Abstract: After the bursting of the real estate bubble in 1990, Japan’s economic growth fell into a slump that lasted for 30 years. Japan attempted to delay the outbreak of the real estate crisis, but the market eventually went through the necessary corrections, and the delay only prolonged the crisis. Additionally, Japan’s evasion and concealment of bad debt eventually led to a systemic banking crisis, significantly increasing the difficulty and cost of dealing with bad debts later on.
Looking at the 30 years, population has been the most important factor affecting Japan’s economy. If we look at the per capita GDP of the working-age population, Japan’s economic performance is actually not bad, reaching the level of a normal developed country. However, the downward pull from changes in the population structure is something that macroeconomic policies cannot counteract, and Japan’s economic performance in terms of total and per capita indicators remains poor.
Japan’s experience offers significant lessons for the Chinese economy. First, it is important to pay attention to the impact of population structure on economic growth and to improve labor productivity to offset the drag of population issues. Second, it is crucial to recognize and properly handle real estate and financial risks, instead of delaying and concealing them. Third, facing issues such as population structure, real estate, and financial system risks, macroeconomic policy must be more courageous and proactive.
