1. China vs. Japan The Thirty Year Time Lag?

2. Amazing Growth of GDP Both the Japanese and Chinese economies in the thirty years examined showed incredible growth in terms of Real GDP per Capita. With the exception of 1989 when China saw a decrease in both investment share and % of savings the increase has been consistently stable.

3. Consistent Increases in Current Savings and Investment Share of GDP Both economies have shown an ability to grow to and maintain high levels of savings and investment. Though the chart shows no significant increase in the Japanese economy, the level at which they were at in 1961 is extremely good and the have been able to maintain it for the most part.

4. Investment and Savings Investment and savings fuels economic growth by giving the banks…the ability to lend to build infrastructure and raise capital Savings can bring consistent consumption spending including investment into high value goods

5. China and Japans economies were both fueled by savings and investment…21% and 23% respectively. Gross Capital Formation is a major indicator of what is happening with investment...is it being used to increase productive capacity

6. Deposits & Capital Formation Capital formation is growing faster in China but similar to the growth of Japan Japan increases from 1625 to 90104(b$) China increases from 108 to 6235 (b$)

7. Deposits show strong growth also. Deposits are a primary driver of small businesses China increased from $170 billion to $8315 billion Japan increased from $1632 billion to $65735 billion

8. Population Growth Rates Population growth rate can be a large factor in growth Lowering rates are typical of growing economies Increases the effective unit of labor by controlling the population growth rate

9. The part of the Japanese economy China wants to avoid… Significant decreases in Investment share and current savings has caused a recession in Japan, starting in the early 1990’s and still continuing today.

10. The Effect of the Decreases in Japan In the 15 years from 1986 – 2000 the savings rate has fallen over 4% and the investment share fell over 5% from 1990-2000. The overall effect on the Growth Rate of GDP per Capita has been an average growth rate in the 1990’s just over 1% of compared to an average growth rate of over 3.6% the decade before.

11. Japan’s Fall in Demand Deposits Deposit Rate of the population is dwindling Effects small businesses in a big way Loss in confidence in the banks even though they were bailed out

12. Degree of Openness Degree of Openness can add additional demand to an economy by openning up new markets to sell in The dwindling rate will have a negative effect on growth

13. Gross Capital Formation Post Boom The capital being formed in the country is shrinking Businesses are not reinvesting in improving productivity like they were in the booming period

14. Even though the lending rate is declining The Lending Rate on loans from the Banks is dropping and there is still a lowering rate of capital formation within the country Points to Banking issues within Japan which will have a strong affect on the economy

15. Japan’s Issue Japan’s stagnancy is largely due to the fact that there are strong issues with the banking system...the bank crisis in the 90’s in Japan is still having an effect Results are lowering reinvestment by businesses and lower rates of deposits in the system Resulting in lowering GDP and GDP per capita

16. China is on her way… By current figures and projections China will eclipse the United States as the world’s largest economy sometime around the year 2020. We have no doubt that this will happen as long as they steer clear of the pitfall that Japan has encountered.