Some Possible Lessons for Japan from China's Economic Reforms
9 Pages Posted: 20 Jun 2010
China's economy has grown by an average of nearly 10% a year since the country embraced economic reform in 1978. In contrast, Japan's economy has been stuck in a rut ever since the asset boom of the 1980s turned to bust in the 1990s. Japan may have much to learn from China's experience in its attempts to revitalize its economy. China's experience suggests that fostering a new system is strategically more important for successful reform than changing the old system. Like China’s non-state-owned sector (private and foreign-funded companies) in its initial stages, no matter how weak a new system is or what its shortcomings are, it is a mistake to ignore its potential. China's experience of economic reform suggests that Japan needs to focus more on growth industries and venture businesses than on mature industries and large companies. Also, it might do more to encourage inward direct investment.
Keywords: economic reform, gradualism, China, Japan
JEL Classification: P20
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