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Warning from history: Could Japan-style crash hit China?

22 Comments
By Hiroshi HIYAMA

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I think another key factor that the article didn't point out was Japan literally got economically screwed by the Plaza Accord. If anything, it started there. How can you manage your own economy when you allow a foreign country to tell you what to do with it, at the expense of your own?

8 ( +8 / -0 )

It's only a matter of time. Good times will not last forever. All things come to an end; this is inevitable.

The CCP can try and crack down as much as they can but I think the lasting damage has already been done. The debt levels and how much they've accelerated over the last 10 years has been really astronomical.

China, you are not special. You are going to feel the same pressures and issues as other established economies now. The only "special" bit is that you are only just starting to see these same issues that other established economies have been dealing with in a cyclical fashion for quit some time now. This is the problem the longer the "good times" go on for, the memories of the last "bad times" or recession tend to fade quite quickly and people have the expectation that the current "good times" are the norm.

0 ( +5 / -5 )

If the IMF is involved, of course it will.

The "bursting of the bubble" wasn't an accident, it was caused. By people who made a massive profit from it.

6 ( +9 / -3 )

I think another key factor that the article didn't point out was Japan literally got economically screwed by the Plaza Accord. If anything, it started there. How can you manage your own economy when you allow a foreign country to tell you what to do with it, at the expense of your own?

yes yes yes! I also believe Japan started the downward spiral at that point. China still controls their currency so they can somewhat protect there ex rates from being affected by foreign disasters (like a Lehman shock type).

2 ( +3 / -1 )

As the unelected Chinese dictators control everything, anything that goes wrong can be blamed on them and them alone. Scapegoats will be found and executed following a show trial, but the top crook and murderer, Xi, will blame everyone but himself.

4 ( +5 / -1 )

The situation in China is very different from Japan. Firstly, China has natural resources to fall back on, which Japan does not. That will be the biggest difference if the Chinese economy does start to crash. Also, most Chinese do not work for over inflated salaries, as the Japanese did during the bubble years. Yeah, if it does peak and start to crash the fat cats will lose a lot, but the base of the economy will not flounder, unlike Japan.

-1 ( +3 / -4 )

China, you are not special.

Did they said they are special to you?

You are going to feel the same pressures and issues as other established economies now.

Ouch. Don't want to suffer alone, eh?

The only "special" bit is that you are only just starting to see these same issues that other established economies have been dealing with in a cyclical fashion for quit some time now. 

Sorry, dude. I don't think so. Other "established economies" are using the similar system which is not comparable to China. That's why you have 2008 financial crisis and pathetic growth since then.

I bet you didn't see the 2008 crisis coming to your "established economies" back then, Mr. Nostradamus?

This is the problem the longer the "good times" go on for, the memories of the last "bad times" or recession tend to fade quite quickly and people have the expectation that the current "good times" are the norm.

Exactly. The pathetic growth of your economies are the norm right now, when the growth of China's continue to beat the expectations of "sage of Western-style economy".

Wisdom to heal the sour and jealousy inside your heart: Deal with it. Instead of praying for other country to dragged down to your level.

-5 ( +3 / -8 )

This isn't a question of if it will happen. It's a matter of when. No country is special or immune no matter whst some fools might believe.

5 ( +7 / -2 )

Robert S. AbenzToday  11:19 am JST

China, you are not special.

Did they said they are special to you?

You are going to feel the same pressures and issues as other established economies now.

Ouch. Don't want to suffer alone, eh?

The only "special" bit is that you are only just starting to see these same issues that other established economies have been dealing with in a cyclical fashion for quit some time now. 

Sorry, dude. I don't think so. Other "established economies" are using the similar system which is not comparable to China. That's why you have 2008 financial crisis and pathetic growth since then.

I bet you didn't see the 2008 crisis coming to your "established economies" back then, Mr. Nostradamus?

This is the problem the longer the "good times" go on for, the memories of the last "bad times" or recession tend to fade quite quickly and people have the expectation that the current "good times" are the norm.

Exactly. The pathetic growth of your economies are the norm right now, when the growth of China's continue to beat the expectations of "sage of Western-style economy".

Wisdom to heal the sour and jealousy inside your heart: Deal with it. Instead of praying for other country to dragged down to your level.

Really quaint and cute response from you there, considering you think that you know everything.

My family is of Chinese descent and my post has absolutely nothing to do with any personal feelings or political persuasion on my part. I've seen way too many Chinese who are just plain oblivious to the dangers of having mounting piles of debt and think that because China is "special", that what happened to the Western economies "could never happen to them" and then naively seek to lecture others about how they could "never get into this kind of scenario". Wrong. China now has a very big debt problem which is akin to what many established Western economies have today. All debts need to be repaid.

The amount of profligate spending has been astounding. To try to use an attack on "Western economies" is just like what I've seen with too many Chinese unfortunately nowadays, it's just a sign of being completely oblivious to the dangers of the debt situation. You cannot just keep on borrowing and borrowing and borrowing; it does not work, as all debts will ultimately need to be paid off.

Also, the stock crashes in China of recent years showed how too many Chinese had an unrealistic expectation of economics at the time and kept thinking that the only way stocks could go was UP. Wrong! As I said in my initial post, there is no such thing as an "everlasting good time". Due to these unrealistic expressions, people will end up being very unprepared for the eventual downturn.

Western economic growth has been pathetic and I definitely agree with that. To try to call me out on being sour and jealous shows you have zero knowledge and are only basing off my post on a nationalistic viewpoint; the anemic nature of Western economic growth awaits China if it chooses to be blissfully oblivious and not get its act together on this crazy mounting pile of debt. China is not special in this regard and the speed of the accumulated debt is honestly, a very serious issue. To be fair, it's not only China that has this issue.

4 ( +6 / -2 )

. I've seen way too many Chinese who are just plain oblivious to the dangers of having mounting piles of debt and think that because China is "special", that what happened to the Western economies "could never happen to them"

Those Chinese that you see are certainly laymen, then, not those whose in control. The government is acutely aware of what could happen to their economy.

and then naively seek to lecture others about how they could "never get into this kind of scenario"

Lol. Sorry again, dude. The one who keeps on lecturing other nation is the West and their media.

Also, the stock crashes in China of recent years showed how too many Chinese had an unrealistic expectation of economics at the time and kept thinking that the only way stocks could go was UP. Wrong! As I said in my initial post, there is no such thing as an "everlasting good time"

The stock crashes problem in the beginning of 2016 has been fixed and causing no more problem, which very disappointing China doomsayers, including you, I guess.

the anemic nature of Western economic growth awaits China if it chooses to be blissfully oblivious and not get its act together on this crazy mounting pile of debt. China is not special in this regard and the speed of the accumulated debt is honestly, a very serious issue.

Well, wait and see, then! Meanwhile, please refrain from lecturing and giving warning to other nation as if they don't aware of what could happen to them, and only you are aware and know how to solve the problem. Lol.

In fact, if you are really concerned about mounting debt, you should worry much more about our good ol' USA.

To be fair, it's not only China that has this issue.

That about sums it up.

-4 ( +2 / -6 )

Public debt levels had and have nothing to do with it. It was due to an asset bubble pumped up by real estate speculation and massive amounts of loans from a loosely regulated financial system (sound familiar?).

The Chinese can avoid the disaster as long as its regulators take a hard line against shadow banking and other excessive trends inside its banks.

4 ( +5 / -1 )

JeffLeeToday  12:39 pm JST

Public debt levels had and have nothing to do with it. It was due to an asset bubble pumped up by real estate speculation and massive amounts of loans from a loosely regulated financial system (sound familiar?).

The Chinese can avoid the disaster as long as its regulators take a hard line against shadow banking and other excessive trends inside its banks.

This, and also, people need to stop feeding this crazy demand to always constantly borrow.

3 ( +4 / -1 )

China is a different economic animal. And it is an "animal" before logical and rational analysis.

One major factor which everyone ignores is the temendous advantage it has by having thousands of China towns in hundreds of cites throughout the world, and thousands of covert companies involved in controlling natural and human resources throughout the world. That was expanded by the Chinese government for decades using foreign monies (obtained by cheep labor within) to infiltrate foreign nation in the guise of Chinese "foreign aid". It now even influences and controls many banks and though it international politics, enough to affect the IMF and to start their own monetary funding system designed to "control" money internationally for its own benefit. Their economy is not entirely on the surface as many analysts like to think.

And for the Chinese, they are always Chinese. How many of the China towns have actually, really assimilated into their host countries?

Most even refuse to speak the language of their host or adopted countries.

It is like the Muslims spread throughout the world and united by religion, while the Chinese are united by race, culture and national identity which is most of all "pride" based upon economic and political power.

What say you about the Chinese economy when those factors are considered?

-5 ( +0 / -5 )

What say you about the Chinese economy when those factors are considered?

Untouchable.

-2 ( +2 / -4 )

I would hope that a Great Depression could be avoided in China... who knows what ill will come of that ? The recent N.K. spate could even pale into insignificance in comparison.

-1 ( +0 / -1 )

Any question that is posing a theoretical possibility HAS to be answered ‘yes’. Will it? Well, it’s looking increasingly like it will. The shadow banking system, the inflexibility of its institutions and monetary policy and many more factors to boot. Absolutely China could have a catastrophic economic collapse.

3 ( +4 / -1 )

Public debt levels had and have nothing to do with it.

True wrt 1980's Japan. Public debt was racked up after the crisis (but can't be said to have fixed Japan in the subsequent quarter of a century...)

It was due to an asset bubble pumped up by real estate speculation and massive amounts of loans from a loosely regulated financial system

Broken record / scratched CD.

Japan's financial sector was highly regulated in the 1980's - the 'big bang' deregulation of the sector did not occur until long after the bubble burst.

0 ( +1 / -1 )

Absolutely China could have a catastrophic economic collapse.

After Britain and the rest of the West collapsed first. Yes, it could be

0 ( +2 / -2 )

People keep bringing up that the Japanese debt to GDP ratio is over 200%. If you net off the assets of the government, it is about 100%, like lots of other countries. These assets include the government's 51% ownership in all those government companies that were privatized in from the 90's (remember PM Koizumi?). Like JR (which used to be JNR - Japan National Railroad) or Japan Tobacco and Salt, etc etc etc.

0 ( +1 / -1 )

Lol, on the 'loosely regulated fin sector' thing I find this:

Encouraged by the Ministry of Finance, the large commercial banks moved into real estate in the 1980s but quickly engaged in imprudent lending. 

Thanks to the Ministry for its guidance there!

0 ( +1 / -1 )

@fxgai

"....but quickly engaged in imprudent lending."

In a properly regulated environment, banks would not be able to so easily engage in "imprudent lending" on a colossal scale.

-1 ( +0 / -1 )

Properly regulated is an oxymoron.

Regulators are every bit as fallible as their fellow human beings, and recognizing this is step one.

1 ( +1 / -0 )

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