In recent weeks, we have come to another reminder of China’s decline, as the yield on China’s 30-year government bond fell below Japan’s for the first time. We are talking about Japan, which in principle has been stagnant for several decades and had to worry about deflation for a long time. The current situation highlights the extent to which economic roles can change.
In itself, this does not seem like a very big event at first, but in fact it is an elegant symbol of processes that are worth talking about.
Something similar is happening in China as in Japan for decades
In recent years, it has become increasingly apparent that the Chinese growth model no longer works. Due to the weakening of the world economy and trade wars, the Chinese export-oriented growth model has failed, while investment-driven growth is not a viable alternative due to the plunge in the housing market. In the meantime, the population has lost a significant part of their savings (as a result of falling house prices and the stock market), which is why they are greatly reducing their consumption (forced savings). In addition, China’s demography is deteriorating rapidly.
Source: www.portfolio.hu
