American and British commentators have told three stories about the German economy over the past decade, all of them derogatory. Articulating a standard conservative view, Adam Posen of the Peterson Institute for International Economics in 2006 characterized Germany's performance as "lastingly poor." In a similar vein, Jude Blanchette, blogging for the libertarian Mises Institute, predicted in 2003 that nothing but "rot and indolence" lay ahead.
After the economist Nicholas Lardy visited China in the mid-1980s, he came away distinctly skeptical. While Chinese leaders were gearing up for a huge export drive, Lardy predicted “a marked slowing in China's trade expansion in the years ahead.” In particular he questioned Beijing's reported plan to boost total Chinese trade (imports plus exports) to more than $200 billion by 2000. In a monograph published by the Asia Society in 1987, China's Entry into the World Economy, Lardy suggested the target was implausibly high.
The size of the trade deficit with China is one of the hottest potatoes in American economic policy these days. It is about to get a little hotter, thanks to Beijing's highly provocative, if hitherto largely overlooked, controls on outbound tourism.
In all the public bickering recently between Japan and China, one fact has received remarkably little attention: Japan's continuing refusal to pay compensation to victims of its militarist-era brutality.
For those who claim to understand the global economy, here's a pertinent question: Which East Asian economic powerhouse recently announced the largest current-account surplus in world history?
The answer is Japan, although very few readers of the American press are likely to have noticed. Given the continuing media obsession with China, little news about East Asia's other giant economy makes it into print or onto television these days. Yet in most of the ways that matter to current U.S. economic policy, Japan remains far more important than China.