Is China falling into Japan’s lost-decade trap? (opens the source in a new tab)
- The FT finds China showing Japan-style malaise: falling property values, deflationary pressure, cautious consumers and a population that began shrinking in 2022. Total debt is near 300% of GDP, by Capital Economics’ count.
- An updated Goldman Sachs ‘Japanisation’ gauge has rated China more Japanised than Japan for years, and household bank lending has fallen outright for the first time.
- Nomura’s Richard Koo calls it a balance-sheet recession needing bold fiscal spending; Beijing is leaning on exports and high-tech bets instead.
- ~300%
- China’s total debt to GDP
- 2022
- year China’s population began to shrink
Why it matters If Chinese households keep hoarding cash, the slowdown travels abroad as cheap exports and weaker demand for everyone else’s goods.
Other side BNP Paribas’s Isabelle Mateos y Lago says the differences matter more: China is poorer, its factories stay competitive, and its very high household savings could be unlocked.