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Is "China Fear" Warranted? Perspectives from Japan's Trade and Investment Relationships with China


  • Shigeyuki Abe

    (Center for Southeast Asian Studies Kyoto University 46 Shimo Adachi Cho, Sakyo Ku Yoshida Kyoto 6068501 Japan)


A fear of China's economic growth, particularly with regard to its recent evolution into the "factory of the world," is often expressed in the Japanese mass media. This paper reviews the development of trade and investment relations between Japan and China and examines the validity of this "China fear," pointing out the ways in which China continues to lag behind Japan on many economic fronts and describing strategies that Japan could use to improve its performance. Japanese firms need to focus on producing more specialized high-tech products. At the same time, to cope with competition from China, they must take more drastic measures to keep costs down in the production of low-tech products. Some Japanese enterprises have already initiated new approaches in management, production, and distribution. The views of three of Japan's leading economists are critically reviewed, with a focus on how Japanese firms might draw profitable lessons from China's situation, improve their joint ventures with Chinese firms, and benefit from China's large market by concentrating more on local conditions. Copyright (c) 2003 Center for International Development and the Massachusetts Institute of Technology.

Suggested Citation

  • Shigeyuki Abe, 2003. "Is "China Fear" Warranted? Perspectives from Japan's Trade and Investment Relationships with China," Asian Economic Papers, MIT Press, vol. 2(2), pages 106-131.
  • Handle: RePEc:tpr:asiaec:v:2:y:2003:i:2:p:106-131

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    References listed on IDEAS

    1. McKibbin, Warwick J & Vines, David, 2000. "Modelling Reality: The Need for Both Inter-temporal Optimization and Stickiness in Models for Policy-Making," Oxford Review of Economic Policy, Oxford University Press, vol. 16(4), pages 106-137, Winter.
    2. Wing Thye Woo, 1999. "The Economics and Politics of Transition to an Open Market Economy: China," OECD Development Centre Working Papers 153, OECD Publishing.
    3. McKibbin, Warwick J. & Wilcoxen, Peter J., 1998. "The theoretical and empirical structure of the G-Cubed model," Economic Modelling, Elsevier, vol. 16(1), pages 123-148, January.
    4. Ianchovichina, Elena, 2001. "Trade Liberalization in China’s Accession to WTO," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 16, pages 421-445.
    5. Wing Thye Woo, "undated". "Chinese Economic Growth: Sources And Prospects," Department of Economics 96-08, California Davis - Department of Economics.
    6. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
    7. Warwick J. McKibbin & K. K. Tang, 2000. "Trade and Financial Reform in China: Impacts on the World Economy," The World Economy, Wiley Blackwell, vol. 23(8), pages 979-1003, August.
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