The problem with this is that I do not think that I have the story of Japan's successfully pre-WWI development path nailed, the way I have the Chinese story of failure nailed. Oh well:
The opposite of China in the pre-World War I years was Japan.
In the early seventeenth century the Tokugawa clan of samurai decisively defeated its opponents at the battle of Sekigahara, and won effective control. Tokugawa Ieyasu petitioned the—secluded Priest-Emperor to grant him the title of Shogun, the Priest-Emperor's viceroy in all civil and military matters. His son Hidetaka and grandson Iemitsu consolidated the new régime. From its capital, Edo—renamed and now Tokyo—the Tokugawa Shogunate ruled Japan for two and a half centuries.
At its very start, early in the seventeenth century, the Tokugawa Shogunate took a look to the south, at the Philippines. Only a century before, the Philippines had been independent kingdoms. Then the Europeans landed. Merchants had been followed by missionaries. Converts had proved an effective base of popular support for European influence. Missionaries had been followed by soldiers. And by 1600 Spain ruled the Philippines.
The Tokugawa Shogunate was confident that it could control its potential rivals and subjects in Japan. It was not confident that it could resist the technology, military, and religious power of the Europeans.
The country was closed: trade restricted to a very small number of ships allowed access to the port of Nagasaki only, Japanese subjects returning from abroad were executed, foreigners discovered outside of their restricted zone were executed, and Christianity was suppressed. The Tokugawa Shoguns did adopt one more foreign practice: crucifixion—which they saw as a fitting punishment for those who refused to abjure the foreign religion of Christianity.
For two and a half centuries the Tokugawa ruled a largely peaceful Japan. Population grew. Rice-growing productivity increased. The arts and crafts flourished. Trade flourished. The military skills of the samurai warrior class atrophied, Japan's technology fell further and further behind that of Europe. And the country did not become a European colony.
Peace, relatively widespread literacy, caste boundaries that focused the attention of artisans and merchants on economic rather than political or landlord roads to advance, and a central Tokugawa government that wanted to keep the subjected former opponent daimyo class from getting too rich and too strong led to semi-Malthusian prosperity. Taxes were high, supporting very large non-agricultural classes—perhaps 40% of the population, huge for a pre-industrial agrarian-age civilization—on the backs of peasants who appear to have been quite poor and malnourished: working-class and peasant adult men appear to have averaged 5'2" and adult women 4'9". And since wages were low, the direction of technological development was to economize on materials like woods and metals, on capital, and on land. Irrigation systems to allow for a second crop—oilseeds wheat, cotton, sugar. Robert Allen claims that daimyos began a race to the top to attract industries into their dominions, and that progress in silk, for example, came not from building better machines but building better silkworms.
There was, however, a lot of economic and society built on top of the peasant economy. When the Tokugawa era came to an end with the Meiji Restoration in 1868 Kyoto, Osaka, and Tokyo together had 2 million people: one in six of the population was truly urban. Half of adult men were literate: there were more than 600 bookshops in Tokyo.
Literacy and urbanization laid the groundwork for technological competence. Robert Allen tells the story of the Lord of Nagasaki, Nabeshima Naomasa, and his cannon foundry. His workers acquired and then translated a Dutch description of a foundry in Leyden, and set out to copy it: "In 1850, they succeeded in building a reverberatory furnace, and three years later were casting cannon. In 1854, the Nagasaki group imported state-of-the-art, breech-loading Armstrong guns from Britain and manufactured copies. By 1868, Japan had eleven furnaces casting iron..."
In 1851 the President of the United States commissioned Commodore Perry to open relations with Japan. The American warships entered Tokyo Bay in 1853. There argument for why the Tokugawa Shogunate should change its policy and open up trade was simple: if they did not, the U.S. fleet would burn Tokyo. The Tokugawa Shogunate submitted, and began trying to grasp how to deal with a world in which European powers would no longer permit isolation as an option. It failed, and in 1868 the Tokugawa Shogunate was overthrown by the coup termed the "Meiji restoration."
Theoretically the Priest-Emperor resumed the direct rule that his ancestors had turned over to the first Shoguns more than a thousand years before—hence "restoration":
The Emperor of Japan announces... that permission has been granted to the Shōgun Tokugawa Yoshinobu to return the governing power in accordance with his own request. We shall henceforward exercise supreme authority in all the internal and external affairs of the country. Consequently, the title of Emperor must be substituted for that of Taikun, in which the treaties have been made. Officers are being appointed by us to the conduct of foreign affairs. It is desirable that the representatives of the treaty powers recognize this announcement...
Thus by 1872 all the feudal domains were surrendered to the emperor, and the 2 million members of the samurai class compensated with government bonds—and within a generation inflation had expropriated them. However, well educated as they were, they and their sons became army officers, bureaucrats, teachers, administrators, and entrepreneurs. Rule was grasped by a shifting coalition of notables—most prominently at first the "Meiji Six": Mori Arinori, Ōkubo Toshimichi, Saigō Takamori, Itō Hirobumi, Yamagata Aritomo, and Kido Takayoshi—interested in absorbing European technology while maintaining Japanese civilization and independence: "western learning with Japanese spirit" in the interest of creating a "rich country with a strong army."
There followed the rapid adoption of western organization: prefects, bureaucratic jobs, newspapers, language standardization on Tokyo samurai dialect, an education ministry, compulsory school attendance, military conscription, railways built by the government, the abolition of internal customs barriers to a national market, fixed-length hours of the day, and the Gregorian calendar were all in place by 1873. Representative local government was in place by 1879. A bicameral parliament (with a newly-created peerage) and a constitutional monarchy were in place by 1889. By 1890 80% of school-age children were at least enrolled.
Li Hongzhang in China had been one of the few able to swim against the institutional and cultural tide to push modernization and industrialization forward. In Japan there were many who successfully did swim with the tide. One of the “Meiji Six” was the man originally named Hayashi Risuke (林利助, October 16, 1841–October 26, 1909), from the then-dissident Choshu Domain, became Itō Hirobumi (伊藤 博文) as his line—he and his father—were adopted by Mizui Buhei who was in turn adopted by Itō Yaemon. This was a social leap upward in status—but it still left the now Itō Hirobumi as a low-ranking samurai, one who was expected to support himself rather than drawing on the feudal dues the Choshu clan collected from peasants, and to do the work rather than supervise. As a teenager he attended the Shoka Sonjuku school of Torajirō (寅次郎), where he was taught military arts, politics, and sonno joi—to "revere the emperor and expel the barbarians" (尊皇攘夷). In 1863 the Choshu elders decided that they desperately needed to learn more about European organization and technology, and so—illegally—smuggled five or their promising young potential students out of Japan to travel to and study in Europe.
Itō Hirobumi worked 130 days as a deckhand on the sailing ship Pegasus before arriving in England, where he then studied at University College in London. He cut short his studies after only six months however, and returned to Choshu to argue stridently against a policy of confrontation: Japan was too weak, and the organizational and technological gap too large. That he would, at the age of 22, deviate from the plan imposed on him by Choshu and return to argue against Choshu Domain policy tells us something: about how important he thought the issue was, about how confident he was of his place, and about how well-regarded he was by the Choshu clan and its elders.
The Meiji Restoration came in 1868 when he was 26. 1870 found him in the United States studying money and banking. Early 1871 found him back in Japan writing the regulations for the commutation of feudal dues and their replacement by a general system of national taxation. Late 1871 finds him embarking on the two-year round the world Iwakura Mission. 1873 found him Minister of Industry, tasked with reverse engineering as much European technology as possible and with building telegraph lines, street lights, textile mills, railroads, shipyards, lighthouses, mines, steel foundries, glassworks, the Imperial College of Engineering, and more.
1878 found him Home Minister after the assassination of his patron Ōkubo Toshimichi. 1881 found him muscling his contemporary Ōkuma Shigenobu out of the government and becoming the informal prime minister of Japan. 1882-3 found him spending 18 months away studying the constitutions of the U.S., Spain, Britain, and Germany, and then returning home to chair the committee writing Japan's constitution. He chooses the 1850 Prussian model. And 1885 saw him become he first formal prime minister of Japan.
Also in 1885, Itō Hirobumi negotiated the Convention of Tianjin with Li Hongzhang, neutralizing Korea. 1895, however, saw him as prime minister the First Sino-Japanese War. With 11 European-built and two Japanese-build major warships, and with an army trained by Prussian Major Jakob Meckel, the war was short. The major Chinese base and fort of Dalian (大连市) in Shandong—Port Arthur—fell to a frontal Japanese assault in one day. Capture was followed by a three-day massacre in which 2000 Chinese were killed, a massacre justified by the Japanese Army's legal officers as "reciprocity" for Chinese "provocation". Japan took Korea and Taiwan as protectorates.
The successful war with China in 1895 made Korea and Taiwan Japanese protectorates. In 1899 the Japanese government abolished extra-territoriality—the immunity of Europeans from Japanese justice and law. Japan allied with Britain, seeking the role of Britain's viceroy in the North Pacific, in 1902. Disputes with Russia over spheres of influence in Manchuria led to the Russo-Japanese War in 1905. The Japanese were eager to escalate to test their armed forces; the Russians were eager to escalate as well, Czarist ministers believing that a "short victorious war" would solidify support for the Czar. The Japanese won decisively, bringing Manchuria into their sphere of influence.
In 1905 Itō became the first Japanese Resident-General in Korea. 1907 saw him seize authority to control Korea's internal affairs. And in 1909 he was assassinated by Korean nationalist An Jung-geun.
Formal annexation of Korea followed in 1910. And Japan's declaration of war against Germany in World War I brought it rule over all Pacific islands that had been German colonies.
Robert Allen believes that those economies that successfully developed industrial societies before 1900 focused government power on creating four and only four institutional prerequisites: a national market served by railways, universal literacy via compulsory education, savings mobilization for capital via investment banks, and a tariff to shield nascent domestic industry and its communities of engineering practice from the gales of competition from British industrial exports.
Meiji Japan was prohibited by unequal treaty from imposing tariffs on imports greater than 5%. But, again, the government was willing to step in. As far as private firms were concerned, the government did not so much "pick winners" as recognize winners—and subsidize them. As the Ministry of Industry established Japan’s railway and telegraph systems, it also established its school to train Japanese engineers as fast as it could, and it relied as much as possible on domestic suppliers as it possibly could.
Meiji Japan did not have banks. It did have a government willing to fulfill a Gerschenkronian role as capital-mobilizer. And it also had some very wealthy and open merchant clans willing to move into industry: Mitsui, Mitsubishi, Sumitomo, Yasuda.
In both of these efforts to substitute for the missing investment banking and tariff wall prerequisites for Allen's "Standard Model" of early industrialization, the "strong army" part of the slogan was more important than the "rich country" part. It is unlikely that the Meiji Restoration's military politicians imagined how useful for the civilian economy the communities of engineering practice they were trying to midwife into being would be. Their focus was on preparing the logistical tail to defend Japan and conquer an empire in the age of steel and steam. As Kozo Yamamura writes, the military:
arsenals and other publicly-financed shipyards and modern factories which acted as highly effective centers for the absorption and dissemination of Western technologies and skills…. [Plus] the "strong army" policy and the wars provided… the demand… for assuring the survival and… growth of often financially and technologically struggling private firms in… shipbuilding, machinery, and machine-tool[s]….
Within a dozen years of the Meiji Restoration, four major arsenals with satellite plants and three government shipyards were fully engaged in supplying the needs of a modern military…. In 1877 the Tokyo arsenal was equipped to repair small arms and cannons, and to produce explosives and simpler hand-operated machinery for its own use. Only seven years later, in 1884, the arsenal had Belgian, French, and German engineers and foremen, imported machinery, 2,094 workers, and was capable of producing small arms and shells and of repairing larger cannon…. The navy's arsenals in Yokosuka and Tsukiji were no less ambitious….
In the early 1880s, when the cotton textile industry had yet to make its presence felt in the Meiji economy, these arsenals, shipyards, and their satellite plants together employed about 10,000 workers compared to fewer than 3,000 in the small private shipyards producing wooden ships and in the factories "still primarily using or making machinery of a 'pre-machine age.’”…
The establishment, using imported machinery, of state-owned mines and factories could have been a disaster, as it had and has been in so many other times and places. But the Japanese government quickly swerved away, privatizing industrial establishments to businesses that had demonstrated managerial competence in the 1880s. Allen praises the creative response of Japanese sector private entrepreneurs confronted with machinery from abroad designed to economize on labor—which was, in Japan, still extremely chap: "the Japanese... redesigned Western technology to make it cost-effective in their low-wage economy. Silk-reeling... the Ono merchant family in Tsukiji established a mill that... used European-inspired machinery... [with] the machines were made of wood rather than metal and the power came from men turning cranks rather than a steam engine. The modification of Western technology along these lines became common in Japan as the ‘Suwa method’…"
But in the Meiji Restoration period, structural change was low. Manufacturing was still only one-fifth of GDP in 1910. The leading industries were textiles, plus tea growing and manufacture. Japan in the decade of the 1900s was only a semi-industrial civilization.
It had, however, accomplished something unique: transferring enough industrial technology outside of the charmed circles of the North Atlantic and the temperate-climate European settler economies.
Ever since, politicians, economists, and pretty much everybody else have been trying to determine just what it was Japan was ale to do, and why...