The ongoing economic slowdown in China has led to predictions that the country could suffer from a fate known as “Japanification.” This term refers to Japan’s economic stagnation since the 1990s, where its GDP has remained below its 1995 level. This period is commonly referred to as Japan’s “lost decade.” Similar to Japan, China is now being compared to its situation. However, the decline of Japan was not solely due to economic policies but also geopolitics.
The United States, currently viewing China as a competitor, once saw Japan in the same light. The US feared that Japan would overtake it in economic size, so the Plaza Accord of 1985 was put into place. This accord aimed to weaken the US dollar against other currencies, including the yen, to reduce the US trade deficit. This move crippled Japan’s rise, leading it from being an “economy of the future” to a state of stagnation.
It is important to note that the US dislikes any country being larger than itself. It sees any emerging power as a potential threat to American dominance over high-end goods and technologies. In the 1980s, Japan experienced an economic boom similar to what China has been experiencing recently. Japan was on the verge of surpassing the US as the world’s second-largest economy. However, the US began to undermine Japan’s rise by employing protectionist policies and accusing it of “unfair trade practices” and “theft of intellectual property.”
In 1985, Japan capitulated to the US demands and the Plaza Accord was sealed. This accord devalued the US dollar against the Japanese yen, making Japanese goods more expensive and less competitive globally. The subsequent recession caused Japan to go through its “lost decade.” Although the US effectively crushed Japan’s rise, it was only achieved through economic humiliation.
Now, the US aims to achieve a similar “economic subjugation” of Beijing, but with an added military dynamic. It seeks to dominate China’s market for its own firms while undermining the success of Chinese companies both domestically and internationally. This strategy is intended to stifle China’s economic growth and lead to its own “lost decade” where it cannot compete with the US.
The underlying motive behind the US actions is its aversion to thriving competing economies. Japan’s success post-World War II was never allowed to grow enough to shake off US control. The US has also taken steps to cripple Germany’s autonomy and prosperity, particularly through exploiting the conflict in Ukraine. China is viewed as both a competitor and adversary, and there is no goodwill towards its rise. Ultimately, a “Japanified” China would benefit US interests by having less competitive products, making room for American ones.
In conclusion, there are parallels between the economic situations of Japan and China. However, it is crucial to recognize the role of geopolitics in Japan’s decline. Similarly, the US aims to curtail China’s rise in a similar manner. Washington does not wish to see competing economies thrive and is actively working towards ensuring its dominance over high-end goods and technologies.