Japan must become an engine for global growth by promoting deregulation and market-opening steps, U.S. Treasury Secretary Paul O'Neill said Thursday.
In a speech at the Japan Society in New York, O'Neill also urged Tokyo to make halting deflation and cleaning up the financial sector policy priorities to overcome its economic problems.
Without moving aggressively to fix its economic problems, he warned, Japan will become a "boxcar" -- not a locomotive -- in the world economy down the road.
"If the trends of the past decade continue for Japan and the U.S., and if China grows at the 7 percent annual rate most analysts project, in 25 years the Japanese economy will be less than one-fourth the size of the United States, and only four-fifths the size of China," O'Neill said.