CHINA OR JAPAN?

MAPPING OUT ASIA'S FUTURE

Jeff Kingston

The Japan Times, April 29, 2012

China or Japan: Which Will Lead Asia?, by Claude Meyer. Columbia University Press, 2011, 195 pp., $35.00 (hardcover)

The title poses a question with an obvious answer; a rising China is increasingly eclipsing Japan and seems destined to become the hegemonic power in Asia. So why read this book about old news? One reason is that the author succinctly assesses the rise of both nations, elucidates the respective strengths and weaknesses of the two economies that account for more than 75 percent of Asian GDP and presents scenarios for how regional rivalry will evolve over coming decades. Busy readers who want to quickly get up to speed on East Asia will learn much from this slim volume, one brimming with a veteran observer's insights and knowledge.

Meyer questions the popular view that "Asia's future is already mapped out, between the ineluctable decline of Japan on the one hand and the irresistible rise of China and India on the other." China has overtaken Japan as the world's second largest economy, but Meyer reminds us that tales of Japan's decline are overstated and it retains economic and financial domination of Asia.

While noting that "China and Japan are kept at odds not only by a burdensome past but also, and above all, by their conflicting ambitions", Meyer does not see these tensions spiraling into war, placing faith in pragmatism and the dynamics of increasing economic interdependence.

While everyone is writing off Japan and ogling the latest GDP growth figures for China, Meyer restores some perspective. By 2030 analysts believe that China will be the world's largest economy, but even so its per capita GDP will lag Japan by some 65 percent.

Moreover, "China will have to cope with a polarized society, an environmental crisis and heavy financial burdens." China's demographic time bomb is also looming, its comparative advantage in low-cost production is eroding, and it is dependent on global markets for resources and markets. The interplay of these factors could derail the prevailing onward, upward scenario, but on balance Meyer thinks China will manage to cope with its varied challenges.

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