{"id":91025,"date":"2016-06-08T11:15:58","date_gmt":"2016-06-08T15:15:58","guid":{"rendered":"http:\/\/countingpips.com\/?p=91025"},"modified":"2016-06-08T06:16:29","modified_gmt":"2016-06-08T10:16:29","slug":"looking-for-growth-part-1-trouble-in-japan-and-china","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2016\/06\/looking-for-growth-part-1-trouble-in-japan-and-china\/","title":{"rendered":"Looking for Growth, Part 1: Trouble in Japan and China"},"content":{"rendered":"
June 8, 2016<\/div>
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By WallStreetDaily.com<\/u><\/a> \"Looking<\/p>\n

It\u2019s tough for investors to find decent economic growth in the world.<\/p>\n

The American economy hasn\u2019t grown by more than 3% since 2005, the longest stretch of weak growth going back to 1930.<\/p>\n

The latest labor survey shows that the economy only produced 38,000 jobs in May, the fewest since September 2010.<\/p>\n

And Europe\u2019s record and prospects are even worse.<\/p>\n

Once the bright star, Asia and other emerging markets as an investment destination have lost considerable momentum over the last few years. The massive markets of Japan and China are slowing while smaller, more nimble, and more dynamic markets are surging beyond the radar of even the most sophisticated investors.<\/p>

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While the Shanghai Index is down a whopping 45% during the last year, Hong Kong has given up 27%, Singapore is down 18%, and even Japan has lost 11%.<\/p>\n

Today, let\u2019s first take a look at Asia\u2019s two big economies to discover why these trends may be enduring, as well as why your investing approach to Asia has to adapt to a changing competitive landscape. Then tomorrow, I\u2019ll tell you where in the world you can find 6% to 8% annual growth.<\/p>\n

Japan\u2019s Graying, No-Growth Economy<\/h2>\n

For Japan, we really need to go back almost three decades, to when its real estate and stock market bubble burst.<\/p>\n

In the early 1980s, I went to Tokyo as an exchange student out of curiosity and an eagerness to learn the keys to Japan\u2019s tremendous economic achievements.<\/p>\n

What I learned is that Japan\u2019s success was due to a combination of cultural factors that fostered great cooperation and national effort together with economic fundamentals: a cheap currency, steady increases in productivity and investment, a protected home market, and always putting exports over consumption.<\/p>\n

But complacency leads to the mighty being humbled. As Japan approached the bubble bursting in 1989, the new generation wanted \u2013 and was getting \u2013 consumption.<\/p>\n

Speculation and financial engineering were crowding out capital investment, international pressure was pushing up the value of the yen, and overconfidence and complacency led to bank lending practices being greatly relaxed.<\/p>\n

But it\u2019s surprising that, since the early 1990s, Japan hasn\u2019t been able to get economic growth back on track.<\/p>\n

There are a number of reasons for this:<\/p>\n