Most Hong Kong people have mixed feelings about Japan.
Certainly, Japan is one of the top destinations for Hong Kong holidaymakers, and they love the food, technology and culture, as well as the depreciating yen.
However, it’s very difficult for people in Hong Kong to buy a flat or migrate to Japan.
Japan is a very special country. All the data paint a gloomy picture, but things are totally different if you walk on the streets there.
Daniel Mitchell, a libertarian economist at the Cato Institute in Washington, made a speech in Hong Kong last week.
Unsurprisingly, he is extremely pessimistic about many developed countries, because of their aging populations, low birth rates and government pension plans in the style of Ponzi schemes.
These will lead them to fall apart like Greece, he said.
Japan appears to be the worst, based on the figures, when compared with many western countries.
A third of its population will be over 65 by 2020, and the country has one of the highest life expectancies in the world.
Also, the debt/gross domestic product ratio in Japan has already hit 230 percent, much higher than those of other countries.
In fact, Greece’s debt/GDP ratio was 110 percent when it declared bankruptcy.
It’s expected that the debt/GDP ratio in Japan will spike to 600 percent by 2040 if the country fails to overhaul its welfare system.
Japan is doomed sooner or later, the figures show.
However, the reality was very different when I strolled the streets of Osaka.
The city’s downtown is dynamic and vibrant, and there is no sign of economic recession.
We have to remember that Hong Kong managed to grow its GDP even while it was suffering from the outbreak of severe acute respiratory syndrome in 2003.
In fact, it isn’t only tourists who are spending in Japan.
When I walked into the Panasonic Center, there were many customers who were interested in high-tech electronics like solar panels or computer-controlled switches.
As far as I understand it, it’s the effect of money printing under so-called Abenomics.
However, money printing cannot fix the underlying issues.
Japan is now playing a game of musical chairs, and Prime Minister Shinzo Abe has just turned up the volume of the music so that everyone will enjoy themselves.
My Japanese friends and former colleagues, especially those who went through the 2008 financial crisis, are very loyal to their country.
They think the worst times are already behind them.
Nevertheless, they also complain about high housing prices, which are around HK$3,000 per square foot, limited opportunities for the younger generation, and so on.
The realtors always say the 2020 Tokyo Olympics will drive up housing prices further.
However, they might be forgetting that market expectations have already been built into current home prices.
The Japanese government has continued to inflate the country’s debt bubble, exploiting the patriotism of the Japanese people.
This article appeared in the Hong Kong Economic Journal on Feb. 24.
Translation by Julie Zhu
[Chinese version 中文版]
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