China’s weak economic recovery since the pandemic has raised questions about the country’s growth model. As the world’s second-largest economy, Chian’s fate has profound implication for global markets. Until now, China had adopted and perfected the East Asian growth model and risks following a similar path to Japan until the early 1990s when its economy fell into a deflationary trap. Similarities between Japan in the 1980s/1990s and contemporary China abound, notably around high debt levels, weak domestic demand, worsening demographics and difficult external trade relations.
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