Now we'll find out if the Chinese have learned from the Japanese and American Decades, because they're apparently headed for one of their own.
It appears the doldrums may have already settled in.
OTOH, it looks like Li may suffer from the same economic hubris as Japanese and Western politicians.
His warning came right after the government allowed one large firm to default rather than bail it out with taxpayer money.China is braced for a wave of industrial bankruptcies as its slowing economy forces companies with sky-high debts to the wall, the country's premier has said.
Premier Li Keqiang told lenders to China's private sector factories they should expect debt defaults as the world's second largest economy encounters "serious challenges" in the year ahead.
(Press myopia warning: Note the absence of any mention of the Western version of the Japanese boom and bust that's still playing itself out. It's a Servepro commercial. "It's like it never even happened.")Some analysts said the decision to let some indebted firms collapse was a sign the authorities had learned from the Japanese boom and bust experience of the late 1980s and early 1990s. Tokyo was plunged into two "lost" decades of stagnation after it prevented zombie companies from declaring bankruptcy – even blocking petitions from bondholders in the courts - when a property collapse exposed debts many times the value of their businesses.
It appears the doldrums may have already settled in.
If they allow the markets to clear themselves of the deadwood, it will be interesting to see which economy recovers the fastest. Probably not a good thing for the US or Japan in the long run, though.China's industrial production rose at its slowest pace in five years with surveys showing a faster slowdown than expected. Industrial output, which measures production at factories, workshops and mines, rose 8.6% in January and February year on year, which is the lowest pace of growth since the 7.3% annual growth figure recorded in April 2009.
OTOH, it looks like Li may suffer from the same economic hubris as Japanese and Western politicians.
He should read some Hayek before he follows Japan and the West down that meddlesome path.Li said China must "ensure steady growth, ensure employment, avert inflation and defuse risks" while also fighting pollution, among other tasks.
Friedrich von Hayek said:The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.