Why China and Japan need closer ties – Zhang Lijia

 

Zhang Lijia

Relations between China and Japan have been tense since the end of World War II, and the annual remembrance of the rape of Nanking,  this year 86 years ago, marks those tensions. Author Zhang Lijia argues that nowadays both countries need better relations, she argues in the South China Morning Post. “An amicable Sino-Japanese relationship is vital for regional stability and prosperity. If the two remain hostile, it will play into the US’ hands,” she writes.

The South China Morning Post:

Back in the 1990s, plenty of Japanese politicians would have liked to befriend China as they saw that their future was in Asia. Beijing’s hostility, however, pushed them to embrace America wholeheartedly.

It’s time for Beijing to walk out of the past and forge closer ties with Tokyo. Beyond the fact that China is Japan’s largest trading partner, it has many reasons to be on good terms with this neighbour. As an Asian country with a long history with China, Japan can potentially play a role in softening crises, such as over Taiwan.

Reduced tensions would lessen the overall threat perception and allow a relaxation of all actors’ security positions in the region. An amicable Sino-Japanese relationship is vital for regional stability and prosperity. If the two remain hostile, it will play into the US’ hands…

I am not suggesting that Chinese people should forget the pain we suffered at the hands of the imperial Japanese. I, for one, shall not forget. As a Nanjing native, I still remember the harrowing stories my grandma told me. Back in 1937, as she tried to flee the city, her infant daughter in her arms, a bomb fell nearby. A neighbour only metres away disappeared, blown to pieces by the blast.

Tokyo should apologise unequivocally and unreservedly for the atrocities committed in China and apologise specifically for the Rape of Nanking.

While it is understandable that so many Chinese feel resentful towards Japan, it is unwise to let this anti-Japan sentiment spiral out of control. National interests should come before personal feelings, and it is in China’s best interests to improve its relationship with Japan.

More in the South China Morning Post.

Zhang Lijia is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers’ request form.

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Japan’s Covid-discrimination will be hit by China boycotts – Shaun Rein

 

Shaun Rein

Japan is hitting China’s citizens with unfair Covid restrictions, and will in return suffer from retaliatory actions by the Chinese, says business analyst Shaun Rein to CNBC. The contrary effects on Japan’s economy will be huge, he says.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers request form.

Are you looking for more experts on managing your China risk? Do check out this list.

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Sovereign wealth funds will change the digital economy – Winston Ma

 

Winston Wenyan Ma

Traditionally conservative sovereign wealth funds are a wrongfully ignored player at developing the digital economy, says financial analyst Winston Ma, author of The Digital War: How China’s Tech Power Shapes the Future of AI, Blockchain and Cyberspace, at the Investment Magazine.

The Investment Magazine:

Fuelled by a desire to keep up with the US and China, traditionally passive sovereign wealth funds are increasingly deploying capital into strategic development areas like infrastructure, communications and more recently the digital economy according to global investment manager and academic Winston Ma.

No longer mere “stabilizers of capital markets”, the sovereign wealth funds of the world – which control around US$30 trillion in funds – are building internal teams and becoming more “active and direct” in their investment style, Ma explained on a recent Investment Magazine Market Narratives podcast.

Part of the reason is to save money, he said, by eschewing external management teams.

A larger purpose, however, is because these funds serve as domestic economic promotion agencies that drive strategic development agendas linked to sectors like infrastructure, telecommunications and increasingly, the digital economy.

“All countries are looking to sovereign funds as a policy tool to promote domestic research and development in order to stay as a relevant information centre besides China and the US,” Ma explained. “For Europe, Japan and places like India they need to think about how they can stay competitive in these digital revolution competitions.”

Many countries and regions are now setting up specific sovereign wealth funds tied to singular strategic objectives, he explained. The EU is looking to set up a €100 billion to finance European tech “champions” competing with alibaba and facebook, for example, while Japan is reported to have set up a 6G research fund, Ma said.

“That’s not a typo,” he added. “They’re already thinking ahead. If they’re late to the 5G competition they want to get ahead on the 6G.”

More at the Investment Magazine.

Winston Wenyan Ma is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

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Why China’s state capitalism is not breaking down – Arthur Kroeber

 

Arthur Kroeber

Leading economist Arthur Kroeber sees state capitalism in China not collapsing and certainly not going downhill as Japan’s economy did in the past. He addresses a panel at CSIS Online on how the world can face the second-largest economy.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him on your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

Are you looking for more strategic experts on the China Speakers Bureau? Do check out this list.

China's post-corona problem: their customers are in trouble - Jim Rogers

Jim Rogers

China might be opening up slowly after its coronavirus crisis, but the problems are not over, warns super investor Jim Rogers at Platts, as most of their international customers are just at the start of their economic downturn.

Jim Rogers at Platts:

One of the biggest challenges for China as it emerges from the crisis will be their customers. China is one of the largest trading nations in the world. Now Europe is in trouble. Japan is in trouble. America is in trouble. Yes, Japan is opening up. China is opening up again, but their customers are in trouble. So the biggest challenge for China now is to find customers for their factories, for their companies, for everybody. That’s everybody’s problem, by the way.
Are there any other bright spots?
Sometimes the cure is worse than the disease. China’s opening up and many other countries are already opening up. People in Sweden got sick – they are no worse off than other people health-wise but their economy has not suffered as badly. So it seems to me that one lesson from this is that, nobody wants to die. Nobody wants to get sick. But if you just look around what’s happening in the world, closing off does not seem to be the best solution. But we’ll know. We’ll know in a year or two.

More at Platts.

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Early positive signs from China, the world braces for more coronavirus spots

With all possible caveats: early signs do indicated the coronavirus is slowly retreating in China. That might reverse, as workers are slowly returning to work, and quarantine measure are partly revoked. Meanwhile, the rest of the world, notably South-Korean, Japan, Iran and Italy are fighting their own hot spots of the coronavirus and the fears of a global pandemic outbreak are all but over. 

When you follow our social media feeds at Twitter, Facebook or LinkedIn, you might notice that our China news - not related to the coronavirus - is growing since the weekend, and that is a good sign too. But still, we do not expect the event industry to pick up before May, and much might depend not only on China and the success of its quarantine measure, but also how the virus is developing in the rest of the world.

 Are you interested in discussing how to deal with your China event? Do get in touch.

Positive, confirmed and unclear coronavirus developments

As the severe economic challenges caused by the coronavirus or Covid-19 show a less favorable development, scientists still argue on how to count patients, and how to assess the medical situation. Revealing was an article in Nature discussing the difference between positive-tested patients and confirmed ones, and how to count them in must-quoted public statistics.

Those debates have a profound impact on the assessment of the disease, the fear for mortality, government action and in the end how long the economic standstill might last. 

Positive-tested patients mostly used a nasal test and got - if the result shows corona-related results - a 14-day quarantine to see if they would really develop symptoms, while they might not be sick or contagious at all. Confirmed patients have the disease, are put into isolation. The debate is which groups should be counted in the official statistics. The first group does include a large group of patients who will never develop the disease, so you get a pretty high number of patients in your statistics, and a rather low mortality. The second group has a much higher mortality, but you might also miss cases of patients who do not yet have confirmed symptoms, but can develop the disease later.

Either approach has pros and cons, but the problem is that both methods have been used next to each other and cause severe differences in the number of patients and the mortality for the virus. Western media have sometime been accusing China of hiding the real impact of the virus, but there seem also profound scientific assessments underlying different ways of counting patients.

That is a key scientific debate, but also has a profound impacts on the fallout of the Covid-19 disease. For China and its international trade relations damage has already been done, but a rising number of cases elsewhere - like South Korea, Singapore and Japan - signal a possible spread of the virus, depending on the way governments react on the latest scientific debates.

At this stage, for China, we do not see a fast recovery. Yes, it may become better after the virus has come under control, but before production, logistics, tourism and regular business practices have been restored, we might well be late in the summer of 2020.

In our event-related business we expect that even if in April planning is back on track, it might easily take two to three months to get things running again. And then we do not take darker scenario's into account, while come of our clients obvious do.

Do you want to discuss latest developments on the coronavirus and China, and how the China Speakers Bureau can help you in planning future events? Do get in touch.

Multinationals underestimate local Asian competition - Shaun Rein

Shaun Rein

Multinationals knew they were up for a hard time in fighting local brands in China, but local brands all over Asia are becoming more successful, says business analyst Shaun Rein to Industry Week. Consumers are changing their preferences to local brands.

Industry Week:

Nestle SA is losing buzz to an Indonesian coffee brand famous for brewing civet-cat feces, and L’Oreal SA is losing face to a Chinese skincare brand favored by President Xi Jinping’s wife.

Asia traditionally was considered easy money for Western multinationals, with beverage makers, cigarette brands and fast-food giants capitalizing on rising incomes and weak local competitors. A survey by China Market Research Group in 2011 showed 85% of Chinese consumers preferring foreign brands. 

Those days are over. That preference dropped by half last year, and it goes beyond China: brands of Indian toothpaste, Vietnamese laundry detergent and Japanese flavored water are picking up market share with lower prices and by catering to local tastes. 

Rising stars such as Indonesia’s Luwak instant coffee and China’s Pechoin moisturizers spell trouble for global titans at a time when Asia-Pacific’s economic growth is projected to outpace the world’s through 2019. 

“Multinationals underestimated local competition,” said Shaun Rein, managing director for China Market Research Group. “Local players have moved very fast on emerging trends that multinationals have missed, like healthy and e-commerce.”

More in Industry Week.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Companies flee, rather than fight China - Sara Hsu

Sara Hsu

US President Donald Trump wants US companies to fight China, but they rather flee for greener pastures not to their home countries, says financial analyst Sara Hsu at the ChinaUSFacus. But some might decide to swap countries too early, she warns.

China US Focus:

Moving to another country may make sense for companies whose new grounds of operation have sufficient infrastructure to provide a proper manufacturing environment. 

Firms reshoring to Japan and Taiwan find themselves back home with well-constructed roads and telecommunications systems, although such factors may yield higher costs of production. Those shifting to Vietnam and Thailand are faced with poorer conditions and potential added costs of production. 

Vietnam has a lack of transport infrastructure, power supply networks, and urban infrastructure. Ho Chi Minh City and Hanoi face severe traffic congestion. Government funding and planning fall short of providing sufficient resources to improve the infrastructure environment. It has been estimated that the country needs to invest $400 billion in infrastructure over the next decade. However, corruption and lack of skills prevent this from occurring. 

Thailand has better infrastructure than Vietnam, but it has experienced bottlenecks in pushing infrastructure development further. This is because it takes the central government a long time to approve projects, and state governments lack the capacity to build the infrastructure projects that are slated for construction. Thailand’s political elite view infrastructure projects as long term, while their tenure may be short term. 

As companies move to developing Asian nations to take advantage of Asian supply chains, they are facing challenges. In Vietnam, companies have a harder time locating factories, and ports are struggling to coordinate container ship traffic. Costs of labor in Thailand are higher than in China, even after wage increases in China. Firms attempting to move to Indonesia, Malaysia, and Cambodia are facing similar problems. In Cambodia, for example, almost of half of all goods inspected in the last quarter did not satisfy inspection standards. 

This means that the trade war is forcing some companies to shift production to less attractive locations prematurely. It’s one thing to move abroad in order to increase profitability, but quite another to move out from an established location due to complications resulting from an anti-free trade stance taken by the center country. So far, companies that make Crocs, Roomba vacuums, and Yeti beer coolers are moving out of China due to increased tariffs.

More at the ChinaUSFocus.

Sara Hsu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more financial analysts at the China Speakers Bureau? Do check out this list.  

Getting a trade deal that helps both sides might be impossible - Arthur Kroeber

Arthur Kroeber

Observers watch the proceedings at the G20 in Japan as Donald Trump and Xi Jinping will try to hammer out a kind of trade deal. But getting a deal that makes both sides happy is virtually impossible, says economist Arthur Kroeber in the South China Morning Post.

The South China Morning Post:

Arthur Kroeber, research head and co-founder of Gavekal Dragonomics, wrote in a note that “it will be very tricky to come up with a deal that satisfies the political requirements on both sides.” 

Trump, a Republican, decided to break off negotiations in early May because a deal would be a “political liability” for him if right-wing hardliners and Democratic opponents saw its terms as inadequate. 

In China, the terms negotiated by Vice-Premier Liu He, Xi’s top economic aide, were “politically unsaleable,” with powerful forces in Beijing suggesting US demands were excessive, Kroeber added.

More in the South China Morning Post.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more strategic experts at the China Speakers Bureau? Do check out this list.  

Why a currency deal might be bad for China - Arthur Kroeber

Arthur Kroeber

China is pondering to throw in a currency deal in its trade negotiations with the US, maintaining the value of the Renminbi, to pacify the doves in the White House. But that might be a wrong idea, say analysts like economist Arthur Kroeber, who point at Japan. Japan agreed to a currency deal in 1985 as has paid for it dearly, writes the South China Morning Post.

The South China Morning Post:

Amid reports that the United States will demand that China stop devaluing its currency as part of any trade agreement, Beijing has been urged to learn from the cautionary tale of Japan, which in 1985 agreed to a currency deal which has shouldered a good portion of the blame for its economy’s disastrous “lost decade”. 

The US demands that China limit the yuan’s depreciation have been compared with the Plaza Accord, under which Japan, France, Germany, the United Kingdom and the US agreed to push the value of the US dollar down against the Japanese yen and German Deutsche mark. 

The five countries began selling large amounts of US dollars, leading to a significant loss in dollar value. 

The intervention resulted in the Japanese yen doubling in value against the US dollar in under two and a half years... 

The clause demands that currencies are market-determined and that signatories avoid competitive devaluation, as a means of gaining a competitive advantage in trade. 

It is the first time such a clause had been included in a major trade agreement. 

China has previously signed up to to commitments at the G20 and International Monetary Fund that bar it from competitive devaluation. 

However, critics claim that China has not upheld these commitments. In an interview with the Financial Times last year, US Treasury Secretary Steven Mnuchin noted that the yuan had fallen significantly over the course of 2018. 

“As we look at trade issues there is no question that we want to make sure China is not doing competitive devaluations,” he said. 

Arthur Kroeber, co-founder and research head at Gavekal Dragonomics, said that a currency agreement would be aimed at satisfying the demands of Mnuchin, a more dovish presence in the US administration, compared to hardliners such as US trade representative Robert Lighthizer. 

“An exchange rate agreement is just a way for Beijing to collude with Trump administration doves like Stephen Mnuchin to trumpet a non-event as a big US victory,” Kroeber wrote. 

Former US Federal Reserve chair Janet Yellen last week that it is “difficult and treacherous” to define when a country is manipulating its currency, warning US trade negotiators to think twice about asking China to maintain a stable yuan exchange rate.

More at the South China Morning Post.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more strategic experts at the China Speakers Bureau? Do check out this list.  

China is not a push-over like Japan in the 1980s - Arthur Kroeber

Arthur Kroeber

China as a country is much stronger than Japan was when it got into a trade war with the US in the 1980s, says economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know®. Unlike Japan, China will not give in to any demands from the US, especially when those demands are hard to guess, he tells the Hellenic Shipping News.

The Hellenic Shipping News:

Beijing has not been shy in pushing back at the US, either in talking tough or in retaliating with new tariffs of its own. In its confrontations 30 years ago, Tokyo could not be so bold. Japan was in a far weaker position because of its economic reliance on exports generally and the US market particularly. Arthur Kroeber, co-founder and research head with China-focused Gavekal Dragonomics, based in Hong Kong, said that deep underlying frictions with China would not quickly go away as long as the US was not completely clear about its objectives. 

“The US playbook for this competition is still being written,” he said. “China is in a strong position and will not soon budge on the key issues that anger its trade partners.”... Gavekal’s Kroeber also ruled out a quick solution to end the friction and expected the economic rivalry to continue “on a high simmer”. 

“China will not retreat from its industrial policy goals, and the US will not be fobbed off with the usual concessions”.

More in the Hellenic Shipping News.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more experts on the trade war between China and the US? Do check out this list.

Old trade warrior Robert Lighthizer leads the US fight against China - Arthur Kroeber

Arthur Kroeber

Robert Lighthizer was sworn in as US trade representative in May last year. He is the key person to watch when a trade war between China and the US is developing, says leading economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know®, in the South China Morning Post.

The South China Morning Post:

After scant progress was made in the first round of Comprehensive Economic Dialogue with Beijing in July – aimed at resolving trade issues – the US suspended the high-level talks. 

Last month, Lighthizer said there had been no effective result from senior-level dialogue between the two countries, and now the Trump administration is taking serious aim at the trade deficit with China, and considering further action to restrict Chinese involvement in its hi-tech sector. China’s trade surplus with the United States rose 8.6 per cent last year to a record high of US$275.8 billion, according to official Chinese data. 

“The combative Lighthizer is now firmly in control of the international trade and economics agenda,” said Arthur Kroeber, a founding partner with Gavekal Dragonomics.

“It was only in the second half of last year that the US Trade Representative Robert Lighthizer wrested trade policy from more accommodating figures like Commerce Secretary Wilbur Ross and economic adviser Gary Cohn,” Kroeber said, describing Lighthizer as an “old trade warrior who cut his teeth battling Japan in the 1980s”.

More at the China China Morning Post.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form. 

Are you looking for more political experts at the China Speakers Bureau? Do check out this list.

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Will China face a pushback? - Howard French

Howard French

China's erstwhile "peaceful rise" has been less peaceful over the past years. Will China face a pushback from its neighbors, asks former foreign correspondent Mary Kay Magistad author Howard French of Everything Under the Heavens: How the Past Helps Shape China's Push for Global Power in a wide ranging interview about his book in PRI.

PRI:

French: That's really the $64,000 question, and it's kind of the core of my book really. I think that we are entering, right now, a moment of very serious danger, which in my view, and I kind of roll out this argument in an extended way in my book, is likely to last for the next 10, 15, at the longest 20 years, after which, I think, if we can get through this transitional period, tensions will subside. 

But we are entering the danger period. And we're entering the danger period because China has advanced so far, so quickly. And its strength, economically speaking, in terms of industrial competitiveness, military capability, and particularly in terms of capacities for self-defense and projection of force in the nearby seas, have come to draw close to the capacities of the United States. In a situation where you’ve had a rising power and a status quo power in history, where the gap between the two narrows rapidly and dramatically, that is the precise situation of highest danger — because neither side is absolutely certain that it is able to prevail in a moment of instability or of conflict. 

In the rising power, you have strong constituencies that are tied up in the investment and effort to acquire capabilities, which say, 'what's the point of acquiring all of these capabilities, if you don't use them?' 

And meanwhile, in the status quo power, what was once a very clear and unambiguous lead in all of these key areas from economic strength and competitiveness, to high tech to military capacity, as the gap narrows, anxiety begins to increase. And ... a corresponding constituency says, in effect, ‘if we don't do something now to nip this threat in the bud, then it's going to be too late. We have to assert ourselves now to make clear who's in charge, or to make clear what the rules are.’ 

What's happening in the surrounding region is that, again I think one most usefully must resort to the realism that political scientists speak of. The neighboring powers are watching kind of anxiously to understand which way the wind blows. And so, how did they respond to this? Well the first thing they want to do is to avoid having to explicitly choose sides. And that means that most of them will want to obtain the benefits of economic cooperation with China, because China has been growing so fast and represents a huge market that's right on their doorstep, and to simultaneously enjoy the benefits of security arrangements with the United States, because the United States is this off-shore power far away that has been the trustee and guardian of the established rules of the road and who doesn't seem threatening. 

And so you see lots of countries — Vietnam is the most interesting example of this — Indians are training Vietnamese submarine crews on how to run submarines that are used, among other ways, to deter Chinese attacks. The Japanese are helping pay for a new Philippines Coast Guard, and a Vietnamese Coast Guard as well. Australia plays in this game. All of the smaller countries, Malaysia, Indonesia, the Philippines, Vietnam, Thailand are seeking ways to balance against China — soft balancing against China in ways that are not meant to be offensive to China, but allow them to hedge their bets. 

Magistad: You mentioned an important point in your book, which is, if China doesn't show respect for the rules and norms of the region, it pretty much encourages those countries to seek assistance, to seek support, to seek backup from the United States, and that actually plays against China's interests. How much do you think China's leaders are aware of that? 

French:  So there's a political scientist named Edward Luttwak, who I quote in the book at one point, who has developed a theory. He's basically a strategic thinker. And he's developed a theory, which is not exclusive to China, but describes a mentality or mindset that's common to very fast rising powers, as they begin to emerge, and to begin to more and more obviously contend with the status quo power. This mentality that he speaks of is called Great Power Autism. And, apologies to anyone who might take offense at this — this is not my term. 

The point he's trying to make is that rising this far this fast is a giddy experience. And amid the giddiness that you experience during this rise, caution and all sorts of other perspectives are kind of lost. And so, you are not likely to be terribly perceptive of the cost that you may incur by offending other people, meaning in this case, your immediate neighbors, much smaller countries, because you think that when you rise as far and as fast as a country like China has risen, that this is an affirmation of your correctness. 

So the next 10 years could be very messy, by accident or by design, to one degree or another. China could push in a way that involves hard power, to make gains in the immediate region at the expense of the status quo powers, most importantly for this conversation, the United States and Japan, which are the most important status quo powers in the region. And there could be a war. Or there could be at least some more limited form of conflict that could be ugly and very dangerous. 

That's one scenario that's very real, cannot be discounted, which we must be very attentive to, and that our diplomats have to figure out a way to prevent. 

You can imagine a leadership that says 'look, in 10-15 years, we can be down to 2 to 3 percent economic growth per year. ... This is the moment when we have to go we have to make our big push. We have to lock in whatever gains we can lock in right now, meaning in the next 10 years.' 

Still, I'm hopeful that we'll muddle through. Once we're past this transitional period of 10, maybe 15 years, then other things begin to happen. The demographics of China, I think, kick in — with hundreds of millions of people over the age of 65, with immense costs in medical care, possibly residential care, and China doesn’t have that infrastructure yet, because it hasn’t yet been at that stage of economic development. And so, if we get past this transitional period of 10 or 15 years, I'm very hopeful that China will say, 'listen, the status quo isn't as bad as we thought it was. We don't need to be such a grudging, victim-centric country. We've done well. We've come a long way.

More in PRI.

Howard French is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more strategic experts at the China Speakers Bureau? Do check out this list.

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Japan's IKEA might not sell in China - Shaun Rein

Shaun Rein

Japan’s discount-furniture king, Akio Nitori, dubbed the country's IKEA, now wants to export its success into the region's largest market: China. Business analyst Shaun Rein doubts whether their Japan success can be copied into China, he tells Bloomberg.

Bloomberg:

At 73, (owner) Nitori said he’s not ready to retire, but he handed day-to-day control to longtime lieutenant Toshiyuki Shirai while he concentrates on expanding in countries such as China, where he’s opened 11 outlets since 2014 and plans to double that number this year. 

“It’s going to be a lot harder than he thinks,” said Shaun Rein, founder of Shanghai-based consultancy China Market Research Group who offers Ikea’s travails as an example of how difficult the market is to crack. Ikea’s stores are packed with people -- but they come to take naps on showroom beds and enjoy a bit of free air conditioning, rather than to buy. 

For Nitori, the challenge will be building brand cache, Rein said. “You can’t compete on price in China.” 

Still, Nitori is betting he can replicate his success in the world’s most populous nation, a market 10 times the size of Japan’s. It’s key to meeting his current 30-year target: 3,000 stores by 2032. 

“I’m absolutely confident we’ll make it, as long as you don’t hold me to the deadline,” he said with a laugh. “The demand is endless.”

  More in Bloomberg.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Can China avoid Japan´s mistakes? - Arthur Kroeber

Arthur Kroeber

China is ahead of a range of challenging decisions, writes economist Arthur Kroeber in BloombergView. There is a real danger China will enter economic stagnation just like Japan did in the past, and Kroeber is not sure China´s leadership can avoid the same mistakes Japan made.

Arthur Kroeber:

Whether China can avoid a Japan-like slide from world-beater to also-ran will ultimately depend on the courage of its leaders. Unfortunately, on that front, the Chinese regime also seems to be repeating Japan's mistakes. 

One is hubris. By the end of the 1980s, Japanese officials, and many analysts, were convinced that Japan had come up with a new, hybrid economic model superior to traditional free-market capitalism. This proved not to be so. Foreign diplomats and businessmen consistently say that today's Chinese leaders are similarly self-righteous, deaf to criticism and convinced of the virtues of their model of state-led development. 

Public discussion of the debts weighing down state companies is muted. Ambitious plans to introduce private shareholders into the state sector have diminished into a timid reshuffling among existing players. History teaches that when the captain and his mates start congratulating themselves on the superior design of their ship while ignoring obvious icebergs, it's time to haul out the lifeboats. 

Another fatal mistake is timidity. The obvious solutions to both countries' problems all involve a scaling back of state control. Japan could probably have achieved higher growth in the 1990s if it had deregulated services, opened up the financial sector and permitted much more foreign investment. It chose not to do so, for fear of upsetting the cozy ties between government and corporate elites. 

The same reluctance is obvious today in Beijing, where Communist leaders say they intend to let market forces “play a decisive role in resource allocation,” but in practice have intervened in the equity and foreign exchange markets to prevent prices from falling. The reluctance to reform the state sector reflects a fear of letting markets, rather than the Party, decide who gets to control important assets. 

China is still fundamentally an economy with a lot of dynamic potential. Vigorous policy in the next few years could arrest the rise of leverage and enable growth to stabilize at around 5 percent by 2020. The crucial steps would be to shut down or privatize the least productive state-owned enterprises (cutting the state sector roughly in half), open up protected service sectors to private and foreign competition, and liberalize the financial system so that it reliably channels credit to the most productive firms. The problem, from the Party elite’s point of view, is that these reforms would require that the regime surrender much of its ability to direct economic activity. China may yet be able to avoid the Japan trap, but only if its rulers learn to lighten up.

More in BloombergView.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

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Japan´s war game with China gets dangerous - Wendell Minnick

Wendell Minnick

China has been upsetting its neighbors by building an airstrip at the Fiery Cross Reef, but now Japan has been making war efforts really dangerous, and the end is not yet in sight, writes defense analyst Wendell Minnick in Defense News. From a yet-to-be released Japanese white paper.

Wendell Minnick:

In what may turn out to be the first step in a dangerous game of chicken, Japan's upcoming annual defense white paper will accuse China of belligerency in its dealings with neighbors as it becomes clear that China is laying the foundations of a military base on Fiery Cross Reef, one of seven artificial islands China has created in the disputed Spratly Islands. 

In the outline of the white paper, to be released in late July, on top of the usual statements citing North Korea's nuclear and missile development as issues of concern, the paper will directly call China's reclamation work on the Spratlys, "high handed."  

In the last 18 months, China has added about 800 hectares to seven reefs in the area, including an airstrip on Fiery Cross Reef, along with the makings of a military radar base. All of this is seen as a significant escalation in a dispute over the islands, part of a huge swath of territory in the South China Sea (SCS) over which China claims undisputed sovereignty.

More in Defense News.

Wendell Minnick is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request from.

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Japan tourism catching up among Chinese - Shaun Rein

Shaun Rein

The Fukushima disaster and a flare of nationalism made a dent in Japan´s position as favorite tourist destination for Chinese. But, helped by a slumping currency, Japan is back on the agenda for Chinese tourists, tells business analyst Shaun Rein in Japan Times.

Japan Times:

Visits by Chinese slowed after the 2011 nuclear disaster and a 2012 revival of tensions between Tokyo and Beijing. After exploring South Korea, Taiwan, Thailand and Bali, Indonesia, many affluent Chinese travelers are making up for lost time, said Shaun Rein, Shanghai-based managing director of market intelligence firm CMR.  

 “There’s massive pent-up demand,” Rein said.

To lure more big spenders, Japan has slashed sales taxes on a wider range of items favored by foreign tourists and is setting up duty-free counters at hundreds of shops in Tokyo and elsewhere, even in drug stores — medicines and supplements are big sellers among Chinese and Russian tourists. 

The Laox duty-free shop in Ginza was crammed with Chinese buying watches, cosmetics, robotic vacuum cleaners and space-age rice cookers. 

Ultra high-tech, detachable toilet seats with automatic lighting and lid opening and closing, that warm, wash and dry are another big must-haves among Chinese, even though the products are made-in-China for export to Japan. 

“The new status symbol in China is buying things and having experiences,” said Rein. “It’s not just buying a Louis Vuitton bag but how you bought it and how you did something cool.”

More in Japan Times.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.

Are you looking for more experts to deal with your China risk? Do check out his list.  

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