China Effect on Unemployment and Deflation
In these 20 years, Western economists and journalists have argued Japan's economic slump and financial deficits without linking them to China.
In these days, Western economists and journalists are arguing American economic slump, financial problems, and unemployment without linking them to China.
Yet, more than 700 million workers in China could produce cheap products to export to Japan, the US, and other countries. Accordingly, China could increase its GDP. However, Japan had to face long-term deflation and the US has to suffer grave unemployment.
In the world, when the total population of mankind was six billion, China added 600 million labor force to the global labor market. It first had an influence on Japan, in the form of deflation, no economic theories ever dreamed of. Then, it started to have an influence on the US, in the form of unemployment, no economic theories ever dreamed of.
Since 1980s, China provided labor force equal to and then more than that combining the Japanese and American labor force at costs several times cheaper. This is the core issue for the Japanese deflation and the American unemployment.
To make sure, it is not because Japanese suddenly became foolish and lazy or Americans became suddenly foolish and lazy but because China started to provide six to seven hundred million cheaper labor force in late 1980s.
As the above figure shows, economic growth is effective to cope with the negative impact the large scale of import from China has. In the US, till the 2008 Financial Crisis, the subprime loan scheme played a role of economic growth, though it turned to be false eventually. Huge credit granting to American consumers based on the subprime mortgage-backed house values gave traction force to the US economy. But, when this false scheme was broken and consumers lost credit capacity, growth of the American economy stopped. Subsequently, the negative influence of the import from China emerged so vividly, leading to 3-year-long 9% unemployment. Before the subprime loan boom, it was the IT boom in the US that offset the downward influence of the import from China. The IT boom substantially allowed for economic growth in the US in the late 1990s. But, it was saturated around 2001.
In Japan, condition was more complicated, since Japan has relied on its manufacturing sector more than America. There were real competition with China in this sector. But, the truth is that it was more competition between Japanese makers that had factories in China and other Japanese makers that had not than competition between Japanese makers and indigenous Chinese makers. So, through these lost 20 years of Japan, Japanese makers secured big profits as they used cheap Chinese labor force, but salaries of Japanese workers in Japan stopped to grow, leading to deflation
(to be continued...)
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Some Japanese patriots support an idea of Japan's joining TTP.
These patriots are mostly journalists, academic guys, and urban politicians. They are rather ideological patriots supported by Japanese business leaders who are promoting TPP in Japan.
But other Japanese patriots are against TPP. They are strongly linked to the Japanese agricultural sector, medicare sector, and other expert fields. They know that economic bases on which they live, work, and earn money can be significantly hurt by entry of American businesses into their sectors. They are protected by various barriers the Japanese Government has set around them. But, the US will request removal of those safeguards for Japanese parties concerned in the name of Trans-Pacific Strategic Economic Partnership Agreement (TPP). So, these substantial Japanese patriots are against TPP.
But, ideological patriots claim that TPP is not a simple trade or economic agreement but a Japan-America security related agreement. If Japan joins the US-led TPP, Japan's defense against China will be reinforced, they say. They also stress that China and pro-Chinese Japanese are against Japan's entry to TPP. Therefore, they emphasize, it is a right thing for Japan to be a participant of TPP so as to strengthen the military alliance with the US.
Yet, this argument is so immature. The present security alliance between Japan and the US is strong enough to stand any challenge by China. It is not such a fragile relationship that would be hurt if Japan does not join TPP. Rather, China and pro-Chinese Japanese are afraid that the Japanese economy gets weakened as a result of concluding the TPP agreement. Strong economy of Japan is needed for China to maintain balance between the US and Japan. China can sell itself sometimes high to the US against Japan or to Japan against the US, if the Japanese economy is strong enough to cope with America's. China alone cannot stand the US. Chine needs a buffer of strong economy of Japan to face the U.S. Japanese ideological patriots misunderstand this dynamics.
And, true American patriots should not target Japan as an instrument to solve the American unemployment problem. They have to directly address and tackle China.
Heb 11:29 By faith they passed through the Red sea as by dry land: which the Egyptians assaying to do were drowned.