China's Traditional Growth Model Has Broken Down, Risk of Following Japan's Path, U.S. Expert Says

U.S. expert Logan Wright (ローガン・ライト) says China can no longer sustain its traditional growth model and that the use of fiscal and monetary policy to drive the real economy is undergoing a sustained decline. He presented this analysis in an introduction to his book, based on an interview with VOA.

Wright says China's economy has slowed markedly since the collapse of the real estate bubble. Exports rose 5.5% year on year to approximately $3.8 trillion in 2025, while the global trade surplus reached a record $1.2 trillion. At the same time, he notes that investment appetite cooled in industries unrelated to exports from 2022 onward. He also says the problems at China Evergrande Group reflect the broader pathology of the economy.

During the global financial crisis from 2008 to 2016, new lending in China accounted for approximately one-third of global GDP, while the debt-to-GDP ratio nearly doubled, Wright notes. He explains that the excess credit expansion has now reached the point at which massive debts must be repaid, without leading to a recovery in the real estate market or domestic consumption. Wright points to a pattern of strength abroad but weakness at home, saying it is resulting in excess products being dumped on world markets at low prices.

China's share of global GDP has continued to decline after peaking at 18.5% in 2021, while the U.S. share has expanded to 26%. Wright warns that a future slowdown in exports could trigger deflation, corporate debt problems and capital outflows, raising concerns that China could follow Japan's stagnation in the 1990s. He says declining fiscal resources will make it difficult to sustain military modernization and cutting-edge technological innovation, and projects that the United States' strategic superiority will expand over the next decade.