[According to Barclays\u2019 economists…] The economic circumstances facing China have parallels with Japan\u2019s experience after its asset bubble burst in the early 1990s. This created the term \u2018Japanification\u2019, which is typically defined as a combination of slow growth, low inflation, and a low policy rate, accompanied by deteriorating demographic trends.<\/p>\n\n\n\n
To measure this phenomena, a Japanese economist, Takatoshi Ito, introduced a Japanification Index, which measured the sum of the inflation rate, nominal policy rate, and GDP gap. To apply to China\u2019s economy, we have adjusted this index, replacing the GDP gap with working-age population growth, as the estimation methods of GDP gaps differ across nations and working-age population is by far the most fundamental determinant for long-term growth. Our amended index shows that China\u2019s economy has become more \u2018Japanised\u2019 than Japan\u2019s recently, albeit marginally.<\/p>\n\n\n\n
This not a surprise to us. A demographic drag, the emergence and collapse of asset bubbles, debt overhang, zombie companies, deflationary pressures from excess capacity\/high debt, and high youth unemployment, to name a few, are some of the notable similarities between the economies of China and Japan post their bubbles.<\/p>\n\n\n\n
Read it all<\/a>.<\/p><\/p> "The \u201cJapanification\u201d of China continues to be a big theme, with a lot of eerie parallels right down to stimulus proving wanting. Here\u2019s the latest symptom" https:\/\/t.co\/tlxjGqqgnd<\/a> pic.twitter.com\/TnKwearGl0<\/a><\/p>— Scott Lincicome (@scottlincicome) October 17, 2024<\/a><\/blockquote>