South China Morning Post
March 27, 2010
US-Japan rivalry set the stage for China
As the author of Trading Places, referenced in Tom Holland's Monitor column ("Warnings for China in a dusty old book on Japan", March 22), I take exception both with his analysis and his conclusions. Indeed, he contradicts himself.
He argues that the collapse of the Japanese bubble in the early 1990s disproved my prediction of a rising Japan and a continually declining America that "looks ever more like a developing country". But surely no one in Asia or anywhere in the world today believes that America is flourishing, or gaining or even maintaining competitiveness.
Whether one looks at its trade deficit, its international and domestic debt, failing education system or its eroding leadership in technology, the position of the US today is weaker both absolutely and relatively than it was 20 years ago. And while Japan may have run into heavy headwinds, it remains financially self-sufficient and competitive in a broad range of industries that we Americans have abandoned.
More important, however, is the fact that the Asian imitators of Japan's export-led economic development strategies - South Korea, Taiwan, Singapore and now China - are in fact displacing American economic hegemony. So if you defined the Japanese challenge as just part of a broader Asian challenge, my script is, in fact, right on target.
Indeed, Holland admits as much in his closing paragraphs when he says that the Chinese have concluded that to achieve the economic dominance I foresaw for Japan, Beijing must not allow the kind of rapid appreciation of the yuan that the Japanese agreed to for the yen in the late 1980s. But to say that is implicitly to suggest that, had it not buckled to American pressure for yen revaluation, Japan itself would have stayed right on my script. In other words, the Japanese model worked and is now working for China while the US model increasingly winds down.
May I suggest that far from being a definitive event ending in the victory of America and the defeat of Japan, the US-Japan confrontation of 1980-1993 was only the prelude to a far bigger show. With the evolution of the more recent US-China confrontation, we are now in the main event.
Clyde Prestowitz, president, Economic Strategy Institute, Washington