Why China should rethink its ‘lost decade’ fears — Ahmad Ibrahim
AUGUST 13 — For years, the phrase “Japan’s Lost Decades” has been invoked as a cautionary tale f...
A recent study challenges the notion that China is destined to repeat Japan's "Lost Decades." The research, utilizing World Bank data, reveals that Japan's stagnation was not a period of economic failure, but rather a time of transformative change that ultimately bolstered living standards and social stability.
Contrary to popular belief, personal consumption and investment were the primary drivers of Japan's growth during this era, not government spending or exports. The study also highlights the importance of labour force participation and service sector productivity in sustaining Japan's economy during the 1990s.
For China, the paper suggests that rather than viewing Japan's "Lost Decades" as a warning sign, it should be seen as a roadmap for productivity, consumption, and structural reform. China, despite facing similar macroeconomic imbalances, has more room for growth and unique advantages like its ongoing urbanisation process and greater global leverage.
The most crucial lesson for China is not to avoid Japan's path, but to learn from Japan's adaptation. Japan's experience demonstrates that GDP growth alone does not equate to economic health; instead, steady improvements in productivity, service sector sophistication, and quality of life are more significant. Policymakers should focus on supply-side reforms that enhance productivity, increase labour force participation, and create a robust social safety net.
In conclusion, the research encourages China to retire the term "Japanification" as a warning and instead treat it as a playbook. By focusing on these areas, China may attain a more stable, innovative, and high-quality economy, even in an era of slower growth.
Written by urgent.news from Malay Mail's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
