The Economic Impact of China's Fast Growth on the Japanese Economy

ABSTRACT

China's economic growth is continuing at a fast rate and along with this growth, the scales of its markets are expanding, and its influence on the Japanese economy has enlarged.

As China's economy grows, so too does the economic relationship between Japan and China. The remarkable increase in Japan's exports to China is not only expanding Japan's total exports, but it is also contributing to the recovery and the growth of the Japanese economy. China's demand has enlarged the exports of specific industries, and the resulting increase in production and appreciation in prices have improved corporate revenue. In other words, China's special procurements have led to the renewal of specific industry sectors, which have in turn extended their influence to other industries ultimately contributing to a rebound in the Japanese economy as a whole.

While Japan has been reaping benefits from China's high economic growth, this has been a direct result of changes in Japan-China relations, and an about-face in the business strategies of Japanese corporations. The structural changes in China's economy have caused an increase in demand for Japanese goods. Meanwhile, Japanese industries have expanded its local selling and local procurement operations, made investments for new products and new technologies in the Chinese market, constructed independent sales and service networks, and adopted new management strategies such as differentiation against Chinese businesses. Japan has, in effect, learned how to compete in China.

As China's high economic growth is expected to continue in the years to come, it could feasibly become Japan's largest export market. Thus, strengthening Japan's approach to the Chinese market will be a sure step toward the advancement of the Japanese economy. But in order to enjoy the most benefits from China's high economic growth, it is necessary that Japan implement several different measures: a strategy of complete localization and a plan for competition through differentiation are essential in facing Chinese corporations. It is also necessary to realize the risks involved in Chinese special procurements, and be prepared to respond to them. In terms of policy measures, it is important that Japan promote free trade with China, and that it also be cautious not to aggravate political relations.