The looming real estate crisis in China threatens to drag the country’s economy into “balance sheet recession”; This is a situation where households and companies are forced to use funds to pay off debts rather than invest. This is the same trap Japan fell into after the mortgage bubble burst in the 1990s. The publication writes about this Business Content .
According to economist Richard Ku, China is well aware of the seriousness of the situation.
“They talk about it every day, they understand what kind of disease they are facing,” he notes.
But Beijing’s path out of the crisis is significantly different from the paths Japan chose three decades ago.
Unlike Tokyo, which relies on fiscal stimulus and loosening monetary policy, Chinese authorities are counting on a technological breakthrough. They plan to expand the production of high-tech products, from microchips to electric vehicles, and occupy these niches in the global market.
“Beijing wants the rest of the world to buy these products from the Chinese tech ecosystem, which should dominate the markets,” Koo explains.
But such a scenario is fraught with serious trade conflicts. Unlike the situation in the early 2000s, when the world was ready to integrate China into global supply chains, leading powers are now preventing increased exports from China in sensitive industries.
“Brazil launched an anti-dumping investigation into Chinese imports, Turkey tightened regulations on electric vehicle imports from China, and the EU reduced car purchases as part of an investigation into Beijing’s state support for this sector,” the expert gives examples.
He warned that measures to weaken the yuan to boost exports would also provoke a strong reaction from China’s partners.
Unlike Japan, which draws support from free trade ideology, Beijing faces growing distrust of world markets. And without foreign partners, China’s technological breakthrough may be impossible.
“Ultimately, technology may not save China if it doesn’t have reliable trade allies to buy these products,” Richard Ku summarizes.
China before now reported He said he was ready to open the markets to foreign investors.
Previously Russia passed Based on GDP growth rate of most G7 countries.