Is China on the brink of “Japanification"?

In Kürze

Markets have recently been spooked by similarities between China and Japan’s economy around the burst of the stock and real estate bubbles in 1990. The implosion of these bubbles led to Japan’s “lost” decades, a fate that could be repeated by China (Japanification).


  • Markets have been spooked by fears of a “Japanification” of China, which would mean a period low growth, inflation, and depressed interest rates, as happened in Japan caused by a balance sheet recession in the 1990s. 
  • Similarities are eye-catching, including a troubled real estate sector after a prolonged rise in prices, strong and fast re-leveraging, adverse demographics, deflation risks and correcting stock prices. 
  • Yet, Chinese property prices have increased less strongly than formerly in Japan, and its stock market is less overvalued. Estimated bad debt in the property sector looks more digestible for banks. Most importantly, the institutional settings differ, with China exerting much more control over property prices, developers, banks and thus deleveraging needs. 
  • Idiosyncratic risks notwithstanding, a systemic banking crisis is less probable, and the stock market is already largely discounting the various headwinds. However, China’s recovery is likely to be L-shaped, keeping inflation subdued. Monetary policy will remain structurally accommodative, while stock markets face elevated volatility over the medium term. We recommend a slight overweight until there are clear signs of recovery.

Download the full publication below

Is China on the brink of ”Japanification”?

© Generali Investments, alle Rechte vorbehalten. Diese Website wird von der Generali Investments Holding S.p.A. als Holdinggesellschaft der wichtigsten Vermögensverwaltungsgesellschaften der Generali Gruppe zur Verfügung gestellt, die direkt oder indirekt die Mehrheitsbeteiligung an den unten aufgeführten Gesellschaften hält (im Folgenden gemeinsam "Generali Investments"). Diese Website kann Informationen über die Tätigkeit der folgenden Gesellschaften enthalten: Generali Asset Management S.p.A. Società di gestione del risparmio, Infranity, Sycomore Asset Management, Aperture Investors LLC (einschließlich Aperture Investors UK Ltd), Plenisfer Investments S.p.A. Società di gestione del risparmio, Lumyna Investments Limited, Sosteneo S. p.A. Società di gestione del risparmio, Generali Real Estate S.p.A. Società di gestione del risparmio, Conning* und unter deren Tochtergesellschaften Global Evolution Asset Management A/S - einschließlich Global Evolution USA, LLC und Global Evolution Fund Management Singapore Pte. Ltd - Octagon Credit Investors, LLC, Pearlmark Real Estate, LLC sowie Generali Investments CEE. *Einschließlich Conning, Inc, Conning Asset Management Limited, Conning Asia Pacific Limited, Conning Investment Products, Inc, Goodwin Capital Advisers, Inc. (zusammen "Conning").