I mentioned China as being one of the subjects to be addressed. China has become a very important part of not only this region but the world, and as I said earlier, the Japanese economic recovery and very strong performance in the last couple of years would not have been possible without a very healthy Chinese economy, both in terms of their healthy domestic economy, but also their ability to provide opportunities, for instance to the Japanese manufacturers, to be a better, more effective value-added player in the global market. Yes, in the meantime we have suffered what you might call the hollowing-out effects, but the total net has been the big plus for the Japanese economy. But you are also aware of the sensitive bilateral relationship between China and Japan, largely because of our past history, but partly because of a number of speculations as to what China might become or do, not only to Japan but also to the rest of the world.
Quite recently I was interested to read a remark by the Chairman of Intel, Mr Grove. A Japanese journalist was interviewing him about the future of China. He made two very interesting, important comments. First, he said: I have no doubt that China has passed the point of no return, it has become a very important part of the world, and it will be more important in the future; this is something we have to accept. It is not a question of liking or not liking it, it is going to be a fact. But the second comment was more interesting to me: this was in answer to a question that because China is not a democratic country, they just cannot encourage creativity and imagination. In the future the competition will be decided on how effective your R & D will be, how imaginative, how creative your people will be in responding to the challenges. The gentleman said: nonsense, the political system has nothing to do with how imaginative people can be. Look back at what Germany in the Nazis' time did; they were at the height of technology.
That was an interesting comment, and I was quickly reminded; the Chairman introduced me as having attended the Wharton School, part of the University of Pennsylvania. I was in the States in 1957, and when Sputnik was put up, I still remember the front page of the New York Times. Dr Braun, who had been brought in, maybe from Germany, was being interviewed, and he was talking about what was wrong with the American education system. Why did they beat us, the Soviets? Of course it was at the height of the Communist Party's dominance. Now we don't have to agree with these remarks made by the Chairman of Intel, but certainly it is a mistake, number one, to develop very wishful thinking that some day, some time, China will stumble or tumble conveniently to their knees. Secondly, seriously speaking, whether this is the Communist regime or the democratic system or whatever, the importance of people driven to be more creative, more imaginative, certainly continues to be probably the most important theme: number one, for the world as a whole to be a better world, but for any nation, any corporation or region to be more competitive. In the long term, this is going to be the number one theme, to become more imaginative, more creative in a very positive manner.
This is where Japan has to think very carefully. Now I just brushed through the economic aspect, maybe too simply, but my feeling is that we will do all right. I think in what we all call "the market", some of the market forces we don't like, some of the market forces favour some of the people more than the others, but the Japanese economy has become almost an inseparable, integral part of the global economy, and with its size, I really have no major concern in the short term about the performance of the Japanese economy. But in the long run, when we ask ourselves if we are up to the challenge of being more creative and more imaginative in a substantive sense, this is where I'm not as optimistic as I am on the purely economic and business side. And this has something to do with education. We have come through very major educational changes after 1945, some good, and some bad. On the positive side, we have developed a system in which we probably are the best in terms of developing youngsters almost from kindergarten all the way up to graduate school, who will be able to solve the problems once the problems are given. So we have developed a couple of generations of world-class "how-to" oriented people, but failing in developing at the same time the people who can think what and why. Again some of you may know the current debate that's going on in Japan on the education system. Fundamentally, this debate is how to re-arm our students with better knowledge in specific areas of disciplines to do better in an international context. The other thing is, even at the risk, skills-wise, of doing not as well as we want them to do, developing youngsters who will be willing to think and speak out even if their ideas may be wrong. We would like to develop children who are aggressive and forward-looking enough to form their own opinions. And in the last several years, we have been trying to design programs where students can work together with people from corporations, together with bureaucracy, both central and local, so they can really feel what they learn, what they can read in textbooks. And they can actually ask rather embarrassing questions to their parents, simplistic but very fundamental. Now we are going through that difficult stage, but on top of this whole program is at the higher education level, we have almost totally neglected the very important liberal arts education which is absolutely necessary to develop people who can think.