Yesterday, we published an article discussing the current state and causes of the collapse of the South Korean economy. Some netizens asked, "Why can Japan hold on when both are vassals of the United States, and South Korea's economy is collapsing?" This is because over the past few decades, Japan and South Korea have taken similar paths, yet due to one difference, they have reaped two different outcomes.
Yesterday, we discussed that South Korea's tragedy is an inevitable part of history; its economy lost to the times, and South Korea is a microcosm of the world's changes. So the question arises, since the economic models of Japan and South Korea are very similar, why have the events that have occurred in South Korea in recent years not happened in Japan, and instead, there are signs of economic recovery?
What has happened in South Korea? What about Japan?
According to preliminary statistical data released by the Bank of Korea, South Korea's GDP grew by 1.4% in real terms in 2023, falling to the lowest level in three years. The economic growth rate was 4.3% in 2021 and 2.6% in 2022.
In 2023, South Korea's exports decreased by 7.4% year-on-year, with a trade deficit of $9.97 billion. At the same time, South Korea's pillar industries such as electronics, chips, and shipbuilding have all experienced significant declines, and emerging industries such as automobiles and artificial intelligence have also shown signs of recession.
Advertisement
Therefore, South Korea is currently in a dangerous state of rapid decline, whether in terms of GDP data, industrial competitiveness, or exports.
Japan's situation is quite different from South Korea's.
Not long ago, the Japanese cabinet announced preliminary statistical results showing that Japan's real GDP grew by 1.9% year-on-year in 2023, and the nominal GDP growth rate, which reflects price increases, was 5.7%.In 2022, Japan's actual GDP grew by 1.1%, with a nominal increase of 1.3%; in 2021, the actual growth was 1.7%, and the nominal growth was 0.8%.
Looking at the GDP data, Japan is not much better than South Korea, but Japan is emerging from years of economic decline, beginning to regain growth, and showing a trend of increasing year by year.
Additionally, in 2023, Japan's export volume increased by 2.8% year-on-year, setting a historical record. Although Japan also has a trade deficit, the deficit was significantly reduced by 54.3% compared to 2022.
This reflects an upward trend in Japan's industrial competitiveness, which is the opposite trend to South Korea.
We mentioned that South Korea and Japan are very similar; their economies were both supported by the United States after World War II.
In fact, the economic outbreaks of Japan and South Korea were the result of the American technological revolution and the overflow of manufacturing, as well as the result of the two wars in East Asia during the 1950s-1970s.
Historically, a large number of American scientific and technological achievements were exported to Europe and Japan and South Korea, and many manufacturing industries were relocated to Japan and South Korea. This was, of course, not out of any kindness from the Americans, but the result of the American economic model becoming dematerialized and financialized.
At the same time, the two wars in East Asia revitalized the manufacturing industries and economies of Japan and South Korea, and the United States replicated the "Marshall Plan" in Europe in East Asia, enabling these two countries to rapidly rebuild from the ruins of war.
This economic model still has a significant legacy to this day, with the manufacturing giants of Japan and South Korea essentially being those who were originally engaged in the production of military weapons for the United States, starting with the military industry.
So, why do we see completely different economic situations in Japan and South Korea today?The truth is quite simple: Japan developed earlier than South Korea and experienced a 30-year-long recession much sooner than South Korea. The path of decline that Japan once traversed, South Korea has only just begun to tread in recent years.
After decades of relentless efforts, Japan completed its economic model and industrial transformation, beginning to emerge from the shadows, but South Korea's crisis has only just begun.
Japan's exports have started to grow, which is a sign of the completion of industrial transformation and the formation of differentiated competitive capabilities. In contrast, many of South Korea's industries are still in direct competition with the United States and us, further exacerbating South Korea's crisis.
Japan's experiences since the 1990s, including the real estate collapse, the appreciation of the yen with a large amount of investment abroad, the shift of the manufacturing industry from front-end consumer goods to back-end material industries, and the forced retreat of the chip industry, have also begun in South Korea.
There are also significant differences. Japan's descent into recession was due to posing a threat to the United States, facing suppression, and having an unstable foundation with financial and economic bubbles and crises.
South Korea's current danger is greater than that of Japan at the time. Not only do industries such as chips and automobiles pose a competitive threat to the United States, but they also face the rise of the East and the decline of the West, along with the decline of the United States.
How can South Korea withstand such a storm?
Today, the United States' technology and economy can no longer drive the development of its East Asian allies. American manufacturing not only lacks a spillover effect but is also trying to bring back all high-end global manufacturing to the United States.
Therefore, Japan and South Korea developed under American capital colonization after World War II, relying on the same model, but due to the different times, they have taken two different paths.
At present, it appears that South Korea's ultimate fate will inevitably be worse than Japan's.