However, there are many similarities between China's current development and Japanese development, which does not seem to bode well. The tragic situation of Japanese should be a warning to China's economic development. Excessive pursuit of economic development speed seems to be repeating the mistakes of Japan in the past.
"Just like Japan, we think China will face a long-term economic slowdown," Goldman Sachs economic analysts said in a report earlier this year. Moody's analysts warned in May this year that China may suffer from "persistent deflationary pressure and even economic stagnation". Jim Chanos, the founder of Knicks United Fund Company, once compared the economic development of China and Japan, just like "steroids, if used for a long time, will certainly produce many bad problems".
Some people may think that this is impossible, because over the years, many bad luck predictions for China have failed. But you must know that 30 years ago, when Japan was in full swing, no one said that Japan would decline. Some people even say that Japan will replace the United States and become the world's number one economic power, known as the East Asian giant. At that time, many people thought that Japan's development model was better than America's laissez-faire capitalism. Through the close cooperation between banks and large companies, Japanese policymakers encourage investment and guide the development of national industries, while the government intervenes in the market to some extent and guides capital to tilt towards emerging industries. With the support of this policy, Japanese enterprises suddenly stepped onto the world stage, pushing the world's number one power and its competitor, the United States, to a dead end.
However, with the great development of Japanese economy, they began to rot. The exclusive relationship among finance, commerce, government and capital has caused a lot of waste of funds. Although cheap credit is helpful to economic development, it is also the continuous expansion of debt level and the continuous rise of stocks and real estate. When this "bubble economy" burst in the early 1990s, the financial industry was razed to the ground. Still not fully recovered. China's economic development is somewhat similar to Japan's, and the state intervention in the economy, that is, macro-control, is stronger than the previous Japanese government intervention.
With the rise of factories, the process of urbanization is accelerated, and the level of national economic development is constantly improving. However, the proliferation of RMB has caused unstable asset prices to soar, just like Japan in that year. Last year, China's stock market rose all the way, and then fell sharply, which is only a reflection of the problems existing in the country's economic development. House prices soared, and the government had to take measures to control the excessive growth of house prices.
Perhaps more dangerously, loose monetary policy has led to a sharp increase in debt. Fitch Ratings said that on the eve of Japan's economic downturn, Japan's debt level ranged from 1980 to 1989, exceeding its national output by nearly 80 percentage points, reaching 275%. According to the data of the Bank for International Settlements, from 2007 to 20 15, China increased by more than 100 percentage points, reaching 255% of its GDP. ChetanAhya, co-head of global macroeconomics at Morgan Stanley and chief economist in Asia, said in a report on Sunday that China's recovery in the past year was driven by a new round of debt relief. In the past 12 months, China's debt scale has increased by 4.5 trillion US dollars. In contrast, during the same period, the United States only increased its debt by $2.2 trillion, Japan by $870 billion and the euro zone by $550 billion. In other words, China's new debt exceeds that of the United States, Europe and Japan combined.
Some economists believe that China's huge debt is not as dangerous as it looks. Because state-owned banks lend to state-owned enterprises to a large extent, the government may intervene and support the financial system. Because almost all the debts supported by China are at home and supported by large-scale savings, the financial sector is unlikely to become a victim of external economic shocks. However, the experience of Japan shows that this is not the case. In the early 1990s, Japan was a creditor country with a huge trade surplus and huge savings, but this did not prevent the outbreak of its financial crisis.
There is also a long-term trend in China and Japan, which hinders their economization. Japan's working-age population is decreasing by 0.4% every year, from 1990 to 20 15, which will hurt economic growth, because workers with less production and income have to support a larger army. According to data from Goldman Sachs, with China restricting many couples to have only one child and Beijing relaxing the restrictions, China's population has rapidly determined its age in the past three years alone, and as a result, decades of policies are expected to reduce the labor force by nearly 0.5 percentage points every year in the next 25 years.
There is another very important question. According to Goldman Sachs, due to China's family planning policy for decades, the labor force will shrink by 0.5% every year in the next 25 years with the acceleration of population aging in China. This has a very important impact on the future economic development.
Fortunately, nothing is inevitable. We can learn from the development and decline of Japanese economy. I believe that under the strong leadership of the government, China will only get better and better in the future!