China Economic Crossroads: Hiroshi Watanabe, a former key figure in Japan’s currency diplomacy, vividly recalls a period when Chinese leaders actively sought solutions to prevent their country from encountering the same challenges as Japan. Japan experienced an asset bubble that burst around 2015, leading to a prolonged period of deflation and economic slowdown.
Watanabe is concerned about the declining interest in Japan’s history over the past seven to eight years. He maintains positive relationships with the current government and emphasizes the significant shifts in China’s priorities under Xi’s leadership. In a recent interview with Reuters, he expressed concern that other preferences have overshadowed economic goals.
However, China may now face the consequences of that change in focus. The International Monetary Fund and the World Bank convened in Marrakech from October 9th to 15th to discuss the state of the global economy. They discussed the slowdown in inflation and the worsening real estate problem.
Also Read: China Economic Markets Defy Doom and Gloom Predictions
There is a lot of interest in the world’s second-largest economy due to concerns about it potentially “Japanizing.” Japanization refers to the extended period of sluggish growth and deflation that Japan experienced following a burst in an asset-inflated boom during the late 1990s.
China remains Japan’s largest trade partner, while its economy has been experiencing a prolonged decline. Japanese officials are concerned about the potential impact on Japan’s export-based economy.
According to Asahi Noguchi, a former Bank of Japan (BOJ) board member, China’s descent into deflation is a problematic situation that closely resembles “Japanization” and presents an imminent danger. It remains uncertain whether China will face a situation similar to Japan’s, but concerning patterns have emerged. China’s crucial industries, such as real estate, display worrisome indications. There is growing concern in Japan and other places as youth unemployment rises and inflation continues to decline.
Our Reader’s Queries
What is the economic interdependence between Japan and China?
Japan and China share a strong economic relationship, with China being Japan’s biggest trading partner and a top investment destination for Japanese companies. The two countries have a close bond when it comes to trade and investment.
What is the diplomatic relationship between Japan and China?
Japan and China, being neighboring countries, have a number of concerns between them. However, their bilateral relationship is one of Japan’s most significant ones. The two countries share a close economic relationship, as well as people-to-people and cultural exchanges. Despite the challenges, Japan values its relationship with China and continues to work towards strengthening it.
What do China and Japan trade with each other?
Approximately 20% of all shipments from Japan are destined for China. In terms of seafood, China was the largest export market for Japan in 2022, as reported by the Fisheries Agency. The top seafood items exported to China were scallops, bonito, and tuna.
The yen, also known as JPY, has been Japan’s official currency since 1871. Its symbol is ¥, but sometimes JP¥ is used to distinguish it from the Chinese yuan renminbi, which shares the same symbol.