BS EDIT: China’s Economic Slowdown: A Japan-Like Future?

By Business StandardPublished On Mar 12, 2025

Economic optimism vs reality

China faces deflation with weak demand & overcapacity

US trade restrictions may intensify economic struggles

Growth targets under pressure

5% GDP growth & 2% inflation targets look ambitious

Sectors reliant on China, like metals, must re-evaluate

Fears of ‘Japanification’

$18 trillion lost in real estate, hurting consumer demand

Deflation discourages spending, worsening economic woes

Misallocation of capital

Unprofitable firms continue operations despite losses

Restrictions on capital mobility worsen inefficiencies

Xi’s strategic response

No capital mobility reforms or major fiscal stimulus

Focus shifts to tech investments & productivity growth

Can China’s tech gamble succeed?

R&D spending nearing US levels amid US budget cuts

Will tech leadership be enough to avoid stagnation?