Japan, China and the United States: Economic Relations and Prospects

Interest in the future of the Pacific region has been increased in the past year by dramatic events, notably the conclusion of a peace treaty between China and Japan and the normalization of relations between the United States and China. And, over a longer period, the realization has grown that the Western Pacific region-which includes Japan, Korea, Taiwan, Hong Kong, the ASEAN countries (the Philippines, Thailand, Malaysia, Singapore, and Indonesia) and China-is one of the most dynamic areas in the world in terms of economic growth and development.

Although Japan's rate of economic growth since the 1973-74 oil crisis has been reduced from around ten percent to about five to six percent, the country still maintains a higher growth rate than any of the other industrial nations. South Korea, Taiwan and Hong Kong have been growing at about ten percent per annum, even since the oil crisis, and their trade volumes are expanding rapidly. The ASEAN countries are also performing well, growing at a rate of six to seven percent a year, which is higher than the rest of the world's developing countries. China's annual rate of economic growth has been estimated at 5.3 percent for the 1970-75 period, and China's new ten-year economic development plan which was announced in February 1978 (covering the period 1976-85) projects a growth rate of about eight percent a year (although, as we shall see, this figure may be reduced somewhat in subsequent reexaminations of the plan).

In contrast to the performance of these Western Pacific countries, economic growth in other parts of the world, with the exception of Latin America, has been much lower. With the cumulative effect of these different rates of growth, the Western Pacific will have a much larger share of the world economy by the end of this century. Already in 1977 American trade with Pacific countries exceeded that with Europe for the first time in her history.