The countries of China and Japan share numerous similarities other than their geographical proximity. They both have established extremely rich cultures and great senses of national identity. Their histories have crossed paths during several periods since both civilizations have existed for such a long times. The countries also share similar religions and value systems, which have influenced each other. However, despite all of these similarities the recent history of these two countries has caused them to diverge into two very distinct modern civilizations. A great factor in this divergence is the extreme differences in the evolution of each country’s economic policy. The Chinese civilization is one of the oldest in the world. Up until the early twentieth century China remained a world leader in arts and sciences. His led to an enormous growth of GDP, placing China second in world rank behind the U.S. China continues to contain the largest population in the world, despite efforts to curb population growth by regulating births per family since the 1970s. China also maintains the world’s largest standing army. Meanwhile, Japan’s history led the civilization down a much different path. Because of Japan’s geographical isolation as an island, for much of its history it existed as a closed cell. Japan began to adopt many types of Western technologies which would eventually enable substantial growth. After being devastated in World War II, Japan began use of a democratic parliament system installed by British and American forces. For the decades following the war, Japan experienced unbridled growth fueled by an unparalleled collective work ethic, national pride of culture, relatively new found technology, and the government’s ability to collect capital from international sources. Japan is home to approximately 1/10 the population of China. It is technically a constitutional monarchy with the emperor still on the throne acting as a figurehead to maintain a sense of surviving tradition. Much of the power lies in the hands of business executives and politicians. Japan’s rugged, mountainous landscape allows for minimal agricultural productivity so economic policy has been an integral part of the country’s unbelievable growth. Japanese culture instills a strong sense of loyalty to family work and country which is an important intangible.