The idea of China “turning Japanese”, to borrow from a popular 1980 hit single, has drawn much attention recently. Observers are asking whether China is in danger of a “balance-sheet recession” of the kind that condemned Japan to a long stagnation after its asset bubble burst in 1990. Given China’s global heft and significance – it now accounts for 18 per cent of world GDP – a similar outcome would have dramatic implications for everyone.
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