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Nigel Harris

The eastern sun rises

(November 1985)

From Socialist Worker Review, No. 81, November 1985, p. 8.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

AS CHINA has opened up to the world system, it has increasingly related to the Japanese economy. Japan’s exports to China have increased rapidly in the eighties. They are 50 percent up in 1984/85 alone (compared to an increase in overall Chinese imports of 38 percent).

Increased imports reflect both the close attention to China paid by the Japanese government and the energetic efforts of Japanese companies – some 250 are represented in Peking (ten times the representation of British companies). The exports are mainly consumer goods, pouring in to meet the great hunger for durables of newly prosperous Chinese consumers. China is now Japan’s largest export market for colour television sets and fridges. It is Japan’s second largest market for vehicles, and in 1985, overtook the United States as the largest volume buyer of Japanese steel.

The Chinese government aims to increase per capita gross national product up to the year 2,000 from about 300 to 800 US dollars. Japanese traders thus foresee a continuous expansion in the Chinese demand for their offerings, with a possible market of ten million television sets per year for forty years (the current Japanese output is about 15 million sets per year).

Do these short term economic changes represent any long term political trends? Some people in Japan see the Sino/Japanese relationship as the basis for continued Japanese growth in the face of world slump and stagnation (in the same sort of way as the South African government appealed to the rest of Africa to close ranks with it in the mid seventies against world slump). The combination of unlimited cheap Chinese labour with Japanese capital and technology could, it is said, be the heart of a regionally self-sufficient economic bloc, especially if it came to include the oil of Indonesia.

Economic insurance

In the thirties, the creation of this regional ‘Co-Prosperity Sphere’ under the control of Tokyo was the declared aim of Japanese imperialism. More modestly, others think China could supply an economic insurance policy against the risk of import controls directed to keep out of North America and Europe Japanese exports.

However, this year the expansion of Sino/Japanese trade has begun to reach its limits. At one stage, Peking was talking of a possible 18 billion dollar trade deficit – a third of it due to imports from Japan. China’s foreign reserves are said to be about ten billion dollars, so the limit on its importing capacity is severe. The Japanese have tried to ease matters by lending to China and by increasing their import of Chinese goods.

Japanese grain traders have started to sign long term agreements to import Chinese corn – to the chagrin of United States companies that supplied 13.7 million tonnes in 1984, the largest US export to Japan (97 per cent of Japan’s imports and 28 per cent of US corn exports). American suppliers reckon their share of Japanese imports could fall to 75 percent this year as the result of imports from China of 2.5 million tonnes. Furthermore, Chinese corn this year is slightly more expensive than American, so Washington believes these are politically motivated imports.

The same situation operates in the case of cotton. The United States share of Japanese imports, 51 percent in 1984, is expected to fall to 25 percent this year as the result of expanded Chinese exports. China is also expanding its export of vegetables, particularly hitting US exports of soya bean to Japan.

However, even if China could expand (and so pay for increased imports from Japan), is there any possibility of the Sino/Japanese economic relationship becoming a real counterweight to Japan’s relationships to North America and Europe? It seems most unlikely in the foreseeable future for the two economics arc wildly different in scale.

For example, some 56 percent of Japanese exports are ‘Machinery and Transport Equipment’. China’s imports in this category was about 4.4 percent of Japan’s supply in 1983 (the last year for which there are figures). There is no way China could sustain the mighty Japanese economy on present levels of income.

Combined imports

Even if we throw in the rest of East and South East Asia (South Korea, Hong Kong, Taiwan, Malaysia, Thailand, Philippines, Indonesia, Singapore, Vietnam) and assume Japan’s exports exactly fit what those countries require, their combined imports with those of China still only reach 46 percent of Japan’s exports in this field. Japan depends very heavily on markets in North America and Europe. And this leaves out of account Japan’s dependence for raw material imports in Australia and North and South America.

Could the Japanese government and banks pump funds into China to buy Japanese exports? In the late forties, Washington’s Marshall Aid Plan is supposed to have achieved this purpose in Europe, injecting finance which set going the long boom. In fact, Marshall Aid seems to have been too small and too short lived to achieve this purpose; but United States military spending in Europe following the outbreak of the cold war did.

However, US funds were injected into countries with a skilled labour force and, despite destruction, a developed infrastructure. In China’s case, not only is the scale much larger – China’s imports are only 14 percent of Japan’s exports – but China’s capacity to expand is much more limited. It still has to train its workers and develop infrastructure.

In any case, Japan’s companies are contesting for world domination, and for that, they need to be abreast of the latest technical changes. Even a partial dependence on a backward market is likely to stultify the technical capacity of Japanese companies – as the existence of the British empire partly stultified the technical competence of British companies trading there. However, this is a small argument in comparison to the limited capacity of China to absorb Japanese exports, let along pay for them.

The age of the self-sufficient regional empire is past. It is now too late to recreate the old imperialism, even in the case of Japan which is the most nationally separate component of world capital. The dominant powers have gone well beyond that. The international companies are swiftly being obliged to copy the same tendency.

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