Academic journal article Multinational Business Review

The Role of Japan in China's Economic Devolopment

Academic journal article Multinational Business Review

The Role of Japan in China's Economic Devolopment

Article excerpt

This paper reviews Japan's economic relations with China in the pre-and post-Tiananmen era. More specifically, the objectives of this paper are three-fold. First, it explores the evolution of Japan's trade with its huge neighbor. Bilateral trade between the two countries has consistently increased since 1986, except for a brief setback in 1990. In 1993, Japan became China's largest trading partner. Second, the paper analyzes Japan's level of private investment in China. Japanese investment in China has increased dramatically over the last couple of years. In 1993, corporate Japan invested approximately $1.75 billion in China. Most Japanese investments are concentrated in the country's former colony in northeast China, especially Liaoning Province. Third, the paper reviews how Japan has gone from a fledging aid donor to one of the largest aid doners in the world in only three decades. Japan's aid remains strongly centered on its Asian neighbors, with Indonesia and China topping the list of recipients.

Japan has consistently viewed its relationship with China as special because of China's size, abundant natural resources, and strategic location (Asiaweek 1993; Baldinger 1992). For example, the Japanese Embassy in Beijing is second in size only to its Washington delegation. Moreover, Emperor Akihito's visit to China in November 1992 enabled China to break out of the diplomatic isolation which resulted from its crack down on the pro-democracy movement. It was an historic trip since it was the first time a reigning monarch had visited China in two millennia.

Japan's economic relations with China in the post-war period are in the areas of trade, investment, and aid. In the beginning, trade was the main focus, followed by investment. More recently, aid has become progressively more important as Japan evolved into an economic superpower.

Critics claim that the Asia-Pacific region is being dragged into a post-war version of Japan's "Greater East Asian Co-Prosperity Sphere" without the use of military force. However, some Japanese scholars insist that Japan's apparent domination is not the product of a concerted plan to gain regional hegemony. Rather, they prefer to explain Japan's role in the Asia-Pacific region by referring to three concurrent waves of industrialization in the region and by using the metaphor of a wedge of flying geese, with Japan in the lead and opening the doors for the "geese" that follow (Mochizuki 1990; Awanohara 1989; Kendall and Jaewono 1991; Romm 1992). The first wave of industrialization was in Japan in the 1960s, followed by the second wave in the 1970s and early 1980s of the Asian Newly Industrializing Economies (NIEs) consisting of South Korea, Taiwan, Hong Kong, and Singapore. The third wave in the mid 1980s and early 1990s is led by other Association of Southeast Asian Nations (ASEAN) and the coastal economic zones in China.

The flying-geese pattern envisions Japan as being higher up on the technological chain. The gradual transfer of technology will eventually lead to consecutive take-offs of the geese behind it. As Japan's industrialization moves to cuttingedge reality by concentrating on research and development as well as advanced designs and other hi-tech processes, it shifts its laborintensive industries such as textile and consumer electronics to the NIEs behind it. As the NIEs shift from labor-intensive industries to more technology-intensive fields, they in turn would transfer the labor-intensive industries to ASEAN countries and the coastal zones in China. Consider the transfer of VCR technology from Japan to other Asian countries. Japanese companies first transferred VCR technology to South Korea, then to Singapore. More recently, Hitachi announced plans to supply VCR technology to three Chinese-owned plants.

Corporate Japan is attempting to tap the growing affluence of an increasing minority of China's 1.2 billion people. According to a study conducted by McKinsey, corporations should concentrate marketing efforts at flourishing pockets of wealth in China (Shaw and Woetzel 1993). …

Search by... Author
Show... All Results Primary Sources Peer-reviewed


An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.