The news broke yesterday that Japan has slipped from the number two spot in the GDP stakes to number 3 behind China. Does this really matter?
Political analysts will blame parliamentary deadlock and vested interests. Investors will blame over-engineering and timidity. The simpler version is that Japan has ceded its status as the world’s second-biggest economy to China because it lost interest in keeping it.
The farcical domino-run of six prime ministers in five years marked a haemorrhaging of national gravitas that few other electorates would tolerate. Even if Japan as a whole were hungry enough to give China a battle for the second-place spot, it has nobody willing to channel that energy.
Here is a more positive take.
Today’s pessimism undoubtedly also would have been heard in the 1860s, when centuries-old Japanese political, social and economic models were collapsing. Out of that chaos, however, the world’s first non-Western modernized society and a great power emerged. A veteran Japanese journalist told me over lunch the other day that Japanese act the best when they are shocked. Perhaps losing their coveted economic slot to China will prove the kind of shock that makes take some chances and free the creative energies of its people.
Mark Perry has the bottom line.
Adjusting for GDP (Purchasing Power Parity) on a per-capita basis, China (at $6,567) has a long way to go before it achieves “superpower” status, considering that it ranks #102 according to the CIA, #99 according to the IMF, and #92 according to the World Bank. In fact, on a per-capita basis in 2009, China ranked behind Namibia, Jamaica, Belize, Thailand, El Salvador, and Albania. And the last time the U.S. had per-capita GDP of $6,567 was back in 1932.
There are really two stories here rolled into one. Japan’s stagnation; and China’s rise.
China are now the biggest exporting nation. There’s no way around the fact that they are an economic superpower. If Hayek is right, and production, not consumption, is the key indicator of an economy’s strength, then purchasing power is irrelevant.
daddy dave
19 Aug 10 at 9:57 am
The news broke yesterday that Japan has slipped from the number two spot in the GDP stakes to number 3 behind China
Really?
The news broke today that our political culture is a vacuous bimbo in an LA bar waiting to meet her dream date: the guy that can get her into the Porn Business (Gee. I hope he’s, like, waxed n’ all). Interesting when the inevitable happens innit?
What I’d like to know is how Japan kept it up considering the shit it’s been thru since, oh, when did the Emperor Mutsuhito ascend the throne again.
Adrien
19 Aug 10 at 11:34 am