The View | Four lessons China must heed from Japan to get its economy back on track

As President Xi Jinping’s team struggles to address China’s property crisis, officials are forgetting the four most urgent lessons from Japan’s lost decades.

Economists are churning out a bewildering number of cautionary analyses about China’s economic development “turning Japanese”. That is understandable considering that Asia’s biggest economy slid back into deflation in October and its 2024 prospects seem to dim by the day.

It hardly helps that Beijing is proceeding as if time is on its side in getting China Inc.’s trajectory back on track. It’s not, with global investors pulling increasing amounts of capital out of Chinese assets. All this has economists adding decades to timelines for when China might surpass the United States in gross domestic product terms.

First, act fast and go big. Beijing is arguably already behind the curve as global headwinds mount. China’s leaders have been timid about adding fresh fiscal and monetary stimulus. This reluctance owes much to Xi prioritising deleveraging, both in the property sector and among local governments bingeing on debt.

The world has been watching, though. Just as Xi underappreciated how much economic damage Covid-19 lockdowns would do, his inner circle seems asleep at the wheel as growth loses momentum. This perception has only added momentum to the capital flight driving the yuan lower.