Chinese Economy Predicted to Surpass Japan in 2010

Ñ China, to surpass Japan in 10 years = as scale of trade between China and Japan is estimated to exceed 90 billion dollars, it has increased more than 80 times than 30 years ago. However, Japan’s trade deficit regarding China is increasing up to 20 % every year and fear that Japan will be occupied with Chinese goods is spreading. Even last year, import exceeded as much as 31.1 billion dollars than exports. Ratio of Chinese goods in Japanese import market is 17.8%.

In addition, Japanese manufacturing firms are shifting to China, therefore, industrial collaboration is also getting serious. Accumulated amount of investment by Japanese firms are 32.3 billion dollars, which ranks the second after the U.S (34.9 billion dollars).

Japanese headache is that China is surprisingly growing at 7~8% per annum but it is experiencing minus growth since 1990s’. GDP of China was 1 trillion and 189.6 billion dollars last year and it was 1/4th of Japan (4 trillion and 172.9 billion dollars), however, if it is like this, China is likely to upset Japan. In deed, UFJ comprehensive research prospected that China will surpass Japan in 2010~2015 and Fuji research prospected as 2012.

Ñ Deepening of diplomatic-military conflict = On the contrary with close business co-operation between the two nations, diplomatic-military conflict is deepening. There has been discord surrounding historic perception like war responsibility of Japan for 30 years since amity.

In particular, Chinese national leader Jang Cheo-min got furious when Japanese Prime Minister Koizumi Junichiro visited Yaskuni shrine this April again, after visiting in August last year. Prime minister Koizumi tried visiting China for 30-year amity memorial; however, it wasn’t achieved due to rejection by China.

Japan is concerned about Chinese military expansion. Japanese defense ministry is cautious, saying, “China is increasing expenditure on defense every year as it increased 17.6% this year.” Japan began revising peace constitution movement that mentions give-up war under an excuse of surrounding situations, however, it raises concern of conflict with neighboring countries in Asia like Korea, etc.

Ñ Where to, Asian leadership = Economical leadership has gone to China already.

And China is rapidly getting close to the U.S and Japan is getting nervous.

China and Japan started to promote free trade agreement with ASEAN, and China decided items for decreasing custom duty, however, Japan didn’t even start negotiation with its government. And export to China by five nations in ASEAN was 9.6 billion dollars in April~June and it surpassed export to Japan (9.0 billion dollars) for the first time. Trade amount of China and Korea was 35.9 billion dollars last year and it was 80% of Korea-Japan trade amount.

There is an opinion in Japan that it should stop ODA, which supports China thousands of yen every year in order to restrain rapid growth of China. Also, Japan is targeting expansion of right of speech in the North-Japan summit, however, it is also hard to come about without the China’s co-operation.

Young-Ee Lee yes202@donga.com