A friend forwarded me this intersting article, by Rowan Callick in The American, about Japan's economy and role in the world:
All eyes have focused on China lately, but Japan’s economy is nearly twice as large. More important, the ‘lost years’ of economic stagnation are over. Japan is back, and Japan is different. ROWAN CALLICK looks at why Japan changed, its new reform spirit in economics and politics, and its relations with the U.S. and with its obsession, China.***
There is no doubt that Japan is on the rise, but the particular contours of this latest ascendancy remain undefined. Will Japan come to terms with its imperialist past and find a way out of its demographic dilemma? To what extent will Japan allow its cultural and political rivalry with China to trump common economic interests? How will Japanese relations with the West change? So far, it seems clear that Japan wants to remain a close ally of the United States, but not at any price. In the aftermath of World War II, Japan had no choice but to follow the U.S. lead, but that era is now over.
And how will the United States respond to Japan? So far, in stark contrast to the outcries of the 1980s, the American public does not even seem to have registered that Japan is on the rise, and until very recently American investors did not seem to be paying attention either. But that picture has shown some signs of change. Fidelity’s Japan Fund now has $1.9 billion in assets, and in late April, Merrill Lynch announced it would buy a $2.9 billion stake in Japan’s fourth-largest bank, Osaka-based Resona Holdings. Citigroup has been seeking to buy Japan’s third-biggest brokerage firm.
A few years ago, Richard Jerram, the astute chief Japan economist at Macquarie Securities, wrote, “The typical U.S. institutional investor seems to view the Japanese recovery rather like most Americans view the soccer World Cup. They are aware that it is taking place, but have difficulty in getting very excited about it.” That’s changing. Americans as a whole, not just big investors, are beginning to realize that Japan is back—and that Japan is different.
Click here to read the entire article.
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