The rising risk of China turning Japanese: Beijing’s stimulus push may delay crisis, but without deeper reform, China risks a slower version of Japan’s long stagnation (Ronny P Sasmita, February 18, 2026, Asia Times)
Whether acknowledged or not, what is unfolding in China today bears a striking resemblance to Japan in 1989.
China’s property sector, which served as the primary engine of growth for two decades, has become a heavy drag on the economy. Developer giants such as Evergrande are not merely failed corporations; they symbolize the bursting of an asset bubble far larger than anything Japan experienced.
China is also beginning to show symptoms of Richard Koo’s balance sheet recession, this time at the household level. Middle-class families, with roughly 70% of their wealth tied to property, feel poorer as housing prices fall. Consumption slows accordingly.
At the same time, deflationary pressures are intensifying across the economy. Should China slide into a deflationary spiral of the kind Krugman describes, massive private and local government debts will become even more burdensome as the real value of debt rises while prices fall.