Asia’s Superpower in 2040 Will Be Japan instead of China


This is an article by the following writer. He means Asia’s superpower in 2040 will be Japan instead of China but gives the title “Asia’s superpower in 2040 won’t be China”. I changed the title to make his meaning clearer.

George Friedman and Jacob Shapiro, Mauldin Economics Feb. 7, 2017, 8:11 PM

Members of Japan's Self-Defence Forces' infantry unit march during the annual SDF ceremony at Asaka Base, Japan. Reuters/Kim Kyung Hoon

Members of Japan’s Self-Defence Forces’ infantry unit march during the annual SDF ceremony at Asaka Base, Japan. Reuters/Kim Kyung Hoon

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. (I write about this topic extensively in “This Week in Geopolitics” — subscribe here free.)

Japan, though, seems a bridge too far. Its population is less than a 10th of China’s (and it’s not just aging but also shrinking). Japan also has a debt-to-gross-domestic-product ratio above 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’s and Japan’s economies (the second- and third-largest economies in the world).

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 comes 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 most likely manipulated for political purposes.)
chinas-gdp-by-regions

The data contains notable discrepancies, in spite of which it still reveals 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.

The Western Region makes up more than half of China’s total land area. But 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?

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) shows 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, with 360 million people still living in abject poverty.

The map shows us that most of China’s economic success is enjoyed by the coast and 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.

On the other hand, it means 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.

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-gdp-by-region
Japan is made up of four main islands: Kyushu, Shikoku, Honshu, and Hokkaido.

Kyushu, 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 Kanto 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 Organization for Economic Cooperation 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.)

Factoring in the Tokyo greater metropolitan area increases this figure. According to the latest available data from the Organization for Economic Cooperation 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 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. On the simplest level, this is easier to accomplish with a population of 127.3 million than with a population of 1.3 billion.

But this is not strictly about size. What holds China back is the diversity that results from its size.

Japan does not have to deal with the type of coastal-versus-interior diversity that China does.

In the China example, almost every coastal province could be compared with an interior province and a similar gulf would exist. In Japan, only Tokyo is significantly above the mean per capita income of 3.1 million yen for the entire country, and that is due, in part, to the higher cost of living in the city.

There is wealth disparity in Japan to be sure, but the disparity is not on the same scale as that which exists at the provincial level in China.

Japan’s greatest challenge

Japan’s great weakness is its dependence on imports for food and raw materials. The country’s total food self-sufficiency ratio based on calorie supply was just 39% in 2015. Based on production value, it was just 66%.

Japan relies almost entirely on imports for staples like wheat, barley, corn, and soy.

Energy is another example of this dependence on imports. One of the main reasons Japan entered World War II was to protect its access to oil.

Today, Japan is still reliant on foreign sources of energy. Even before the Fukushima nuclear reactor accident in 2011, Japan relied on foreign sources for close to 80% of its energy supply.

Since 2012, that number has risen to almost 91% (according to the US Energy Information Administration).

Some will argue that Japan’s bigger problem is demographics. It is true that Japan has a rapidly aging population. But so does China. Most European countries also face this issue.

But Japan has options

Japan is one of the top investors in the world in artificial intelligence research, automation, and robotics technology to maintain productivity.

And while Japanese society is homogeneous and relatively unfriendly to outsiders, desperate circumstances could call for desperate measures and necessitate changing policies on immigration.

The broader Asia-Pacific region also offers opportunities for Japan to find workers to address this problem.

A final comparison

Japan is the 62nd-largest country in terms of area. It is the 11th largest in terms of population. But neither of these facts disqualifies Japan from rising as a regional power.

Unlike China, Japan has no land-based enemies — it is an island nation. Unlike China, the Japanese government has no concern about its ability to impose its writ throughout the entire country.

Nor does it have to deal with a huge gulf in wealth disparity between regions. Japan has also managed a transition from a high-growth economy to a low-growth economy without revolution.

Japan’s weaknesses have manifested in the development of a strong navy able to guard maritime supply lines. It has also cultivated a tight alliance with a country that will guard those supply lines, the US.

To be clear, China is still a very powerful country relative to most in the world. As such, much of our writing remains focused on understanding how economic problems in China are manifesting in political challenges.

For now, Japan is less dynamic and important — though it will become more so — and our writing on Japan will increase as it becomes the leading power in the Asain Pacific.

Source: Business Insider “Asia’s superpower in 2040 won’t be China”

Note: This is Business Insider’s article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.

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11 Comments on “Asia’s Superpower in 2040 Will Be Japan instead of China”

  1. Title says:

    It can happen we must beware if US nuke China and Russia. And China nuke US for retaliate. That time Japan will be Superpower and that is Abe dream

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  2. Simon says:

    It is far more likely Japan becomming part of China in 2040 under Beijing’s rule. That is the only chance Japan being a superpower, as a Chinese province.

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    • Fugu says:

      Then again on the other hand, China could end up under Japanese dominion the way it came under the Manchus and Mongols.

      In either case it was not good for the Chinese as millions got unnecessarily got slaughtered in genocides and humilatingly became second class citizens in their own country.

      No matter if you rationalize it that eventually these foreign rulers got absorbed or assimilated into Chinese society, it was not worth it. The discrimination, suffering and shame is not worth it. Historically you have nothing to be proud. Imagine what it does to your psyche and your children’s psyche and your grand children’s.

      No, far better Chinese dominate and maintain control over other minority groups like the Japanese or Uighyers or Tibetans and assimilate them under its own program and timetable.

      China’s national security comes first. If they misbehave and threatens Chinese security, conduct a regime change and absorb them into China proper; The way Shinzo “militant grandson of a war criminal” Abe is doing.

      East Asia faces a new enemy from across the oceans. Either duplicitous Abe knows how to tightwalk his country as a buffer zone for China or be removed from his post. Japan as a “first island chain” can either be a defensive wall against invasive foreign barbarians or a prison wall to hem China and other mainland East Asians.

      The latter cannot be. Tokyo must choose wisely or forever lose its sovereignty. Even if they fight ferociously – to the delight of foreign barbarians – the weight of History is against them and fresh in Chinese minds. The fight will no longer be one sided as in 1931 and 1937. Chinese will fight for vengeance, honour and national security. And that is a mighty potent combination why China must fight to win. It is more than a dream.

      Hope you are listening Mr “duplicitous” Abe. Your window of opportunity is closing fast. Do not miscalculate like your grandfatber Kishi did. You have much to pay already.

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  3. Simon says:

    China has the world’s fastest computer 2 years running taking the crown away from America. The Japanese stealth fighter is a joke does not compare with current 4th or even 3rd gen fighters.

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  4. Tyler Reber says:

    It will take a whole lot of robots to produce enough to be the largest.

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  5. Simon says:

    Japan today is not the Japan of old. Japanese today are lazy, there are many jobs young Japanese will not do. The backbone of Japanese manufacturing are done by Chinese workers without them Japan would be in crises.
    Japan’s military and idustrial success in the late 19th and early 20th century came at the expense of a political disrupteve peiod in Chinese history. Japan was the only country in Asia who became industrialised and use the poistion for hegmony upon its neighbours who did not have a good start. To suggest Japan can somehow free its shackles from Washington and become a superpower over China is laughable. It was not that long ago Japan has the most powerful navy in East Asia by some distant, that position now belongs to China who now pulls ahead rapidly.

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  6. Unknown-V says:

    Sorry, but I can’t believe it. Why?

    1. Japan’s population is shrinking fast.

    2. Japan’s debt ratio (twice of its GDP)

    3. Japanese companies (especially electronic manufacturer) lose to Korean, Taiwanese, or Chinese.

    CMIIW

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  7. Fre Okin says:

    Joker analysis. Japan will be eating China’s dust as China speed up her development in all areas. Chinese meritocracy model is very admirable as long as corruption can be contained. China is closing the gap very quickly with US in all areas of technology. The hard truth the joker authors refuse to see is China have 4X population of US, 10X population of Japan and the Chinese with good STEM expertise is second to none, so just based on population size alone, the Chinese produce more technically capable people than Japan and US.

    China had suffered from restrictions on sensitive exports with dual use technology but the Chinese are smart enough to learn fast, build their own home grown equivalent to make comparable products against Japan and even US. With acquisition, espionage, own home grown skills, China will pull ahead, far ahead of Japan in the next few decades. Japan have maxed out. China still have vast potential to grow. Chinese diaspora will be a big factor in helping the Chinese move ahead fast. They will help China overcome technical bottlenecks.

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  8. Foxhound says:

    Usual western idiot fantaisies. As nowadays most of the western assets are in decline at the favour of China, and at the expenses of West. What could they say other than stupidities like that.

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  9. Anonymous says:

    The Japanese can start dreaming, only 22 years away. Over three decades ago, developed nations like US, Russia, UK, Germany, France would be laughing themselves stupid, if some experts predict that
    China will become the worlds 2nd biggest economy, US largest creditor, 2nd most powerful military, moved 700,000 people out of poverty, world’s richest spending tourist, leading space explorer, sealord of the SCS, OBOR, AIIB plus much more.

    China will be a continuing rising global power for decades. Its not proper to predict in 22 years, 2040, Japan will be Asia’s superpower instead of China.

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  10. alking1957 says:

    These are jokers who want to throw something totally unlikely out there so that on the slight chance that it turn out right they can claim to be geniuses. I treat them like White Gordon Changs

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