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PacNet #34 – The Threat to Japan’s Economy is Japan, Not China

Over the past week, people have argued in the same breath that China is an economic threat to Japan and that China’s currency should be revalued. This recalls a similar debate between the U.S. and Japan, which led up to, but did not end with, the Plaza Accords in 1985. American newspapers liked to portray Japan as a giant sumo wrestler or a Godzilla invading the U.S. economy and squashing American industry. Now, with China, journalists have equally sensational imagery to draw from – the dragon is swallowing the sumo wrestler. But those who say that China is a threat are wrong and have merely shifted attention from the biggest problem. The real threat to Japan’s economy resides within Japan itself.