Japan Warning

As the United States struggles through a tough economic time, it's important to distinguish the difference between the economies of Japan and China. Right now, Japan is very much like the United States. Both economies are huge, established machines. The US is the largest economy in the world followed by Japan. As a result, the economic stagnation felt by the US over the mortgage crisis will likely impact Japan hardest among Asian economies. On Monday, the former Bank of Japan Deputy Governor Kazumasa Iwata said "the economy is at a difficult stage. Japan's industrial production and capital spending are flat and growth in corporate profits is slowing, though at high levels." He also pointed out that prices of oil and food prices continue to rise.Meanwhile, China marches on with impressive growth. Even if it falls off a bit from last year's 11.9% GDP expansion, it will still be relatively good. China's GDP for 2008 is expected to be a robust 9.8%. Japan doesn't have that kind of cushion. Any slowdown of Japan's economy will bring expansion of recent years to a standstill.The bottom line here for investors is to treat investments in Japan like you would investments in America. Be cautious. China is still very much an emerging market and strong growth is expected to continue.