In Japan, The System That Soured, Richard Katz (343-44) maintains that "The changes in Japan are likely to be at least as far-reaching as the reforms that Deng Xiaoping made in China in the 1970s." For both China and Japan, the economic and social reform process is ongoing, with significant reforms still required by both nations that are plentiful and interconnected. To continue economic advancement, both China and Japan need to implement a number of reforms. Chief among these reforms for China is a profound need to "depoliticize the economy" in Naughton's (64) view. For Japan, one of the most significant reforms essential for continuing economic advance is removing obstacles to growth built into its political economy, such as "corporate collusion" and "protective regulations" (Kambayashi 46).
One of the biggest obstacles to both China and Japan for the implementation of effective economic reforms is each country's deep-seated opposition to reform. In both nations, barriers to growth are built into the fabric of the political economy. In China, Naughton (64) argues that "Economic conditions are deteriorating in the midst of nasty conflicts among politicians and interest groups," primarily because China is more politicized than other economies. Practically any investment made in China requires government involvement, political influence, or a payoff, whether official or not. According to Naughton (64), this is "the main reason the economy deteriorated so quickly."
In Japan, corporate collusion and protective regulations continue to hamper what Katz (10) argues is Japan's "dual economy." Katz maintains that Japan's formerly competitive manufacturing sector is shrinking while labor moves into a service sector that is inefficient and characterized by protective regulations. Katz (10) maintains that Japan will experience a stunning economic renaissance, but it is likely to take a decade for it to ma...