Japan increasingly dependent on Asia

Japan increasingly dependent on Asia

SINGAPORE (AFP): Japan is in many ways now more economically
dependent on neighbors than they are on Tokyo, whose clout is
being challenged in the region by new economic powers, a report
received here yesterday.

"Talk of a Japanese-dominated economic bloc in Asia --
something that was taken very seriously in the 1980s -- sounds
increasingly empty," said the Hong Kong-based Political and
Economic Risk Consultancy Ltd.

Its fortnightly journal Asian Intelligence said the so-called
"dragons" -- Hong Kong, Singapore, Taiwan and South Korea -- were
collectively investing far more money in Southeast Asia than
Japan was by the late 1980s.

And in China, overseas Chinese investors have so outstripped
the Japanese that Tokyo for the first time finds its "ability to
influence the pace and direction of industrialization in a
neighboring country very limited."

"Moreover, this just happens to be the country that probably
poses the biggest economic and political threat to Japan in the
medium term -- hardly a comforting prospect for Tokyo," the
report said.

"We are not saying that Japan is irrelevant. Its economy is
too large and externally oriented not to have a strong
gravitational pull on every country in the region. However, if
Japan is Asia's moon, China is its sun," it added.

Asia's share of Japan's trade has risen to nearly 40 percent
over the past decade, while the United States' share has fallen
to 27 percent, the report said.

It noted that in 1995, Japan's trade surplus with the United
States shrank 17 percent from the year before to 45.56 billion
dollars, while its surplus with Asia rose 15 percent to 70.75
billion dollars.

"Japanese companies are increasingly dependent, therefore, on
markets in Asia for their livelihood. This is a vulnerability for
Japan, not Asia," the report said.

Japanese imports from Asia are rapidly growing but much of
this is from Japanese-owned factories abroad "and on terms that
the host countries of these investments often consider to be
exploitative," the report said.

It cited lingering resentment in Asia over Japan's wartime
past, and said Tokyo was also more "renowned for its desire to
keep control of key technology than it is for its willingness to
provide technical assistance."

Even Japanese aid, seen in some countries as a form of
reparation for World War II abuses, has caused bitterness when
loans turn out to be very expensive because of the rising yen,
the report said.