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Economic Viewpoint

What Would Be the Implications If China Were to Japanify?

November 23, 2023
Marc-Antoine Dumont, Economist, Francis Généreux, Principal Economist, and Randall Bartlett, Senior Director of Canadian Economics

The bursting of Japan’s property and financial bubble in the early ‘90s was major news, and the economic fallout that followed was long-lasting. It’s now referred to as Japan’s “Lost Decade”, characterized by long-term economic stagnation and persistent deflation. From time to time, different countries have demonstrated certain similarities to ‘90s Japan, like the United States after the 2008–2009 financial crisis. And now it looks like it’s China’s turn. In this note, we take the comparison a little further and project key economic indicators for China along the same trajectories as they followed in Japan starting 30 years ago. We then determine what the consequences would be for Chinese economic growth and how that would impact the world’s—and Canada’s—economy.

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