"Panel urges Japan to toughen up in preparation for Chinese ascent"

Panel Discussion: June 7, 2001

As mainland gains strength, economic recovery, understanding imperative

A businessman and a politician from Japan and a government minister from Singapore expressed their hopes for Japan's economic recovery during a panel discussion on the "Japan's Role in Regional Growth and Stability."

The panelists were Lim Hng Kiang, Singapore's minister for health and second minister for finance; Yoichi Morishita, chairman of Matsushita Electric Industrial Co.; and Taku Yamasaki, secretary-general of Japan's ruling Liberal Democratic Party. The following is a summary of remarks made at the panel discussion.

Moderator: What do you think about Japan's security policy?

Lim: Japan needs to discuss collective self-defense and its role in peacekeeping operations. Such discussion may have a subtle impact on the Japan-U.S. security system. China's influence on the global economy is increasing. Economists forecast that China's economic growth will bring about an unprecedented shock to global supply and demand. This is a problem that we should address from a neutral standpoint.

The global economy is like an airplane that depends on three engines - Japan, the U.S. and Europe. In the past 10 years, Japan has played only half the role it is supposed to play due to its economic slump. If Japan makes an economic recovery, and China joins the plane as the fourth engine, the global economy will be able to make a great leap.

Morishita: Although Japan has failed to play a sufficient role in the past 10 years, its presence has not been smaller. Currently, Japan accounts for over 15% of gross domestic product in the world, and 70% in Asia. Japan should maintain GDP growth of at least 2-3%.

Japan should also gain new international competitiveness by leading Asia in the fields of information technology, biotechnology, environmental technology and nanotechnology.

Moderator: Will bilateral free trade agreements and regional cooperation play an active role in the framework of the World Trade Organization?

Lim: Singapore has clear strategies toward trade liberalization and expects a global body like the WTO and a new round of trade talks to start soon. If launching a new round of talks proves difficult, bilateral trade agreements and regional cooperation in line with the WTO framework should be promoted. An increase in such agreements and cooperation will push the WTO to accelerate the launch of a new round of talks.

The overlap of such agreements and the WTO framework will likely result in a freer global trade system. Singapore wants to reach a free-trade agreement with Japan in a wide range of fields, including e-commerce.

Audience member: How will the framework of Japan-China economic cooperation change under the government of Prime Minister Junichiro Koizumi?

Yamasaki: In order to achieve stability and development in Asia, Japan and China should develop amicable relations, and also strengthen economic ties. Japan wants to seek understanding with China on issues involving official development assistance.

Audience member: What is China's impact on supply and demand in Asia?

Morishita: A shock will come first in supply, because there is a disparity in China between companies that can balance their marketing power with production and those that fail to do so.

Excess supply from China has already caused problems in our industry. China also needs to solve copyright and counterfeiting problems, or face worldwide criticism.

Lim: Over the next 10 to 20 years, China will change to an industrial society from an agricultural one. Currently, 80% of Chinese people engage in agriculture, but that figure should decline. China should abide by international rules if it joins the WTO.

It will have difficulty subsidizing some domestic industries, and will need to compete fairly.

It is important to assess in which fields and products China will be competitive, and imperative to consider how to cope with the great changes that will occur in the next 20 to 30 years.

Each country should make use of its strength in cooperation with China. Japan will play an important role, because it is quite competitive in technology, organizations and production efficiency.

(The Nikkei Weekly July 30 Issue)

Titles of speakers, names of companies, etc., were correct as of the time when the forum was held.