While the world is fascinated by the economic “miracles” in China, it has almost

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forgotten that Japan is still the third biggest economy in the world and in terms of international assets, far richer than the People’s Republic of China. Long ago, the west had been fascinated, even frightened by the Japanese. Economic experts warned that the Japanese will rule the world and that all companies will have to adapt to Japanese management methods. In late 1989, the speculative bubble burst, the Nikkei stock index tanked and the inflated real estate prices collapsed. The 1990s turned into a “lost decade” and Japan is now seen as a country that is destined for economic, demographic and geopolitical decline. While the hype had been excessive, the present pessimism about Japan is equally misplaced.

China’s impressive economic growth suffers from a number of structural shortcomings that point to future stress. Most importantly, Chinese growth is primarily the result of thriving exports and massive capital goods investment. This creates vulnerabilities that the Chinese leadership is well aware of. China has become dependent on flourishing export markets, particularly in the United States and the European Union (EU). Excessive investments in infrastructure and industrial plants lead to wastage of capital and to overcapacities. This again results in problematic debt that weighs down the financial sector, which is still under the firm control of the ruling party. A way out would be a sustainable expansion in domestic consumption and increased production for domestic markets.

Japan’s economy, while not free of structural challenges, is on the whole, much better balanced than the Chinese. Like Germany, Japan has kept a solid industrial base in the country and did not emulate the British economy, where services, particularly financial services, are now practically the sole lifeline. This has allowed Japan to avoid the financial crisis of 2008 and hold its own against Chinese export drives. Like, for example, the German machine industry, the big Japanese companies invest heavily on research and development in order to produce in Japan the goods the world wants. It is impressive to see how many industrial areas there are in Japan. The country, which has no institutionalised economic hinterland, such as the EU or North American Free Trade Agreement (Nafta), and which has a much smaller population than China, the EU, the US and India, is a world leader and will remain so over a very long time.

Japan’s strong industrial base is the result of long-term developments. It dates back to the 19th century when the country embarked on one of the most significant modernisation drives in modern history. Within half a generation, the so-called Meiji Restoration propelled Japan from a mainly rural, feudal society to be a part of the industrial revolution. After the capitulation at the end of World War II when Japan paid for its self-destructive imperialism, the country quickly resumed the policy of industrial and technological progress. Within another half generation, it had reached the apex in the world economy. While in the 1960s “made in Japan” did not carry much prestige, during the past two decades, Japanese achievements in a wide range of goods and services have been setting world standards.

The diligence and skill, with which the Japanese have mastered the path to the top, be it in the car industry or in cosmetics, in medical services or in the entertainment industry, point to another longstanding tradition. Japan has always been a country with great respect for individual excellence, notably in the field of craftsmanship. Every region and every major town has its local specialities of which it is particularly proud. We think of pottery and sake, of lacquerware and textiles. The range of products and styles is truly astounding. Most impressive is the universally high standards of these local specialities and the great attention that is given to aesthetics.

One might have feared that rapid socio-economic modernisation might lead to these traditional skills fading away. Why should a country that produces the Lexus still have a tradition in pottery or wood carvings? The answer lies with a distinct national character of the Japanese. While during the past 150 years, Japan has undergone unprecedented westernisation, the country and its people have, nevertheless, kept their strong identity and innermost Japanese values. On the streets of Tokyo, you hardly see anybody wearing a traditional Japanese dress. The Kimono is only worn on very special occasions. The architectural face of the cities is western, even American. And still, of all major Asian civilisations, Japan has kept the firmest distance from western values.

A particularly interesting Japanese institution is the so-called living national treasures. Every country that is proud of its past has national treasures in the shape of protected buildings, even protected landscapes. It houses artifacts and intellectual achievements in museums and libraries. In the case of Japan, protected national treasure can also be living human beings. The ministry of education and culture, based on the law for the protection of cultural properties, designates outstanding individuals as living national treasure. These are keepers of important intangible national properties. Of course, there are artists and musicians among them, but also exceptional craftsmen such as potters and weavers, carpenters and producers of lacquerware. These people enjoy the highest respect in the country. With their talents, they are part of the outstanding achievements of modern Japan in all fields of art, science and industry.

(The writer is the Far East correspondent of Swiss daily Neue Zurcher Zeitung)