Trade solves this problem. However, Japan wants to solve this problem using its abundant capital - the solution to build 3.5 million robots.
The economic implications are interesting. The low skilled will yet again see their wages under pressure. However, it is hard to see how the capital required can ever be cost effective compared to Chinese wages.
But, crucially, the robot solution means no immigration costs or social unrest associated with immigration of low skilled. The key to the robot solution is Japan's unwillingness to contemplate large scale immigration. I suspect, given Japan's demographics, that this attitude will have to change.
There must be a paper in here somewhere.
Robots seen doing work of 3.5 million in Japan [Reuters]
TOKYO (Reuters) - Robots could fill the jobs of 3.5 million people in graying Japan by 2025, a thinktank says, helping to avert worker shortages as the country's population shrinks.
Japan faces a 16 percent slide in the size of its workforce by 2030 while the number of elderly will mushroom, the government estimates, raising worries about who will do the work in a country unused to, and unwilling to contemplate, large-scale immigration.
The thinktank, the Machine Industry Memorial Foundation, says robots could help fill the gaps, ranging from microsized capsules that detect lesions to high-tech vacuum cleaners.
Rather than each robot replacing one person, the foundation said in a report that robots could make time for people to focus on more important things.
Japan could save 2.1 trillion yen ($21 billion) of elderly insurance payments in 2025 by using robots that monitor the health of older people, so they don't have to rely on human nursing care, the foundation said in its report.
Caregivers would save more than an hour a day if robots helped look after children, older people and did some housework, it added. Robotic duties could include reading books out loud or helping bathe the elderly.
"Seniors are pushing back their retirement until they are 65 years old, day care centers are being built so that more women can work during the day, and there is a move to increase the quota of foreign laborers. But none of these can beat the shrinking workforce," said Takao Kobayashi, who worked on the study.
"Robots are important because they could help in some ways to alleviate such shortage of the labor force."
The current fertility rate is 1.3 babies per woman, far below the level needed to maintain the population, while the government estimates that 40 percent of the population will be over 65 by 2055, raising concerns about who will look after the graying population.
Kobayashi said changes was still needed for robots to make a big impact on the workforce.
"There's the expensive price tag, the functions of the robots still need to improve, and then there are the mindsets of people," he said.
"People need to have the will to use the robots."