Largest Trading Partner Of Japan And China example essay topic

Japanese economy has been in a slow phase for almost a decade now. Despite changing prime ministers every one or two years, over the last ten years, and despite numerous supplementary measures to revive, the economy has not been picked up. Though some pundits are saying that the Japanese economy would not pick up until the United States economy picks up, from the slowdown following September 11th incident, it may be wishful thinking. The U.S. economy was growing ten years, from 1990 till 2000, and it did not do any good in Japan's GDP growth.

Though, many kinds of "reformsEare being proposed to remedy the Japanese economy, the studies by the author reveals that the needed reforms are more fundamental in nature. Author considers the core of the Japanese economy, which is the manufacturing and exports. By looking at the hierarchy of the Japanese industry, author's research, reported for the first time here, finds that the lower layer companies in this hierarchy lack managerial skills to compete at the present "globalizationEdominated by the U.S. Unless the government takes measures to address this, Japan would be in a difficult situation to revive its economy from the present situation in a sustainable manner. 1. Introduction Japan has been under near recessionary conditions for almost a decade now. The government measures to revive the economy through borrowing and spending have led to huge fiscal deficits thus dragging Japan from the lowest debt OECD nation to one of the highest.

News of big losses, corporate closures, and layoffs abound, the consumer spending, a large percentage of country's GDP, keeps falling further aggravating the problems. Trying to find a solution through patchworks of "reforms", the country has been changing prime ministers every one or two years over the last ten year period, without making much progress to the economic ills. Yet, while Japan drags on, it is interesting to note how two of the economies, United States and China, which have much stake over the economic situation in Japan have been doing. United States of course is the largest trading partner of Japan and China has fast become the second, with two-way trade rising over 200% from levels seen ten years ago (Ref. 3).

Just the GDP data from 1996 to 2000 shows considerable growth in both U.S. and China while Japan lagged far behind (Ref. 1). Though many Japanese politicians put much emphasis on the United States and attempt to link the recovery of Japan with strong U.S. market, graph shows that it has not been the case. It did not happen when the United States was enjoying a ten year period of growth from 1990 to 2000; so, there is no reason to believe that a U.S. recovery would bring growth in Japan automatically. While U.S. achieved significant growth by pioneering a major "globalization push", China took advantage of it by opening the market with so-called Deng Xiaoping reforms. Another reason for growth in the U.S. over the last decade has been the effective use of Information Technology (IT) in areas such as Logistic Management and Financial Management.

Though Japan was closer to China than the U.S., it was the globalization minded U.S. which first started using China as a low-cost manufacturing base. Though Japan operated the largest trading houses in the world, such as Maru beni and Ito chu, it was the IT savvy U.S. who used the logistic software, such as Supply Chain Management (SCM), to minimize the production, inventory, and logistical expenses in global trade. Just as manufacturing providing growth in China, it was manufacturing which played a major role in the growth in Japan, from somewhat agrarian society a century ago to a highly developed nation today. The manufacturing sector provides 30% of the employment and 40% of corporate profits in the Japanese economy (Ref, Japan Almanac 2002).

Manufacturing sector also provides the underpinning for majority of small and medium size enterprises (SME) in all kinds of other sectors, such as Food and Retail, which depend heavily on the service needs of the manufacturing sector for their survival. According to studies, 77% of Japan's total labor force is engaged in SMEs, and hence, has huge dependence on the manufacturing sector. (Ref. 5). What had happened since around 1990 till now though is a continuous decline of manufacturing in Japan.

Manufacturing share in Japan has decreased to about 21.5% of the GDP at present while China has seen its share in GDP approaching 60% (Ref. 4). This clearly explains the growth in China and recessionary situation in Japan..