CHINA: JAPAN IN THE 1990s?

DEFYING DOOMSAYERS, CHINA TO AVOID JAPAN-STYLE BUBBLE

Koh Gui Qing

Reuters, October 22, 2012

TOKYO (Reuters) - China has defied doomsayers who have warned for years that Asia's biggest economy would soon suffer a Japan-style boom and bust. It will continue to defy them for years to come.

At first glance, some major similarities between their economies stack up. Just like Japan three decades ago, China is under pressure to let its currency rise, boost domestic consumption and grow its services industry to cut reliance on exports and investment.

A slide in economic activity for seven straight quarters and a view among analysts that growth could be closer to 5 percent by the end of the decade than the near-10 percent it has averaged for the last 30 years, has revived concerns that Beijing faces a Japan-style battle with stagnation.

But analysts say China is hardly a Japan in the making.

Abundant room for greater consumption and wealth, a slow-rising currency, and steps to cool property markets will leave it in good stead to avoid Japan's fate.

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