Investing Ideas

Why China may follow a different recovery path than Japan

A comparison of key macro indicators between present-day China and 1990s Japan.

By: Ivan Xie Masaki Nakamura Abhijeet Singh
Updated: 4/12/2024
Key Takeaways
  • Similar to Japan roughly 30 years ago, China is facing a list of growth concerns that could stall or foil its plan to eventually challenge the U.S. economy for global economic leadership.
  • China may be even worse off than Japan near the end of its postwar rise in some ways, especially when it comes to long-term demographic trends that could constrain the size of its labor force.
  • That said, China’s risks may be less severe than Japan’s in the 1990s, even though China is likely to face unique challenges.
  • We believe an economically changing China—a sizable component of many international and emerging-market indexes—may make a case for active management in international allocations in 2024 and beyond.
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