Macroscope | Predicting China’s endgame: Is China merely kicking the can down the road?
China may be able to kick the can down the road further than most countries, but such a strategy could eventually cost it dearly.
In our first instalment of the China-endgame trilogy, we tried to capture the prevailing market expectations on how China may get out of its structural impediments.
We analysed three common ways for unwinding the imbalances facing the economy – an US-style financial crisis, a Japan-type lost decade and a Beijing-preferred soft-landing.
In this and the next updates, we will systematically compare China’s macro characteristics today with those of the US and Japan, before their respective crises to see which one of the three paths is the most pertinent to China.
Here, we start with the US-China comparison.
Many market participants have drawn parallels between China’s growing problems in recent years with those faced by the US in the lead up to the subprime crisis. There are indeed uncanny similarities in the two experiences in:
