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Is Japan-style Deflation Coming to China?

China’s real-estate sector is buckling under the weight of falling prices, a huge and growing inventory of unsold units, and highly indebted developers. Add to that slowing GDP growth and falling inflation, and a prolonged period of stagnation and deflation, triggered by a property-bubble collapse, seems increasingly likely.

TOKYO – Recent economic news from China has triggered the same helpless, sinking feeling that gripped me when Japan’s property bubble collapsed in 1991-92. Will this sense of déjà vu continue, with China apparently heading down the same path of deflation and stagnation on which Japan embarked three decades ago?