Chinese and Japanese Economics and Politics

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China and Japan are among the leading economies in the world. They have huge influence on a wide range of global issues such as economy, democracy, trade, politics, education, environmental conservation, security, energy, global recession, innovation, technology, agriculture, and manufacturing. They also have immense influence on international organizations such as the United Nations (UN), G-8, UN Security Council, International Monetary Fund (IMF), World Trade Organization (WTO), and World Health Organization (WHO). However, in terms of democracy, Japan is more democratic than China.

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This paper is based on the topic of economic and political systems of China and Japan. It compares and contrasts the economies of the two countries using political, economic, and social indicators. Specifically, the paper evaluates the size and growth of the two economies and their relationship to capitalism and democracy. It also looks at the impact of the internet on the economies and how the two countries define capitalism in relation to their national political policies.


As mentioned above, the two countries are among the leading economies in the world. According to the CIA Factbook, China was the 2nd largest economy in the world with a Gross Domestic Product (GDP) of 13 trillion (by purchasing power) in 2013. Its growth rate by GDP was 7.7%, making it the world’s fastest growing economy (CIA Factbook, 2013).

China also leads the world in terms of manufacturing and exports. Being the largest trading nation in the world, China has entered into several trade agreements and treaties with several countries. Examples of such countries include Australia, Korea, Switzerland, and Pakistan. China’s economy is described as a socialist market economy, which is considered as open to competition from other countries. China is the world’s most populated country with a population of 1.3 billion people (CIA Factbook, 2013).

Being a member of the G-8, Japan is a major economy in the world. In fact, it is the 3rd largest economy and the 8th most populated country in the world with a population of 128 million people (CIA Factbook, 2013). In 2013, the country had a GDP of 4.7 and a growth rate of 2%. According to the IMF, Japan was the 2nd largest developed economy in the world in 2013. Since its emergence as a major player in the global economy, Japan has entered into trade agreements with key trade partners such as the European Union (EU), Australia, and the United States (US) (Rivoli, 2015).

The economic growth of Japan has been attributed to advancement in technology, supportive government trade policies, skilled workforce, increased capital, and a favorable international trade environment. In fact, Japan has remained the 2nd largest economy after the US from 1960 to 2010, when it was overtaken by China (Australian government, department of foreign affairs and trade, 2014).

Japan’s economic growth has improved the standards of living of the Japanese people (Columbia University, East Asian curriculum project, 2014). In an effort to sustain its economic progress, the country has ventured into the service industry to effectively compete with its major trade partners, especially the US. The decision to venture into the service industry has also been informed by the need to reduce the cost of imported services from other countries. The service industry has played a major role in Japan’s economic growth. For instance, the banking industry accounted for 75% of Japan’s GDP in 2012 (Misawa, 2011). The growth of the banking industry in Japan has made the Tokyo stock exchange a global center of financial exchange, further increasing Japan’s competitiveness across the globe (Misawa, 2011).

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The country’s highly educated population and evenly distributed income has made it to diversify its economy to avoid stagnation like the one witnessed in the 1970 decade (The federation of international trade associations, 2014). The table below shows Japan’s international trade statistics from 2009 to 2013

International Trade Indicator 2009 2010 2011 2012 2013
Total imports (goods) in million USD 551,981 694, 059 855,380 885,843 833,166
Total exports (goods) in million USD 580, 719 769,839 823,184 798,568 715,097
Total imports (services) in million USD 146,965 155,613 165,727 174,924 160,941
Total exports (services) in million USD 125, 918 138,703 142,551 142,489 143,890

Source: The Federation of International Trade Associations

Traditionally, Japan is renowned for its vibrant manufacturing sector, which has been a major force behind its economic growth for many years. It has retained its manufacturing culture and today, it leads in the manufacture of various goods such as machine tools, electrical appliances, chemicals, ships, electronics, optical equipment, steal, and automobiles (Australian government, department of foreign affairs and trade, 2014). However, there has been increased competition from China and South Korea, which are manufacturing some of the goods mentioned above

International trade, which comprises of imports and exports, is a major component of Japan’s economy. In 2013, Japan’s exports from various industries accounted for 27% of Japan’s GDP (Economy watch, 2013). According to Australia’s department of foreign affairs and trade, Japan’s exports were equivalent to16% of its GDP in 2013. Japan’s dominant exports include manufactured goods, machinery, and vehicles (Australian government, department of foreign affairs and trade, 2014). Its major destinations for its exports include the US-18.8%, China- 18.1%, and Korea-7.7%. Its major imports include foodstuff, machinery, and fuel (Australian government, department of foreign affairs and trade, 2014). The suppliers of these imports include China- 21.7%, US-8.6%, and Australia-6.1% (Economy watch, 2014). This information is as presented in the table below

Exports as at 2013
Country US China Republic of Korea
% 18.8 18.1 7.7
Imports as at 2013
Country China US Australia
% 21.7 8.6 6.1

Source: Economy Watch: Japan Export, Import & Trade

As explained above, China and Japan are not only some of the major economies of the world, but they are also among the fastest growing economies in the world. The size of their economies has an influence on capitalism and democracy at the global level. Due to their big size, the two economies have the potential of propagating capitalism and democracy across the globe.

Even though China’s economy is based on the socialist ideology, economic analysts have argued that China’s economy has been transformed into a capitalist economy in the past four decades. The reason is that China has become very aggressive in manufacturing and as a result, it has been relying on raw materials from other countries to manufacture some of its products. Its high purchasing power has enabled it to offer high prices for raw materials especially from Africa and Asia.

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Economic analysts have further argued that China has the potential of overtaking the US in terms of economic growth if China succeeds in controlling the resources and markets of the developing countries. The size of China’s economy does not have a direct relationship to democracy. The reason is that China’s foreign policy does not have any political interests. Since the end of the cold war, the country has never had serious political alliances at the global level to propagate a particular political ideology. The reason is that China’s main interest is becoming a global leader in international trade.

The size of Japan’s economy has a direct relationship to capitalism. After the end of the Second World War, Japan was left behind by the western countries as far as economic growth was concerned. As a result, its economic strategy was coined around the determination to catch up with the western countries and the desire to look for cheap raw materials for its manufacturing sector (Rivoli, 2015).

After the Second World War, the country enacted protectionist policies which restricted competition from western industrial nations and as a result, its economy took off from the disruption caused by the World Wars. During the 1980 decade, many countries changed their perception of Japan. Its ability to export more than any other country raised its rating in international trade and was ranked as an industrial nation like the US and the EU. Its new status mounted pressure on it to ease restriction on its market so that many countries could access it. Pressure was also mounted on the country to be actively involved in the supply of foreign aid.

However, the pressure for Japan to open its market for other countries appeared not to succeed much, especially due to its huge surpluses. The perceived defiance of Japan to open its market precipitated tension between it and its major trade partners. In order to maintain the good relationship with its trade partners, Japan opened its market and by 1987, there was a remarkable increase in imports and as a result, the tension was eased albeit in a small measure.

Japan has therefore been pursuing a capitalist ideology since the end of the Second World War. Since it is a major player in international trade, its capitalistic ideology has contributed to the expansion of capitalism across the globe. Many Japanese citizens have also adopted capitalistic lifestyles due to Japan’s close association with the US.

The size of Japan’s economy has a direct relationship to democracy. The trade relationship between the US and Japan has been explained by many commentators as a classic case of enemies turned to allies. The explanation behind this analogy is that since the time of the two World Wars, Japan and the US have had nasty relationships characterized by enmity, politics of domination and elimination, and sharp ideological differences.

After the Second World War, Japan’s economy was highly disrupted and as a result, it lost grounds for competition with western industrial nations like the US. As explained earlier, Japan’s post war economic strategy was primarily focused on catching up with the US in terms of economic and social development. Its economic fortunes of 1960 to 1990 brought it to the limelight and enabled it to compete with the US in trade and technology.

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After realizing Japan’s unstoppable momentum in advancement in technology, the US had no option other than to turn Japan into an ally in international development. As from 2000, the US became not only Japan’s leading trade partner but also a great ally in political and military affairs. As of 2013, Japan was one of US’ most trusted international allies. At the present, the two consider each other as indispensable allies due to the sharing of economic, political, and social ideologies. In fact, Japan is a key player in pushing US’ interests in Asia.

In terms of how China and Japan define capitalism in relation to national political policies, none of them has integrated national political policies with capitalism. However, there has emerged a trend where aspiring leaders in the two countries base their political campaigns on capitalism, that is, the tendency to use the capitalist ideology to gain political mileage.

In terms of internet, the two countries are properly networked. China’s internet country code while that of Japan According to the CIA Factbook, China had 389 million internet users while Japan had 99 million internet users in 2009. However, in terms of internet hosts, Japan had 64 million while China had 20 million (CIA Factbook, 2013).

These figures show that the two countries are highly depended on the internet for various activities. Specifically, the internet has a great impact on the economies of the two countries. The reason is that most of trade activities in the two countries are based on the internet. Examples include marketing, e-procurement, e-training, supply chain management, customer relationship management, and online selling.

For instance, many firms in the two countries use electronic methods of payment such as wire transfer and PayPal. The use of electronic methods of payment enables the firms to pay for goods and services in a timely manner. Once payments are made in a timely manner, the firms are able to improve their efficiency and effectiveness, which leads to increased profits. Since the firms are taxed by their respective governments, the governments are able to increase their revenues and grow their economies.

In terms of the relationship between economic growth and personal freedoms, the two countries differ to a great extent, with China being more authoritarian than Japan. In China for example, the government has put in place the one-child policy, which is aimed at slowing China’s population growth (Von Der Putten, 2008).

China’s government is of the view that a big population would compromise the country’s ability to accelerate its economic growth. As a result, Chinese citizens are restricted as far as family size is concerned. This restriction has been described by commentators as an infringement of personal freedoms. The policy has also raised serious ethical and moral concerns regarding the punishment of parents who have more than one child (Von Der Putten, 2008).

Another sector which is largely controlled by the Chinese government is the information sector. The Chinese government controls all Television (TV) and radio frequencies, and as a result, there are no privately owned TV and radio stations. It also has a requirement for all foreign TV programs to be approved by the relevant Chinese authorities before being aired. It therefore means that the Chinese citizens do not have the freedom to choose which TV programs to watch, a situation which interferes with their right to information of their choice.

However, Japan is more liberal than China in terms of access to information. The reason is that the government of Japan does not exercise full control of the information sector. The country has one public broadcaster and five commercial TV stations. There are also several radio stations which are not controlled by the government. As a result, the citizens are able to choose their preferred sources of information, either from Japan or from other countries.


Australian government, department of foreign affairs and trade: Japan country brief overview. (2014). Web.

CIA Factbook: China Vs Japan. (2013). Web.

Columbia university, East Asian curriculum project: Economy and trade fact sheet: basic points about Japan’s economy and trading patterns. (2014). Web.

Economy Watch: Japan Economy. (2013). Web.

Economy Watch: Japan Export, Import & Trade. (2014). Web.

Misawa, M. (2011). Current business and legal issues in Japan’s banking and finance industry. New Jersey: World Scientific.

Rivoli, P. (2015). The travels of a T-shirt in the global economy: an economist examines the markets, power, and politics of world trade. Hoboken: John Wiley & Sons.

The federation of international trade associations: Japan: introduction. (2014). Web.

Von Der Putten, J.C. (2008). Moral issues and concerns about China’s one-child policy. S.l.: Grin Verlag Ohg.

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