflation and lethargic growth.
Faster growth is hard to achieve and much of the hard work has yet to come. Both countries are going to face a tougher challenge of making their economies and business environments more efficient and competitive. "For both China and Japan, the problems are deep-seated and structural". It's not about being able to cut interest rates to stimulation growth, they have to do a lot more.
http://www.nytimes.com/2014/04/18/business/international/for-china-and-japan-the-economic-challenges-ahead-are-similar.html
2 comments:
For China much of structural issues are seeded in the varying freedoms within different regions. Domestic consumption will be difficult to focus on when almost half of the country is agrarian regions. Growth from populated area will be easier but can only go so far.
Although the problems are very similar, I think the solutions are very different. In China, I'm sure many people would be willing to consume more, given the opportunity. Whereas in Japan, the aging population, systematic xenophobia, and other challenges are likely reasons preventing it from attracting lots of investment from abroad. Japan and China would be wise to cooperate more closely in economic activity, in order to help each other to continue growing.
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