China, Japan, US: Rising Dragon, Aging Samurai, Bleeding Eagle

[Sandra]

Aging Samurai needs a larger security framework involving China's neighbors such as India, Russia and ASEAN for regional stability

China, Japan, US: Rising Dragon, Aging Samurai, Bleeding Eagle

 - Andy Maheshwari  Friday, June 10, 2011

Old soldiers never die; they just fade away­General Douglas MacArthur, Gaijin Shogun, Japan.

China’s rapid rise as a superpower and a future hegemon is causing tectonic shifts in the global balance of power. According to IMF, in 2016 China will eclipse US to become the leading economy in the world. By many measures such as metals, cement and energy consumption, it already has.

While distant regions such as Latin America, Africa, and Middle-East are welcoming this power shift with enthusiasm, and an aging Europe ridden with crushing debt is facing it with helpless resignation, in neighboring Japan it is causing a chronic alarm.

Part of Japan’s anxiety stems from the realization that its economic power relative to China has seen a complete reversal over the last 20 years. At the end of 1989, Japan’s equity market capitalization was 45% of the world total and its economy was 2.5 times that of China. By 2010, it was China’s economy that was 2.5 times that of Japan.

Throughout the 1980s-1990s - and even recently - American and East Asian business and political leaders admired Japan’s culture, economy and management techniques. Japan’s phenomenal success was seen as a model worth emulating by Third-World. Not so anymore.

Today international observers are largely pessimistic or dismissive when predicting Japan’s role as an influential global player even as the bulk of their focus has shifted to China.

In 2030, China’s economy will be at least 6 times that of Japan, as per capita income gap between the two countries shrinks rapidly.

Everything Japan does, China will do on a scale 10 times larger and perhaps much faster, whether it is communications, transportation, energy, aerospace or military.

The pace of demographic divergence between China and Japan is even more staggering. In last 50 years Japan added 33 million people, whereas China added 680 million - equal to the entire population of Europe.  During last decade, Japan added 1.1 million babies per year on average, compared to ~19 million per year for China.

Quite simply, China is giving birth to one Canada and Australia every three years. Demographically, if China was a flying Dragon, Japan would clearly be the dragon fly.

Despite 32 years since the official declaration of one child policy, China’s birth rate is 1.8 children per woman- almost twice the stated goal- compared to 1.3 children per woman for Japan. The median age for Chinese is 36 years versus 46 years for the Japanese, whereas Japanese life expectancy is 83 years compared to 74 years for the Chinese.

From 2011 to 2030 the vast Chinese labor pool of ~1 billion working age adults (15-64 years) will drive China’s enormous expansion and global resource consumption while the Japanese labor pool will sharply contract from 81 million to 67 million.

China’s torrid pace of development has not been entirely a pleasant experience, but on balance the average Chinese is faring far better than 35 years ago, when Chairman Mao’s grip on power was loosened by his death.

Japan is anxiously observing as China is using its enormous industrial capacity to expand the world’s second most powerful military. Memories of the colossal carnage inflicted during 1937-1945 are still fresh in China, and Japan is increasingly fearful of the ominous repercussions once China maximizes its capacities.

It is not certain that even if Japan progressively deepens its trade and tourism ties with China, conducts well-meaning displays of remorse for its past atrocities, and provides billions of dollars in development aid - informally conjured as war reparations­its future security prospects vis-à-vis China will dramatically improve.

Japan’s maturing population and high-tech economy presents both opportunities and impediments for its future prosperity and security. Declining population for an overpopulated island nation with negligible energy or mineral resources and only 40% food self-sufficiency is a net positive, especially when Japan’s Human Development Index (HDI) is among the top in the world.

On the other hand Japan’s public debt is now >200% of its GDP, the highest among the developed world. As its domestic savings deplete, Japan is increasingly looking towards international finance to fund its government expenditures. Paradoxically, Japan also holds more than $900 Billion in US debt if one were to believe official US data.

On June 7, 2011, Japan’s Finance Ministry revealed that China’s holdings of long term Japanese debt have reached a new record.

Japan’s principal security ally US is also aging and declining with a looming entitlement Armageddon of Medicare, Medicaid and Social Security insolvency, unsustainable $1 Trillion+ military budgets, rising consumer price inflation, falling incomes for middle-class and working poor, crumbling infrastructure and a dwindling worker to retiree ratio - from 16.5:1 in 1950 to 3:1 today and 2.2:1 in 2030.

As the 2012 GOP primaries intensify, voters will need to be informed of the unsustainable US military presence in Eurasia, including Japan. If Jon Huntsman from Utah decides to run, his calamitous stint as US ambassador to China might become the focus of criticism from his rivals.

Did Ambassador Huntsman communicate effectively with Chinese leaders to share US anxieties over rapid Chinese military build-up? What kind of advice did he give to Obama administration to address China’s rise in the face of crushing US and Japanese debt?

Huntsman, Mitt Romney, Tim Pawlenty and others will have to explain how they will bring manufacturing jobs to US amidst an unstoppable flood of Asian and Latin American goods that have devastated American industrial capacity and put enormous downward pressure on working class wages. Massive transfer of US high technology to China has also eluded mainstream media’s attention.

It remains to be seen if GOP hopefuls will see the writing on the wall and realize that US foreign policy needs deep structural changes to make it sustainable in the face of rapidly declining American capacity.

Aging Samurai needs a larger security framework involving China’s neighbors such as India, Russia and ASEAN for regional stability so that its principal ally US can look inwards to address an impeding fiscal, social and constitutional crisis.

A total withdrawal from Eurasia, while maintaining uncontested sea and air power in the Pacific is the only sustainable path forward for US as a world power.

http://canadafreepress.com/index.php/article/37406