At current growth rates, China will overtake Japan to become the world’s second largest economy. But do trees grow to the sky? It is was only 20 years ago when it was thought that Japan had unlimited economic potential.
Some economists compare China’s position – with the authorities combining low interest rates with high government investment and rising asset prices – to Japan in the late-1980s, warning that it, too, could fall victim to a crash.
Some worry about the country’s demography. The one-child policy means that in the coming years its population is likely to age extremely quickly, increasing the pressure on its public finances and dampening its long-term growth prospects.
