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Updated Sep 20, 2023, 7:57am EDT
East Asia
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China’s economic slowdown looks like Japan’s in the 1990s

Coins and banknotes of China's yuan are seen in this illustration picture taken February 24, 2022. REUTERS/Florence Lo/Illustration/File Photo
REUTERS/Florence Lo/Illustration/File Photo
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China’s economic situation is sliding rapidly, and a confluence of factors are leading economists to draw sweeping comparisons to Japan’s economy in the 1990s. As the country faces an aging population, a slowdown in spending, and a slump in housing values, it is showing some of the signs that preceded Japan’s decade-long recession.

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There are signs China’s economy might be following the same path as Japan’s in the 1990s. “China’s policy responses so far could put it on track for ‘Japanification’,” Johanna Chua, an economist with Citigroup, told The Wall Street Journal. The two countries have overlapping characteristics in terms of their economic trajectory: In the ‘90s, Japan recorded deflation, an aging population, and high debt levels. China is currently experiencing the same, and it’s possible that solving the problem won’t be as straightforward, since the nation is recording lower per-capita income comparative to Japan 30 years ago.1

China’s economic downturn has led to reduced lending to African nations. In 2022, China lent less than $1 billion to Africa, the lowest level in nearly two decades, Reuters notes. The drop follows a trend that has been ongoing since 2016, when lending to Africa from China hit its peak. “China’s domestic economy is playing a huge role here,” researcher Oyintarelado Moses told Reuters.2

The country’s economic situation is likely being compounded by Russia’s war in Ukraine. As China faces its worst financial outlook since the Cultural Revolution, “one of the biggest mistakes in Chinese foreign policy in the last half-century has been lining up with Russia,” James Nolt, a senior fellow at the World Policy Institute, told Time magazine in a recent interview. China has so far avoided the inflation crisis which has struck much of the world — but many exports from Ukraine, like grain and fertilizer, that have been blocked by Russia, are bound for China.3

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