Since the collapse of the bubble economy in the 1990s, Japan's economy has been in a state of stagnation.

In 2023, Japan's GDP totaled only 4.21 trillion US dollars, being overtaken by Germany for the first time and ranking fourth globally.

Japan's economy has experienced a "lost decade," a "lost two decades," and now it is already the "lost three decades."

Despite this, Japan remains a developed country, with its economic output still ranking among the top in the world, and its per capita GDP still maintaining above 30,000 US dollars, which is a solid standard for a developed country.

Starting from the reform and opening up, China's economy has been growing rapidly for over forty years, yet China's per capita GDP is still only about one-third of Japan's.

After decades of hard pursuit, the gap in per capita GDP between China and Japan remains so significant, can we say that Japan's economy has lost three decades?The Japanese economy indeed stagnated for over thirty years following the collapse of the real estate bubble, and the gap between Japan's economic total and other developed countries, especially the United States, has widened.

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The reason why there is still such a significant gap in per capita GDP between China and Japan is that the previous gap was even larger; this is a matter of both absolute and relative terms.

Not only the GDP indicator, but other economic indicators also reflect the stagnation of the Japanese economy: exports and trade balances, manufacturing value added, and the number of Fortune 500 companies have not only failed to grow but have significantly decreased over the past thirty years.

The overall economic situation reflected by exports and trade balances, the international competitive industries reflected at the industry level, and the enterprise level reflected by individual economic entities - these three levels of economic indicators all point to the stagnation of the Japanese economy over the past thirty years!

Looking at the changes in the Japanese economy over the past thirty years from the perspective of manufacturing scale:

1. The scale of Japan's manufacturing industry has decreased rather than increased in the 21st century.The value added by the manufacturing industry is the most direct data reflecting the scale of a country's manufacturing sector: In 2000, Japan's manufacturing value added was $1.115 trillion (in current US dollars), and by 2021, this figure had dropped to $1.0251 trillion.

From 2000 to the present, not only has the scale of Japan's manufacturing industry not grown, but it has actually decreased by $90.4 billion. Taking into account inflation, the actual reduction in the scale of Japan's manufacturing industry is much greater!

Although Japan's total GDP is still increasing, its manufacturing industry has been continuously shrinking in the 21st century.

Not all countries' economies will keep growing, and even developed countries like Japan are no exception.

The 21st century is the era of the information technology revolution, which has given birth to several new industries that have changed the world, such as personal computers, the internet, mobile communications, and smartphones.

The fact that the scale of Japan's manufacturing industry has not increased but decreased during the information technology revolution indicates a problem.

From the perspective of the manufacturing industry, the so-called "lost three decades" of the Japanese economy is not an empty phrase.2. Since the 21st century, the development of Japan's manufacturing industry has been far behind that of the United States and Germany.

Between 2000 and 2020, Japan was the only country among the G7 where the value added of the manufacturing industry experienced a significant decrease, making it not an exaggeration to say that Japan's manufacturing industry has lost two decades.

During these two decades, the value added of Japan's manufacturing industry decreased by $105.7 billion, while the three European old industrial countries with the most severe deindustrialization, the United Kingdom, France, and Italy, still saw an increase of $15.1 billion, $46.9 billion, and $75.4 billion, respectively.

The United States, as the leader and driver of the information technology revolution, saw an increase of $689.1 billion in the value added of its manufacturing industry over these two decades, which is about 70% of the scale of Japan's manufacturing industry.

Although Germany's performance in the information technology revolution was not particularly prominent, it benefited from the integration of Europe, and its manufacturing industry scale increased by $327.3 billion during this period.

Since the 21st century, Japan's manufacturing industry has been the worst performing among developed countries, not only has the gap with the United States been further widened, but it is even worse than the United Kingdom, which has been passively deindustrializing.A significant reason for the poor performance of Japan's manufacturing industry is the decline of its electronics sector. The trade surplus in international trade of Japan's electronics industry has shrunk from being on par with the automotive industry to showing a deficit.

The failure in industrial competition is an important cause for the contraction of Japan's manufacturing industry. Not only has Japan's electronics industry failed to benefit from the development of the mobile internet era, but its existing industrial sectors have also been continuously replaced by emerging industries.

This is exemplified by the once most popular electronic consumer product, the Sony Walkman, which has been replaced by Apple's iPod and smartphones.

3. The development of manufacturing industries in China and South Korea has far outpaced that of Japan.

Among all major industrial nations, the country with the largest increase in manufacturing scale over the past two decades is China.

In 2000, the value added by China's manufacturing industry was only $369 billion, and by 2022, this figure had grown to $4.9756 trillion. The scale of China's manufacturing industry expanded 13.5 times in 22 years.

The absolute value of China's manufacturing value added first surpassed Japan in 2007, and since then, the scale of China's manufacturing industry has continued to grow rapidly, while the scale of Japan's manufacturing industry has remained stagnant at this level.In 2021, the value added of China's manufacturing industry reached 4,909 billion yuan, which is 4.8 times that of Japan's manufacturing value added.

The performance of Japan's manufacturing industry is also far behind that of South Korea.

In 2000, South Korea's manufacturing value added was only 152.4 billion US dollars, equivalent to 13.7% of Japan's. By 2021, South Korea's manufacturing value added had grown to 461.1 billion US dollars, equivalent to 45.0% of Japan's.

South Korea's land area and resource conditions are not even as favorable as Japan's, yet South Korea's development over the past two decades has been quite remarkable. Japan's traditional advantageous industries such as shipbuilding, semiconductors, home appliances, and liquid crystal displays have long been surpassed by South Korea.

Looking at the changes in Japan's economy over the past thirty years from the perspective of exports:

1. The export value of Japanese goods has seen no significant growth since 2007.In 2007, Japan's merchandise export value exceeded 700 billion US dollars for the first time, reaching 714.3 billion US dollars. Sixteen years later, in 2023, Japan's merchandise export value still only amounted to 717.3 billion US dollars.

Looking at the absolute value of merchandise export, Japan has not seen growth for more than a decade. Considering technological advancements, industrial development, and the overall expansion of the global economy, the stagnation of Japan's exports is quite puzzling.

Taking into account inflation, Japan's exports have actually decreased since 2007.

2. From the 1990s to the present, the growth rate of Japan's merchandise exports has been far behind that of China, Germany, South Korea, and the United States, and even lags behind the UK and France, which have experienced the most deindustrialization in Europe.

From 1991 to 2023, Japan's merchandise export value only increased by 1.3 times, which is the lowest growth rate among all major industrialized nations.

The UK and France, the most deindustrialized developed countries, saw their merchandise export values increase by 1.8 times and 2.0 times, respectively, during this period. The United States and Germany, which have the best economic growth performance among developed countries, saw their merchandise export values increase by 3.8 times and 3.2 times, respectively.

The country with the most significant increase in merchandise export value since the 1990s is China, with a staggering 46-fold increase!In terms of the absolute amount of merchandise export value, China's merchandise export value reached 3.38 trillion US dollars in 2023, which is 4.7 times that of Japan's export value of 717.3 billion US dollars. In 1991, China's merchandise export was only 71.9 billion US dollars, accounting for only 22.8% of Japan's export value that year.

In 1991, the gap between Japan's merchandise export value and that of the United States and Germany was only 100 billion US dollars. After more than two decades of development, the gap between Japan's merchandise export value and those of the United States and Germany has both expanded to over 1 trillion US dollars.

Although Japan's merchandise export continued to grow after the collapse of the bubble economy, the growth rate was far from comparable to that of the United States and European countries, which are also developed nations, and it cannot be compared with China.

3. South Korea is gradually catching up with Japan in merchandise export.

Japan's growth in merchandise export is also far from that of South Korea, and South Korea has conditions similar to and worse than Japan in various aspects.

As an export-oriented economy that is also based on exports, South Korea's merchandise export was only 71.9 billion US dollars in 1991, accounting for only 22.8% of Japan's export value that year.By 2023, South Korea's merchandise exports reached 632.2 billion U.S. dollars, with the gap with Japan now only a few billion U.S. dollars.

Considering the size of South Korea's economy, it goes without saying that South Korea's merchandise export competitiveness has surpassed that of Japan.

4. Merchandise Export Balance

Japan's foreign trade in goods has frequently experienced deficits since 2007, and the magnitude of these deficits has been expanding.

From 1981 to 2010, Japan's merchandise exports were all in surplus, with the surplus amounting to over 100 billion U.S. dollars in many years.

Starting from 2007, Japan's merchandise exports began to show deficits, which have become more frequent and the deficits have grown larger.

In 2022, Japan's merchandise export deficit astonishingly reached 150.4 billion U.S. dollars, which would have been unimaginable in the past!Why has Japan's commodity export shifted from a surplus to a deficit?

The root lies in the decline of Japan's manufacturing industry and the decreased competitiveness of Japanese goods globally.

Once upon a time, Japanese-made electronic products and Japanese automobiles were both renowned worldwide. Japanese automobiles still maintain strong competitiveness to this day, but Japan's electronic industry has been experiencing a trade deficit since 2013.

Japanese companies essentially missed out on the mobile internet era, and in fact, they also benefited very little from the mobile communication era that came earlier.

Looking at the number of Fortune 500 companies to see the changes in Japan's economy over the past thirty years

The Fortune 500 is a list of companies published annually by Fortune magazine, which selects the 500 highest-grossing companies from all industries worldwide.The Fortune Global 500 list is an important indicator for measuring the strength of large global companies and also serves as a significant gauge for the economic power of a nation.

In 2000, Japan had 107 companies on the Fortune Global 500 list, ranking second in the world after the United States. That year, Japan's total GDP was also the second-largest globally, with the ranking of its companies on the list aligning with its GDP ranking. The number of Japanese companies on the Fortune Global 500 list was far ahead of other G7 countries such as the UK, France, Germany, and Italy. The Japanese companies on the list included not only traditional financial and automotive industries but also a significant number of manufacturing enterprises like Kawasaki Steel and Fuji Heavy Industries.

In contrast, in 2000, China had only 11 companies on the Fortune Global 500 list, which also included companies from Hong Kong and Taiwan.

By 2024, the number of Japanese companies on the Fortune Global 500 list had dwindled to 40, ranking third globally. With the rapid economic growth of China, the revenue of Chinese enterprises has surged, leading to a significant increase in the number of Chinese companies on the Fortune Global 500 list, totaling 133, ranking second only to the United States.In 2000, the number of Japanese companies on the Fortune 500 list had a significant advantage over those from Europe, specifically the UK, France, Germany, and Italy; by 2024, although the number of Japanese companies on the Fortune 500 list was still greater than that of the UK, France, Germany, and Italy, the numerical advantage was no longer as pronounced.

From 2000 to 2024, except for Canada, the number of Fortune 500 companies from other developed countries decreased. After all, with the rise of China's economy and its enterprises, it is inevitable that the revenue of Chinese companies would surpass that of developed countries.

However, the number and proportion of companies that dropped off the list varied greatly among different developed countries. From 2000 to 2024:

1. The number of American companies on the list decreased by 39, accounting for 21.9% of the companies on the list in 2000; the number of German companies decreased by 8, accounting for 21.6% of the companies on the list in 2000.

2. The number of Japanese companies on the list decreased by 67, accounting for 62.6% of the companies on the list in 2000; the number of British and Italian companies decreased by 22 and 5, respectively, accounting for 56.4% and 50% of the companies on the list in 2000.

3. The number of French companies on the list decreased by 13, accounting for 35.1% of the companies on the list in 2000.

Among all countries, Japan had the highest number and proportion of companies that dropped off the Fortune 500 list!In European countries, the UK, which is most notably "deindustrialized," does not see as severe a reduction in the number of its Fortune 500 companies as Japan does. What causes such a large number of Japanese companies to be squeezed out of the Fortune 500 list?

The Japanese economy has lost three decades, with the core being the failure of industrial competition, especially in the information technology sector.

Since the collapse of the bubble economy, the Japanese economy has not shown any signs of recovery, from the "lost decade" to the "lost three decades," with the time lost getting longer and longer.

What has caused the Japanese economy to lose such a long period of time?

Is it the real estate bubble, the monetary policy of the Bank of Japan, the suppression of Japan by the United States, or other reasons?The bursting of the real estate bubble and the industrial suppression by the United States are reasons, but not the whole story.

Japan's failure in new industrial competition is the key to its economic development failure!

Before the 1980s, Japan's successful industries included semiconductors, steel, chemicals, home appliances, shipbuilding, automobiles, construction machinery, and many others.

At that time, the largest market for consumer electronics was color televisions, and Japan had an absolute advantage in color TV production! Sony's Trinitron technology was unparalleled in the world.

The Japanese home appliance industry was unrivaled globally, not only in color TVs, but also in products such as video recorders, cameras, refrigerators, air conditioners, and washing machines, all of which were the most competitive globally.

The Walkman was a Japanese company's innovation, and Japanese companies also developed products with unique Japanese characteristics, such as the gaming console - PlayStation.

In the era of personal computers, the Internet, mobile communications, mobile Internet, and smartphones, what globally renowned products does Japan still have in these emerging industries?

From the 1990s to the present, Japanese companies have gradually fallen behind in the information technology revolution, and Japanese products are no longer seen in smartphones.Not only that, but Japan's traditional advantageous industries such as shipbuilding, home appliances, and automobiles are constantly being eroded by South Korean and Chinese companies, which is an important reason why Japan cannot maintain its original export scale.

The Japanese economy has lost three decades, with the core being the failure of industrial competition, especially the failure in the competition of the information technology industry!

The evolution of technology is continuous, and Japanese industries have failed to seize the opportunities brought about by the information technology revolution, with the electronics industry almost completely wiped out.

The outbreak of the new energy vehicle revolution will threaten Japan's most important advantageous industry - the automotive industry.

In 2023, China's automobile exports surpassed Japan for the first time, becoming the world's largest automobile exporter.

In the new energy vehicle revolution, Japanese companies are still struggling and are not prepared at all.

If the Japanese automotive industry also fails to keep up with the technological revolution, the time Japan's economy loses will be longer and more complete!