Japan’s Economic Power May Be Waning
Only a few years ago, somber warnings were being heard that many major U.S. commercial banks were on the verge of collapse. That didn’t happen.
Now Japan’s largest bank, Sumitomo, has become that country’s first financial institution in 50 years to post a year-end loss. Sumitomo is only one of a number of Japanese banks facing severe problems because of huge real estate losses and other bad debts.
A few days ago, General Motors - the giant U.S. automaker that many experts earlier had predicted might be heading off the highway because of heavy losses - announced worldwide net profits of $1.9 billion.
Meanwhile, Japan’s car exports dropped by more than 11 percent in 1994, the ninth consecutive year they have fallen compared with the preceding year. In Europe, sales of Japanese makes were off by more than 14 percent.
International economic experts concede that these developments - or even the fact that the Japanese, for the first time, imported more television sets in 1994 than they sold abroad - are not conclusive proof that Japan has passed its peak.
But some like Kurt Littler, a Parisbased specialist on global trade, claim evidence is beginning to accumulate that Japan is slipping and will experience increasing difficulty in clinging to its position as an export colossus in the late 1990s.
“It reflects the changing times that European auto makers are now less worried by future inroads into their domestic markets by Japan than by other Asian manufacturers and the U.S. Big Three,” he says.
He also doubts that, given the continuing shaky state of Japan’s real estate and equity markets, its banks will be able to hold onto the preeminent influence they have exercised in world financial centers since the 1980s.
All of this is likely have significant political as well as economic impact, according to some analysts.
The West’s “economic Cold War” with Japan may be drawing to a close, predicts Jean-Louis Sandoz, a French specialist on Western relations with Asia.
After a decade in which fear of Japanese economic power shaped Western policies, he said, the Japanese no longer look unbeatable.