Intertwined dragon and koi fish symbolizing economic networks of China and Japan.

China vs. Japan: Unveiling Hidden Trends in Economic Structures

Kai Mendoza in Business & Economy June 2025 • 3 min read.

"A network analysis reveals surprising shifts and persistent differences between Asia's economic powerhouses. What can these insights teach us about economic growth and stability?"

China and Japan, two of the world's largest economies, often spark comparisons. China, with its rapid growth and vast scale, contrasts with Japan's advanced industrial structure and high productivity. Understanding their economic interplay is vital in today's global landscape.

While much research exists on the individual economies of China and Japan, direct comparisons of their sectoral structures remain surprisingly limited. Traditional methods of economic analysis are evolving with the rise of network analysis, offering new ways to understand complex economic relationships.

This article explores the economic structures of China and Japan through the lens of network analysis, leveraging input-output tables from 1995 to 2018. By examining these networks, we uncover key differences and similarities, offering fresh perspectives on their economic dynamics.

What Can Sectoral Strengths Tell Us About Economic Growth?

Intertwined dragon and koi fish symbolizing economic networks of China and Japan.

To understand the differences in the node strength distribution between China and Japan, we'll be analyzing the strength of a node. For a directed and weighted network, the strength of a node can be partitioned into its in-strength and out-strength, which represent the total weight of incoming and outgoing edges, respectively.

By 2018, China's between-sector economic flows had surpassed those in Japan, reflecting the rapid growth of the Chinese economy. These increases reflect the rapid growth of China's economy, leading to expansion in the sizes of its sectors and between-sector connections.

China: Manufacturing comprises a larger portion of China's total strength than it does in Japan. Agriculture, hunting and forestry claim a more significant share in China.
Japan: The service industry dominates in total strength over China. Wholesale and retail trade, along with motor vehicle repair, takes the lead in sectoral contributions.

These distinct characteristics necessitate detailed network analyses for a comprehensive quantitative assessment.

Implications and Future Research

This study provides a detailed look into the evolving sectoral dynamics of China and Japan, two pivotal Asian economies. By utilizing network centrality measures, we pinpointed key sectors within input-output networks, offering a logical approach to understanding their economic structures. These insights hold significant implications for trade, energy, and environmental policies, providing a framework for assessing supply chain stability and economic vulnerabilities.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: https://doi.org/10.48550/arXiv.2402.1562,

Title: Comparison Of Sectoral Structures Between China And Japan: A Network Perspective

Subject: stat.ap econ.gn physics.soc-ph q-fin.ec

Authors: Tao Wang, Shiying Xiao, Jun Yan

Published: 23-02-2024

Everything You Need To Know

What is the core difference in sectoral strength between China and Japan's economies?

The primary difference lies in the sectoral composition of their economic strength. China's economy, as of 2018, exhibits a larger portion dedicated to manufacturing and agriculture, hunting and forestry compared to Japan. Conversely, Japan's economy is dominated by the service industry, with wholesale and retail trade, as well as motor vehicle repair, playing a more significant role in its overall economic strength. These variations are evident through network analysis of input-output tables.

How does network analysis contribute to understanding the economic structures of China and Japan?

Network analysis provides a novel approach to compare China and Japan's economies by examining the structure of their economic sectors. It allows a detailed examination of the economic relationships between sectors using input-output tables from 1995 to 2018. This method reveals key differences and similarities, helping to understand how manufacturing, services, and other sectors contribute to the overall economic strength of each nation. By using tools like node strength analysis (in-strength and out-strength), we can quantitatively assess sectoral contributions and economic flows.

What do the between-sector economic flows reveal about the growth of China's economy compared to Japan?

By 2018, China's between-sector economic flows had surpassed those in Japan, showing China's rapid economic expansion. This increase signifies a growth in the size of its sectors and the connections between them. Analyzing these flows, visualized through network analysis, underscores the dynamic shifts in economic activity and highlights China's increasing role in global trade and industrial output compared to Japan's more mature, service-oriented economy.

How can insights into the economic structures of China and Japan be applied to policy decisions?

The study's insights, derived from network centrality measures within input-output networks, have implications for trade, energy, and environmental policies. Understanding the sectoral strengths of China and Japan can help assess supply chain stability and economic vulnerabilities. This information aids policymakers in making informed decisions that promote economic stability, manage resources effectively, and prepare for potential disruptions, ultimately fostering sustainable economic growth and resilience.

What specific industries are highlighted when comparing the economic structures of China and Japan, and why are they significant?

The comparison highlights the manufacturing and agricultural sectors in China, which claim a larger portion of the country's total strength. Japan's economic structure is characterized by the prominence of the service industry, with a strong showing from wholesale and retail trade and motor vehicle repair. These specific sectors are significant because they reflect the economic priorities and comparative advantages of each nation. China's focus on manufacturing supports its role as a global producer, while Japan's strength in services indicates an advanced, consumer-driven economy. Network analysis reveals these distinctions, offering a deeper insight into each nation's economic dynamics and their interplay in the global market.