Earlier this year, Chinese President Xi Jinping’s economic advisory group conducted a study to find ways to help China avoid repeating Japan’s tragedy from the 1990s that pushed the country into several countries.
The report examines everything from the Plaza Agreement on currency to the real estate bubble and the population situation that has made Japan the oldest country in Asia, Bloomberg quoted a source familiar with the matter as saying.
Chinese leaders discussed this at a meeting in April. Afterwards, the country’s press simultaneously broadcast Mr. Xi’s warning that financial stability is essential for economic growth.
By June, more news began to appear that banking officials asked credit institutions to provide information about foreign loans to Dalian Wanda, Anbang Insurance, HNA, Fosun International and Li Yonghong – he said.
Billionaire Wang Jianlin’s Dalian Wanda company is being limited in borrowing.
Jim O’Neill – former chief economist at Goldman Sachs Group assessed that Chinese policymakers always seek to avoid the mistakes of other countries, especially Japan.
Earlier this week, Chinese Vice Minister of Commerce – Qian Keming also told the press that Chinese companies must be cautious when investing abroad in the fields of entertainment, sports, hotels and real estate.
Last year, the value of China’s international M&A deals reached a record of 246 billion USD last year.
Research warns that China is following in the footsteps of Japan in the 1980s. At that time, Japan was a manufacturing powerhouse after many years of growth at double-digit rates.
At that time, the relationship between finance, companies and the Government caused capital flows to be allocated inappropriately, causing waste of investment.
China is now working hard to keep companies from repeating those mistakes.
“They really want to reduce leverage in the economy, to limit short-term financial pressure,” commented Logan Wright – China research director at Rhodium Group. “But we still don’t know whether the authorities