How To Avoid "Japan's Growth Trap" In China's Economy

Japan's economy grew rapidly in the more than 40 years after World War II. It surpassed Germany in 1970s to become the second largest economy in the world. It was called the East Asian miracle together with Korea, Singapore and Taiwan, China and Hongkong. However, after Japan's real estate and asset bubble burst in early 1990s, the Japanese economy only maintained a low growth rate of about 1% in the whole 1990s, so the ten years were known as the "lost ten years". After a brief recovery, the Japanese economy did not improve in the first ten years of the new century. Of course, it remains to be seen whether the phenomenon of low growth in the more than 20 years of Japanese economy can be described as "Japan's growth trap". However, the Japanese economy has been falling into a long-term low growth phenomenon for a long time. Undoubtedly, it has made a wake-up call for the new economy of the world today, especially China.

Hubbard and Kaine (Hubbard and Kane) believe that the main features of the Japanese economy include the government's formulation and implementation of industrial policies and selective trade protection policies; the economic and financial system is monopolized by a few giant enterprises, and these few giant enterprises are intertwined in the horizontal and vertical economic chains; the other side of some giant enterprises that control almost the entire national economy is the lack of entrepreneurial talents; although Japan also has a large number of small retail catering businesses, there is no pioneering entrepreneur for technological innovation; on the one hand, Japan has a large number of enterprises that are highly competitive in the international market; on the other hand, the domestic market in Japan is short of competition and vitality due to excessive regulation and vested interests.

Hubbard and Kaine also think that many of them are about Japan. economic model The study does not distinguish between catching up countries and developed frontier countries. In the process of catching up with the developed countries, Japan mainly relies on compulsory government industrial policies, export orientation and investment in infrastructure. These policies are no longer effective when Japan's economic level is close to the economic level of the developed frontier countries, because the developed frontier economies (such as the United States) rely mainly on social economic and financial institutional arrangements to protect market competition, such as allowing, encouraging and supporting the emergence and development of technological innovation entrepreneurs, and allowing a large number of venture capital bankers to seek profitable innovative investment projects.

Ikeda Nobuo, author of the lost twenty years, believes that Japan's long-term stagnation is due to the fact that Japan has not grasped the opportunity for the development of the information industry based on computers and the Internet. When the manufacturing industry has changed to low cost modular assembly, Japanese manufacturing industry is still obsessed with the high-end and meticulous high cost path; the Japanese labor market caused by lifelong employment and seniority, the young people's rising channels are not smooth, and the financial industry is lagging behind, especially in the absence of a venture capital system developed by subsidized hi-tech enterprises.

Above Hubbard The reasons for the stagnation of Japan's economic growth revealed by Kaine and Ikeda Nobuo are more or less exist in China, such as preferential policies for some industries and state-owned enterprises, the monopoly of the economic and financial system by a large number of state-owned enterprises and state-owned financial institutions, excessive regulation and the existence of a large number of vested interest groups, and the lack of financial and banking industry, especially the lack of venture capital system for developing hi-tech enterprises. More importantly, China's economy has basically completed the catch-up stage, that is, China's economy has basically completed the catch-up stage of rapid growth that can rely on export oriented and large-scale infrastructure investment. In other words, the future growth of China's economy will mainly depend on the continuous development of high-tech products and services aimed at meeting market demand.

In order to transform China's economy from a catch-up economy to a new economy, China needs an endless stream of innovative enterprises and entrepreneurs. Of course, this is only a superficial phenomenon. From the perspective of institutional arrangement, China needs to have an economic and social institutional arrangement that allows, encourages and supports the emergence and growth of innovative entrepreneurs. Whether or not it is possible to establish a mechanism for encouraging and protecting the emergence of innovative entrepreneurs is related to the long-term prosperity of a country.

　　 Japan The reason why the manufacturing industry has not been transformed is the lack of continuous emergence of a number of new forward-looking entrepreneurs. With the constant upgrading of industry, only entrepreneurs who are at the forefront of production can understand the rapidly changing changes. Therefore, the task of upgrading and upgrading the industry needs to be handed over to tens of thousands of entrepreneurs rather than the government's economic planning department. Many entrepreneurs may make mistakes and be eliminated by the market, but as few entrepreneurs realize and grasp the most advanced technology and methods of international economic and technological development, these few advanced entrepreneurs can lead China to innovation.

To build an innovative country, China faces three tasks: first, to provide a fair competition framework for millions of entrepreneurs engaged in economic activities, including equal punishment, impartial laws and regulations, and punishment for illegal activities. Second, establish a complete property rights system. Only with a complete property right system can we ensure and encourage technological innovation, entrepreneurship, the rich class no longer emigrate and transfer property to foreign countries. Third, build a robust financial banking system that can finance non-state-owned SMEs, including the venture capital system that can finance high-tech development.