China’s Economic Future at Risk: Former Japanese Central Banker Warns of Impending Crisis Similar to Japan’s ‘Lost Decades

Ex-Japanese central banker cautions China to take action to prevent crisis

Past heads of central banks have expressed concern regarding deflation and economic downturn, both of which were prevalent during Japan's 'lost decades'.

A former head of Japan's central bank suggested at the Bund Summit in Shanghai that China must take action to prevent its economy from experiencing Japan-like decline. This recommendation comes after China noted substantial reductions in both its GDP deflator and its producer price index (PPI).

Haruhiko Kuroda, who previously served as the head of the Bank of Japan, spoke about the deflation crisis that affected his nation from 1998 to 2012. He identified stagnant wages as the most significant issue during that period.

In his term from 2013 to 2023, Japan implemented several cycles of quantitative easing and structural changes, ultimately breaking free from a cycle of deflation.

Nevertheless, he pointed out that China's deflation is not as severe as Japan's, and he emphasized again the significance of sustaining wage growth.