Japan and China from the U.S. Viewpoint

Koichi MERA (Professor, University of Southern California)

This article is based on an interview with Professor Mera in Los Angeles on May 26, 2006.

China and the U.S.

These days I often travel to China to attend international conferences and also to offer courses at the Shanghai branch of the USC Business School. Every time I go there and talk to officials at Chinese universities or governments, I am impressed with their strong confidence in the Chinese economy and their business-oriented attitude to the outside world. They are doing very well in absorbing as many "good things" as possible from advanced countries, while successfully reducing the costs of doing so by taking advantage of China's position in the current global economy.

At the same time, Chinese officials know what they should do to respond to demands and criticisms directed to them. For example, they will adjust the value of the yuan, however gradually, in response to global pressure for currency revaluation, particularly from the U.S. government. The Chinese are quite practical in handling various problems and also quite diverse in opinions among them on almost every problem. So, it would not be wise on our part to regard them as a unified force, as often supposed by the Japanese.

On the other hand, there appear to be an increasing number of Americans who feel threatened by China, which is growing rapidly in terms of economic power as well as military power. Their ever widening trade gap with the US seems annoying, to say the least, and their rapidly increasing military spending is alarming to the U.S. While China is trying to respond to such criticisms, their responses seem too little and too late, at least to those who are critical of China. It appears, however, China knows the bottom line, and is responding to keep the matter within the limit that the U.S. could possibly tolerate, whereas a majority of Americans are learning how to deal with China's attitude and reaction. Thus, there will unlikely be a crisis situation between the two countries for the time being.

Japan and the U.S.

From the U.S. viewpoint, Japan seems to be doing very well in reforming its economic structure under the leadership of Prime Minister Koizumi. As a result, the Japanese economy has made a remarkable comeback, almost from the brink of bankruptcy to the long-lasting economic recovery, which is still continuing up to date. It should be noted that this has been achieved by stimulating the private sector with deregulation and privatization, and not with wasteful public spending -- the essence of the Koizumi reform.

Koizumi knows that Japan needs the support of the U.S. in international relations surrounding Japan in dealing with China, North Korea and even South Korea for that matter. That is why he clearly stated at one time that "the better the relationship between Japan and the U.S. becomes, the easier it is for Japan to improve its relations with other Asian countries." Although this statement was severely criticized at home as well as abroad. Koizumi has been acting in accordance with what he said, e.g., by sending the Japan Self Defense Forces to Iraq in order to show his support for the U.S. position in Middle East.

It is my opinion that while close relations between Japan and the U.S. may help each other, especially for the sake of the current Koizumi and Bush administrations, Japan is bound to reevaluate their relationship from different perspectives as the geo-political situation changes in Asia in the future. The hegemony of the U.S. at the current level may not last for long, and Japan should prepare itself for various scenarios for the future of Japan and Asia.

I would also like to mention that Japan must overcome its long-term problems such as aging population, energy dependency, and environmental constraints in order to maintain, and hopefully raise, its standard of living at home and also its diplomatic influence abroad. I believe that the key to solve these problems is technological innovation to improve productivity and efficiency in the economy and society.

In Search of a New Model

What Japan needs is a new "model" for a country like Japan, which is not a superpower in international relations but an influential nation with respectable economic and moral power in the global community. In this regard, Japan is actually endowed with valuable resources such as the beautiful nature, the sophisticated culture, the honest and hardworking people, etc. One fundamental question, however, is how a country like Japan can survive in the long run when it is squeezed between the two superpowers, that is, the U.S. and China.

Here we can find a kind of "mini-model," that already exists in East Asia. That is South Korea. For centuries, Korea has been given pressure from both sides, China and Japan, but found a way to survive and even prosper in between the two big countries. By learning mainly from Japan, South Koreans have been developing their economy successfully, and also have gained significant support from the U.S. Now, they are investing heavily in China to improve their relations with the giant neighbor. Also they are exporting their high-tech products as well as their traditional culture through Korean movies and music, which are now so popular in Asia and elsewhere. Japan can learn from South Korea in exploring a new model for a relatively small country to survive and prosper with emphasis on its nature, culture and ethics.