What China can learn from Japan

Years ago, I had the honour to be at the same dinner table as a famous Indian scholar. I candidly asked him the following question: India has so many excellent economists at Harvard, MIT, Chicago, Stanford, and Cambridge, just to name a few - so, why was the Indian economy in such a bad shape? His answer surprised me: because Britain had colonised India, India chose to learn from the Soviet Union for many years, even though many Indians knew that the British system might be much better.

Pioneers of the Chinese revolution, including Sun Yat-sen, Chiang Kai-shek, Zhou Enlai , Qiu Jin and Lu Xun , went to school in Japan before they succeeded in modernising China. In fact, countless terms in modern Chinese, including communism, science and democracy, first appeared in Japanese translations.

Despite the animosity and distrust between the two peoples over the Diaoyu Islands, I have to admit that we must still learn from Japan, even today. Japan has invaded and inflicted pain on China on several occasions, but a "victim syndrome" blinds many Chinese to the fact that Japan is far more advanced.

That Japan used to learn from China - it adopted Chinese culture more than a century ago - makes matters worse. Many ordinary Chinese are indignant that the student now appears to be beating the master at the game.

Here's why China must learn from Japan. One, Japan's per capita gross domestic product (in current dollar terms) is still nearly 10 times higher than China's, even after two lost decades in Japan and three booming decades in China. Two, worldwide, some of the most visible lights in skyscrapers at night are advertisements of Japanese multinationals, such as Sony, Toyota, Toshiba and Panasonic. Three, although more densely populated than China, Japan is arguably the cleanest, safest, most convenient-for-travel country on earth, especially for children and seniors.

There's more. Four, illiteracy has almost been eradicated - most young people enter colleges - and there is minimal inequality between rural and urban areas. Five, Japan is a modern giant, yet tradition is maintained gracefully. And, six, neighbouring countries and regions such as Korea, Taiwan and Hong Kong succeeded in modernising after learning from Japan.

You may argue that these are so general that they are hard to mimic. Let me outline four things that China can learn from Japan, starting today.

First, on smog and other pollution. What Japan does is twofold: one has been to develop nuclear energy (about a third of total energy used in the country, before the Fukushima disaster in March 2011), and the other is to limit driving into big cities, by increasing tolls, parking fees and petrol prices, making the process of obtaining driver licences long and expensive, and developing the public transport system, including layers of subways and city buses. In Japan, one cannot buy a car unless the police confirm that the would-be owner has a parking space. Compare this to China, where those rich enough to own cars face little restrictions and are encouraged to pollute even more.

Second, on corruption. The fundamental way to eradicate corruption is to have competition in the political system. Obviously, this is mission impossible at present. Many are proposing "sunshine legislation" that requires officials to publish their income and assets, but such a law has little chance of passing.

A more plausible and simpler way is - again, learning from Japan - to rotate public servants to different prefectures and provinces. Rotation limits the number of years a civil servant stays in one post and in one location, reducing the chances of interest groups forming, while increasing the odds of detecting them.

Third, on food safety. A subsidiary of heavyweight Snow Brand was forced into bankruptcy after it was found to have mislabelled beef to earn government subsidies. Top-down accountability is exactly what China needs to deal with poisonous food - not to mention low-quality bridges, roads and buildings.

Fourth, on housing bubbles and regional inequality. The housing bubble has made some of China's so-called first-tier cities - Beijing and Shanghai, for example - expensive to live in. The outdated household registration system forces those not from the city to lie and bribe their way into city life. It is time to get rid of this unfair and unjust system. The government can also impose a property tax, stopping the rise of housing prices on the one hand and raising revenue on the other.

Certainly, there are many more things China can learn from Japan, such as its advanced engineering and medical technology, efficient management systems, and top-down accountability at all levels of governance.

China may be entering the so-called middle-income trap. Upgrading the industrial base requires a total package of quality education, an independent legal system and fair government support.

The age of using millions of people for cheap labour to manufacture one thing in a single location is gone, shifted to even cheaper countries. Besides, China is running out of natural resources, water and even clean air.

For starters, even the four areas outlined above would change China for good by a mile, without touching the fundamental political system and institutions of one-party rule.

Chinese people laugh at how frequently Japanese prime ministers are changed, instead of seeing it as accountability.

Perhaps due to the victim syndrome, many Chinese seem to favour learning from the US rather than Japan. This is misguided. America is vast and sparsely populated, and rich in resources, not to mention its fair institutions and tolerant culture that attracts millions of skilled foreigners each year. Japan, on the other hand, is densely populated and has almost no natural resources.

Its peaceful blending of modern governance with traditional East Asian culture and customs, and its efficient use of limited resources, are exemplary for any developing country trying to catch up on the road to modernisation.

Lex Zhao is a professor of economics at Kobe University in Japan. zhao@rieb.kobe-u.ac.jp