Now the situation has become more complex when China’s 30-year bond yield, for the first time in history, has gone below Japan’s bond yield. In the last few years, China’s bond yields have fallen by 215 basis points, while in Japan there has been a rise of 160 basis points during this period. All these things indicate that China too is facing the same challenges that Japan did in the 1990s. It took almost 25 years for Japan to get out of its economy, and now China too will need similar time and efforts.

The biggest challenge for the Chinese economy is that it is still in the recovery phase after Covid and now another new virus has also become an issue there. This could make their economy even more vulnerable.

If China has to improve its economy, they will have to immediately revise their policies, and take necessary steps to avoid any major financial crisis. Otherwise they could move towards getting caught in an economic trap like Japan, from which it would take several decades to get out.