China or Japan: Which Will Lead Asia? by Claude Meyer (review)

This book is a well-informed comparison of Japan and China in an East Asian setting, but the title is an unfortunate choice. The question the author addresses, that is, which of these two will “lead” Asia, is problematic. Before explaining why, it is only fair to summarize the author’s argument first.

Meyer suggests in the introduction there is an ongoing “battle for supremacy in Asia” (p. 5). Then in chapter 1 he reviews the post–World War II trajectories of China and Japan. To show why one should not take these countries lightly, he points to China’s 30 percent of world GDP before the industrial revolution transformed the West, as well as to Japan’s extraordinary ability to respond to challenges that have sunk other nations. In both China and Japan, the state played a key role in their respective rises in the modern era by investing in education, directing high domestic savings into industrial investment that drove a mercantilist export-driven development strategy supported by nationalism. He notes that, for the Chinese party-state, the motivation for its embrace of reform and opening up was regime survival. For resource-poor Japan, the motivation to develop industry was and remains export or die. However, there are key differences: China developed under a one-party dictatorship gradually transitioning a socialist planned economy onto a market-driven track, while Japan was ever a market economy; the scale of China’s labor and resource endowment dwarfs that of Japan, while Japan’s capital and technology resources still overshadow those of China; and foreign direct investment has played a major role in China’s miracle, but not in Japan’s. He then goes on to characterize the historical development of bilateral relations as passing through five stages: Kinship (centuries-old shared cultural heritage), Emancipation (Japan’s refusal to participate in China’s tributary system and kowtow to whoever ruled China), Betrayal (Japan’s pursuit of Westernization after 1868), Aggression (Japanese imperialism), and Recognition (the period of normalized relations after 1972).

In Chapter 2, the author compares the strengths and weaknesses of the two presumed rivals. After positing that China has strength in cheap labor while Japan has strength in product and production technology, Meyer goes on to give a more detailed account of the Chinese and Japanese economic models introduced in Chapter 1. With respect to present challenges, he gives a good brief characterization of China’s problems with rising inequality, environmental destruction, fiscal and bank bad loan burdens, import dependence, erosion of comparative advantage, and political stability. For Japan, the challenges are aging, public debt, import dependence, and political paralysis. He ends the chapter by pointing out how the Wall Street crisis of 2008–2009 slowed both export-dependent economies, indicating a shared need to shift toward more consumption-driven economies.

Chapter 3 explains how Japan is seeking “normalization” by developing diplomatic and security roles commensurate with its economic weight in regional and global affairs. He describes Japan’s efforts to organize regional institutions, support financial stability, integrate the region through networks created by its banks, manufacturers, and trading companies (building an Asian “integrated circuit”), finance development, spread its soft power, and build interdependent and complementary relations with China. With respect to regional community, the Japanese desire for an ASEAN+6 grouping (the 10 ASEAN members, the 3 Northeast Asian countries, and the peripheral democracies of India, Australia, New Zealand) collides with China’s preference for a purely East Asian grouping (ASEAN+3) in which it would naturally hold sway. In political and security affairs, Japan’s pacifism, inward-looking cultural orientation, and constitutional ban on war limit its ability to wield the kind of international influence that an “ordinary” country of its capacities would have.

Chapter 4 reviews China’s “peaceful rise” which eclipsed Japan’s GDP in 2010, is forecast to overtake the United States by 2030, and is moving toward regaining a position of preeminence it enjoyed in the premodern era. However...