Japan was the first country in Asia to industrialize. While other Asian countries were still struggling for national independence, Japan was already an industrialized country capable of producing automobiles, planes, and ships on its own. During World War II, Japan destroyed only tangible plants and machinery, but the intangible technological and managerial advantages that Japan accumulated before the war were not destroyed by the war. Since the mid-50s of the 20th century, the Japanese economy has entered a period of rapid growth: in 1966, Japan's total economic output exceeded that of France; In 1967, Japan's economy surpassed that of Britain; In 1968, Japan's economy surpassed that of West Germany.
In the late 80s and early 90s of the 20th century, the Japanese economy entered its heyday. The world pattern at that time can be summarized as "political bipolarity and economic three poles": the so-called political polarity of course refers to the two superpowers of the United States and the Soviet Union, and the economic three poles are North America, Western Europe, and Japan. Japan alone can compete with the US-led North American Free Trade Area (NAFTA) and the European Community. Japan accounted for nearly half of the world's top 500 companies at the time. At that time, the GDP of Tokyo alone was higher than the mainland's annual GDP.
Until 1995, Japan's per capita GDP was second only to Luxembourg and Switzerland among more than 200 countries and regions in the world. This year was the most glorious year for the Japanese economy and the beginning of Japan's downhill. When reporting on the Japanese economy, Japanese media often refer to the "lost twenty years" to refer to the two decades after the bursting of Japan's bubble economy in the 90s. In the 20 years from 1997 to 2017, Japan's economy grew at an average annual rate of only 0.77%. During the same period, the average annual growth rate of the mainland economy was 9.5%, Vietnam's economic growth rate was close to 8%, and South Korea's economic growth rate remained roughly three times that of Japan.
As early as 1996, former Singapore leader Lee Kuan Yew predicted Japan's future national fortunes: "Japan will become increasingly mediocre compared to its neighbors in the future." Lee Kuan Yew predicted that "China's economy will surpass Japan's by 2030". Lee Kuan Yew's analysis was entirely correct, except that China was growing faster than he expected. In 2010, China surpassed Japan to become the world's second largest economy after the United States. In fact, behind the rapid rise of the Japanese economy in the 80s of the 20th century, a considerable part of the false prosperity was hidden: the first force was the Japanese stock market, which at that time all 225 stocks representing Japan rose in turn.
In a short period of time, the assets of some people have skyrocketed 4 times. A year after the stock rally, the real estate industry began to rise rapidly. The rise in the stock and housing markets has caused the Japanese economy to expand exponentially. During this period, the Japanese, armed with large amounts of dollars, began to buy them all over the world. The Japanese began to talk about buying the whole of the United States and the whole world. The American media at the time exclaimed: "The United States is becoming the forty-first prefecture of Japan." This overnight rich model lurked the hidden danger of bankruptcy in the first place.
The method of expecting profits from rising asset values becomes increasingly difficult to work as asset prices rise. The value of any asset cannot rise indefinitely. This means that when asset prices stay at high levels, the ultimate asset holder will not be able to reap the benefits. The value of any asset cannot always deviate from its own value: a momentary hype will inflate its value exponentially in a short period of time, but eventually its value will return to a stable state after a certain period of evolution. After the signing of the Plaza Accord on September 22, 1985, the Japanese stock and housing markets rose further.
By 1989, the Japanese government was beginning to feel the pressure of a growing bubble: housing and stock markets were growing and banks lent large sums of money to speculators. If a series of defaults would pull banks down, Japan's entire financial system would suffer. In this situation, the Bank of Japan began to raise interest rates modestly and reduce the money supply from 1989. By August 1990, interest rates had soared from an ultra-low 2.5% to 6%. At the same time, the Ministry of Finance demanded that all financial institutions control real estate lending, and the Bank of Japan demanded that all commercial banks drastically reduce lending.
By 1991, Japanese commercial banks had effectively stopped lending to real estate. As a result, Japan's stock market and housing market have cut off the money supply. The sudden shift in monetary policy first burst the bubble in the Japanese stock market: in 1990 Japanese stock prices began to fall sharply. The collapse in stock prices has caused huge losses for almost all banks, corporations and securities companies. Land prices in Japan also began to fall sharply after the stock market, and the real estate bubble burst. Between 1990 and 1992, the Japanese stock market fell by more than half, and the property market fell by 46%. In the process, trillions of yen of assets were wiped out.
Even more serious than the direct economic damage was the erosion of the national self-confidence of the Japanese people. The vigorous "Showa boys" of the postwar revival period disappeared, and were replaced by the decadent "Heisei Abandoned House". In 2018, Shanghai Translation Publishing House translated and published the book "Low Desire Society" by Japanese management scientist Kenichi Omae. The book exposes the reality that Japan is facing: more and more young Japanese are losing their motivation and desire under the increasing pressure of social competition. People no longer have hope for tomorrow and no longer talk about their responsibilities to their families and society.
The solidification of class has made people give up the struggle - since hard work cannot change fate, it is better to live a life without marriage and sterility and without competition and competition for one person, one dog and one computer. In Japan, an academic institution conducted a social survey of 1,000 young people in the metropolitan area. The survey is to ask these young people whether they want to get ahead. Only 12% answered that 28.8% wanted to get ahead very much, 43.4% had no obsession, and 15.8% were not interested at all. According to the demographic statistics released by the Ministry of Health, Labour and Welfare, the number of new births in Japan in 2017 was only 941,000.
That's the lowest since statistics began in 1899, while falling below the 1 million mark for two consecutive years. In the same year, the number of newlyweds in Japan was 607,000. This is 14,000 pairs less than the previous year. Japan's Ministry of Health, Labour and Welfare estimates that Japan's population will fall below 100 million in 2053, and by 2065 Japan's population will be 30% less than 127 million in 2015. By then, more than 40% of the population of Japanese society will be elderly. The aging of the population has caused Japan's domestic market to shrink, the economy to decline, and innovation to stagnate. However, it would be an exaggeration to think that Japan will fall from a developed country to a developing country.
Since the 80s of the 20th century, Japan has established the strategy of "building a country with technology", and now Japan is leading the way in high-tech industries such as new materials, energy, biology, and artificial intelligence. In 2021, orders in the global civil ship sector were divided among shipbuilders in China, South Korea and Japan. At present, the United States and China rank first in the field of emerging technologies such as artificial intelligence and regenerative medicine, while Japan can roughly rank fourth in the world. Japan has established a mature industrial system covering electronics, automobiles, semiconductors, shipbuilding, iron and steel, military, chemical, pharmaceutical, food processing and other fields.
Among the nearly 20 essential raw materials in the field of semiconductor chip technology, Japan has a unique share of 3/4. In 2016, Japan's Internet empire SoftBank Group acquired semiconductor technology design giant ARM. At present, Japan has a design core in the upstream in the semiconductor field, and also touches product manufacturing in the downstream, and controls raw materials in the midstream. Japan, surpassing the United States and Germany, is the world's largest automobile producer, and Japan's Toyota, Mazda, Honda, Nissan and other car brands are famous all over the world. At the same time as the physical industry developed, Japanese pop culture began to occupy the international market, just like its manufactured goods.
In China, there is a generation of teenagers who grew up watching Japanese anime. Japan's music industry generates nearly $3 billion a year. Japan is one of the few countries in Asia where you can make money from industry, agriculture, trade, finance, and cultural industries at the same time. After the so-called "lost twenty years," Japan still ranks third in the world in terms of total economic output. Over the years, only China has successfully surpassed Japan in terms of economic aggregate. Lee Kuan Yew predicted that Japan would become increasingly mediocre in the future compared to its neighbors, which actually meant China.
Japan's mediocrity is only relative to China's rapid development, but this does not mean that Japan has declined into an insignificant country. Mainland textbooks describe today's international political and economic pattern as "one superpower, many powers": the United States is currently the only superpower in the world, and countries or alliances of countries such as China, Russia, the European Union, Japan, and India have significant influence in the world. This means that Japan will continue to play an important role in the international system in the future. It is unlikely that Britain, France, or Germany will surpass Japan in the foreseeable future.
Although Japan is one of the countries with the most serious aging and low birthrate in the world today, China, Russia, the United Kingdom, France, Germany, South Korea and other major economic powers in the world have different degrees of aging and declining birthrate. The only one that has the potential to surpass Japan's economy after China is India. It is entirely possible for India to surpass Japan's GDP with sufficient resources and population, but it may not be possible overnight for India to surpass Japan in terms of industrial system, science and technology, per capita income, and social welfare.