East Asian Giants: Changing Markets of China and Japan

Transcription

1 East Asian Giants: Changing Markets of China and Japan Kristin Vekasi University of Maine

2 The World s Three Largest Economies GNI in millions of USD Actual Size of Economy Projected Size of Economy Time

3 Prediction about the World s Three Largest Economies (circa 1988) GNI in millions of USD United States Japan Germany

4 The World s Four Largest Economies GNI in millions of USD United States Japan Germany China

5 China s economy strong, US modest Most-strong growth in both economies Strong growth in both economies Modest-low growth in both economies Source: The Economist Dec. 27, 2011, The Dating Game

6 Japan High-income, consolidated democracy Stagnant decades, but recent signs of growth Competitive, but robust and stable consumer market New market possibilities with TPP China 35 years of economic reforms and growth, though not for all Chinese Multiple regional economies with different market potential Corrupt and capricious, but likely stable one-party authoritarian regime

7 The Japan that Can Say NO (1989)

8 Japanese Stock Market Annual Values, Nikkei 300 Index

9 No economic recovery without structural reform Privatization and administrative reform Bold domestic leadership Koizumi Junichiro Prime Minister

10 Koizumi s protégé Abenomics and the Three Arrows 1. aggressive monetary policy: end deflation 2. expansionary fiscal policy: short-term economic boost 3. broad growth strategy Abe Shinzo Prime Minister ; 2012-

11 US and Japan Per Capita Income, Reasons for optimism about recovery, Abenomics Per Capita Income, 2005 USD United States Japan Japan is a stable, democratic, high-income country Source: World Bank Development Indicators

12 Points to watch: liberalization of agriculture, finance

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15 US, Japan, and China Per Capita Income, Per Capita Income, 2005 USD United States Japan China Source: World Bank Development Indicators

16 Reform and Opening Late 1970s: special economic zones (SEZs) in Guangdong, Fujian 1980s: liberalization of exports Post-1986: coastal development strategy Rapid growth of export promotion trade Slow growth of ordinary trade Uneven regional composition of trade WTO membership in 2001: trade and inward FDI rocket

17 Special economic zones (SEZs) from : southern, coastal economic strategy Source: Wang, Jin, The economic impact of Special Economic Zones: Evidence from Chinese Municipalities, Journal of Development Economics, vol. 101 (2013):

18 Chinese Inward FDI, Chinese Exports by Region China s Balance of Payments, Balance of Payments, millions of USD 0e+00 1e+05 2e+05 3e Source: World Bank Development Indicators

19 The China that Can Say No (1996) and Unhappy China (2008)

20 Beijing s Economic Model Export-led growth, employing vast, cheap labor force producing labor-intensive products High domestic savings rate Large state-owned enterprises account for 1 3 of total economic output, and maintain control of strategic sectors New shift: Domestic consumption Reform banking and state-owned enterprises

21 Trade as % of GDP in China,

22 M Schiavenza, Mapping China s Income Inequality The Atlantic 9/13/13

23 M Schiavenza, Mapping China s Income Inequality The Atlantic 9/13/13

24 M Schiavenza, Mapping China s Income Inequality The Atlantic 9/13/13

25 Source: The Economist

26 More Developed China(s) Demand for quality, foreign goods Increasing consumption, middle class New rich Financial liberalization Less Developed China(s) Manufacturing possibilities Go West campaign: Xi an, Chengdu, Chongqing Immense possibilities for expansion

27 East Asian Giants: Changing Markets of Japan and China Japan High-income, consolidated democracy Competitive, but robust and stable consumer market New market possibilities with TPP China Multiple regional economies with different market potential Relatively corrupt and capricious, but likely stable one-party authoritarian regime

28 Questions? Kristin Vekasi