The View

Four lessons China must heed from Japan to get its economy back on track

If Beijing wants to beat the odds, it needs to succeed in key areas where Japan failed following its bad-loan crisis

These include being bold, treating the causes not the symptoms, avoiding policy blunders and having the political will to act

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A delivery man pushes a trolley of packages outside a shopping centre in Beijing on November 11. The government has made increased domestic consumption a key part of its plan to grow the economy, but the property sector crisis and a reluctance on Beijing’s part to cede control have kept China’s animal spirits largely caged. Photo: AFP

William Pesek is a Tokyo-based journalist, former columnist for Barron’s and Bloomberg and author of “Japanization: What the World Can Learn from Japan’s Lost Decades”.

Published: 4:30pm, 15 Nov 2023Updated: 5:10pm, 15 Nov 2023

As President Xi Jinping’s team struggles to address China’s property crisis, officials are forgetting the four most urgent lessons from Japan’s lost decades.

Economists are churning out a bewildering number of cautionary analyses about China’s economic development “turning Japanese”. That is understandable considering that Asia’s biggest economy slid back into deflation in October and its 2024 prospects seem to dim by the day.

It hardly helps that Beijing is proceeding as if time is on its side in getting China Inc.’s trajectory back on track. It’s not, with global investors pulling increasing amounts of capital out of Chinese assets. All this has economists adding decades to timelines for when China might surpass the United States in gross domestic product terms.

It is true that investors haven’t made vast sums betting against China as the Communist Party has kept crises from getting out of hand in the past 30 years. Xi’s team might also beat the odds, but only if they prioritise four imperatives that eluded Japan following its bad-loan crisis.