China and Japan are two Asian countries used to hold a similar superpower status. The global power of Japan is fading and the country finds it difficult to recover its fortunes. The country even attempted the use of unorthodox measures just to recuperate. In contrary, China seems to retain its world power with its ambition, advancing technology, and wealth.
With China’s continuous growth, its economic future is still a question. Japan’s sad tale should be a warning to the country’s policymakers. Rapid development generation was achieved by Beijing through pursuing policies in the economy that are similar to that of Tokyo’s. Leaders of the second largest economy in the world tend to replicate Japan’s mistakes.
Goldman Sachs’ investment strategists stated in an early 2017 report that they believe China will also encounter slow pace of growth.
In May, Moody’s analysts also warned the country could face extended period of economic stagnation, pressures on steady depreciation, and economic growth rate below the average.
Kynikos Associates Founder, James Chanos, compared steroids with China and Japan’s similar flight.
Nonetheless, these warnings may be disregarded the same way China omitted trouble predictions every time. Japan’s decline was also forecasted three decades ago. The country was even touted to be the next world’s top economy against the United States.
Japan may be destined for greatness and might pass this period. At present, its economy is plunging as exhibited by its uneconomical investments. In the second half of the 80s, cheap credit boosted the country’s growth. Property prices and levels of debt were inflated. The early 90s showed the explosion of an impracticable economy. Flat financial industry rates were recorded and Japan has yet to pull through.
The similar path taken by Japan may also be the way China is going. Its way of generating rapid growth is marked by resemblance to that of Japan’s. They promote exports, direct finance, and foster targeted industries. Chinese government interposes with the industrial markets greatly as imposed by its capitalism law.
If Xi and his policymakers could implement the reforms they guaranteed, they could free the country from possible downfall.