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The Leading Power in East Asia will be Japan, Not China

expo_4_large.jpg Posted by : By 2040, Japan will rise as East Asia’s leading power. This is one of our most controversial forecasts at Geopolitical Futures. Our readers know that GPF is bearish on China. And while some may disagree on that point, they usually see that the reasoning is sound. China will face serious problems in coming years… problems that will strain the Communist Party’s rule. Japan, though, seems a bridge too far. Its population is less than a tenth of China’s size (and it’s not just aging… it’s shrinking). Japan also has a debt-to-GDP ratio over 229%. So, how is it that Japan will emerge in the next 25 years as East Asia’s most powerful country? A good place to start is a broad comparison of the structure of China and Japan’s economies (the second and third largest economies in the world, respectively). This analysis will reveal strengths and weaknesses for both and will bring our forecast into sharper relief.

A look at China’s economy by region

The map below divides China into four geographic regions by contribution to national GDP. The data come from China’s National Bureau of Statistics. China sometimes uses these divisions to understand how the economy is performing at a regional level. (It must be noted that these figures are likely manipulated for political purposes.)  The data contain notable discrepancies, in spite of which it still reveal much about China’s economic weaknesses. The coastal Eastern Region accounts for more than half of all economic activity in China. The Central and Western regions each produce about 20% of China’s economic wealth. But let’s take a closer look.

[Read more here, at China Daily Mail]

The Western Region makes up more than half of China’s total land area. When compared to other regions, it produces less than half of what the Eastern Region does. And it produces the same amount as the Central Region, which is less than half its size. The Northeastern Region appears to be an outlier. It accounts for just 8% of China’s GDP. Most of this region’s economic activity is heavy industry and has been under severe pressure as China attempts to increase internal demand and decrease dependence on exports. What does this mean in practical terms? 10-china-gdp-by-region.jpg

Poverty is China’s greatest weakness

China’s biggest economic weakness… and its most potent enemy… is poverty. Regional economic disparities exist in many countries in the world. But in China, they have always been particularly acute. China’s sheer size magnifies this problem. In 1981, roughly 1 billion Chinese people lived on less than $3.10 a day (at 2011 purchasing power parity). The World Bank’s latest data (from 2010) show that the number dropped to 360 million that year. That is a great accomplishment. The problem is that it is not enough. China has been growing at a remarkable rate for the past 30 years, but that growth is slowing down. 360 million people still live in abject poverty. The map shows us that most of China’s economic success is enjoyed by the coast… not the rest of the country. China’s double-edged sword China is the most populous country in the world and the fourth largest in terms of area. This is a source of great power, but it is also a double-edged sword. There are great advantages. China can deploy huge armies. It is buffered from enemies by vast territory or harsh geography on all sides. It can also mobilize human capital like no other country.

[Read the full text here, at Forbes ]

On the other hand, it means that China often spends more on internal security than it does on the much-vaunted People’s Liberation Army. It also rules over many regions that are not ethnically Han Chinese… regions that want greater autonomy (if not independence). And China must maintain a robust capability to guard its borders. China is a formidable land-based power, but it has never been a global maritime power. It has always been susceptible to internal revolution, and at times, external conquest. Now, let’s look at Japan. 10-japan-gdp-by-region.jpg
Wealth concentration in Japan At first glance, this map of Japan (below) seems to imply a similar level of wealth concentration in certain regions. Like China, Japan is informally divided into regions and sometimes reports data at the regional level. Japan is made up of four main islands: Kyūshū, Shikoku, Honshu, and Hokkaido.

Kyūshū, Shikoku, and Hokkaido constitute regions of their own. Honshu (the largest and most populous of the Japanese islands) is subdivided into five additional regions.

These five Honshu regions account for 87% of the Japanese economy. (About 43% of that economic activity comes from the Kantō Region’s seven prefectures.)

This map also separates Tokyo prefecture from the others to provide a sense of how much it contributes to Japan’s total GDP. Tokyo prefecture (by itself) accounts for just over 18%.

Factoring in the Tokyo greater metropolitan area increases this figure. According to the latest available data from the Organisation for Economic Co-operation and Development (from 2012), Tokyo had the largest GDP of any city in the world at $1.48 trillion. (Seoul was second with a GDP of less than half of that.)

That means that greater Tokyo accounts for almost a third of Japan’s total GDP.

Japan’s advantage

Unlike China, Japan’s wealth is spread much more evenly among its population…. (read more)

via China Daily Mail – Source: Forbes – The Leading Power In East Asia Will Be Japan — Not China

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