Markets Sound Alarm Over Deflationary Spiral in China
Investors are increasingly concerned that China risks sliding into an economic malaise that could last decades.
China’s 10 largest brokerages have all produced research on the neighboring country’s lost decades, in a sign of how seriously investors are taking the risk of Japanification.
Photographer: Na Bian/BloombergInvestors in China’s $11 trillion government bond market have never been so pessimistic about the world’s second-largest economy, with some now piling into bets on a deflationary spiral mirroring Japan’s in the 1990s.
Yields on Chinese sovereign bonds maturing in 10 years have tumbled in recent weeks to all-time lows, creating an unprecedented 300-basis-point gap with US peers, despite a slew of economic stimulus measures announced by President Xi Jinping’s government.