Numbers tell tale of Japan’s postwar rise and fall


Staff Writer

This is the final report in a four-part series looking at the past seven decades during which Japan maintained its national security while enjoying economic prosperity, and the ongoing social changes that could determine the country’s future course.

Numbers, particularly when interpreted graphically, are often more powerful than words when explaining long-term trends and changes. Here are three graphs that tell us much about what Japan has gone through in the past seven decades, including how it suffered, prospered, peaked and declined.

The population graph from 1945, based on the national census at the time, clearly reflects the catastrophic outcome of the war.

In the aftermath, males aged 20 to 40 were grotesquely outnumbered by females in the same age bracket, reflecting the fact that millions of Japanese men were killed or marooned in foreign lands, including China, Southeast Asia and the Pacific islands, after Japan’s defeat.

Japan lost an estimated 2.3 million military personnel in the conflicts it waged in the 1930s and ’40s. This left its population at 72.2 million in 1945. As of last July, it stood at 127 million.

The return of many of those men after the war set the stage for Japan’s first postwar baby boom in the late 1940s. But the total fertility rate (TFR), a key indicator of birth trends, ended up plunging within a decade, dropping from 4.54 in 1947 to 2.07 in 1957.

The TFR is the number of children a woman would have in her lifetime if she were to bear children in line with age-specific birthrates in a given year. To maintain its population, a country usually needs a TFR of 2.1 or higher.

Since the late 1970s, Japan’s TFR has been in a gradual decline. In 2013, it hit 1.43 as more men and women put off marriage and childbirth.

This long decline has drastically reduced the number of newborns in proportion to the elderly, as shown in the population graph for 2010.

This rapid aging is one of the key factors behind Japan’s shrinking economic growth potential. It has drastically increased social security costs and helped foster deep-rooted pessimism about Japan’s long-term future.

In the meantime, the 1949-2014 graph for the Nikkei stock average shows the rise and fall of the economy since the war. After the Nikkei’s establishment in May 1949, it ended its first year at ¥109.91.

Led by its powerful export-driven manufacturing industry, Japan kept growing and had become the world’s second-largest economy by the late 1960s. The Nikkei rose accordingly.

But in 1985, the Plaza Accord led to a drastic spike in the yen’s value against the dollar, thrusting Japan into a new economic environment.

The Bank of Japan then embarked on powerful monetary easing to soften the impact of the yen’s rapid appreciation. This eventually led to the formation of the euphoric bubble economy in the late 1980s, which saw the Nikkei soar to a lofty record high of ¥38,915 in 1989.

The bubble imploded in the early 1990s, however, triggering the massive nonperforming loan crisis that would become the starting point for the prolonged economic slump Japan finds itself in today.

The third graph, comparing the gross domestic products of Japan and China, shows how Japan’s expansion ceased after 1995, to be followed by China’s astonishing ascent after 2005.

According to the IMF, the nominal GDP of China was only $309.1 billion in 1980, compared with $1.087 trillion for Japan.

China’s GDP skyrocketed to $5.11 trillion in 2009, surpassing Japan for the first time.

China’s economy continues to grow rapidly. Chinese GDP hit $9.469 trillion in 2013, nearly twice as large as Japan’s $4.899 trillion.

  • China Lee

    If you look at the GDP chart for China and Japan, you will notice the Chinese nominal GDP took off after China joined the WTO in December 2001.

    Beginning 2002, China started to export to the world as tariffs were reduced per WTO rules.

    By harnessing the global market, China was able to achieve exponential growth in exports and nominal GDP. In conclusion, China maximized its opportunity.
    To spur economic growth today, China is busy trying to sign FTAs (ie. free trade agreements) with other countries. New Zealand, ASEAN, Taiwan (via ECFA), South Korea, and Australia have already signed FTAs with China.

    China is currently discussing an FTA with the GCC (ie. Gulf Cooperation Council) and Israel. Hopefully, the United States will show serious interest in a China-US FTA via the FTAAP. Finally, Japan should pursue the China-Korea-Japan FTA.

    The WTO boost to China’s economic growth has mostly run its course. The next step is FTAs.