The political settings of China and Japan are distinct and related to the current status of the economies in each nation. Having shed communism in all but the name of its ruling party, China's government maintains a monopolistic hold on power. The transition from a centrally planned economy to a socialist market economy has fueled economic growth but also created conflict among farmers and officials who continue to acquire land. The government monopoly on power often undermines law and justice, with corruption difficult to control. The government continues to impede progress because of the slow reform of State Owned Enterprises (SOE) that continued to be propped up by zero interest loans in order to offset massive job losses. While most of the challenges of transitioning to a market economy have been overcome, the government must now focus on reforms aimed at development. Naughton (2007) maintains the government must focus on "the need to invest in human skills and physical infrastructure, the need to create effective institutions, and the need to protect underprivileged and vulnerable sections of the population" (p. 5).
In contrast, in Japan, the one-part system of government is one of the biggest obstacles to spurring economic growth. Japan is the only industrial democracy that is a one-party state and the Liberal Democratic Party (LDP) continues to cater to narrow special interests rather than the concerns of the broad middle class. As Katz (2002) argues, "There is little wrong with Japan that couldn't be helped by some good old-fashioned competitive politics" (p. 7). Japan's government in an era of low-growth continues to forge decisions behind closed doors of ministries or by a handful of senior politicians in back rooms. Failure to reform is tearing the LDP apart, with the opposition Democratic Party of Japan (DPJ) recently besting the LDP for a vacant seat in the Diet.
Unlike China's gov...