Top economist explains how China has less in common with 1990s Japan than many think – and why talk of Chinese overcapacity is often ‘imprecise’
13-MIN READ13-MINSylvia MaPublished: 6:00am, 4 May 2026Updated: 6:04am, 4 May 2026Bai Chongen is a prominent Chinese economist and government adviser. He is the dean of Tsinghua University’s School of Economics and Management and serves concurrently as vice-chairman of the All-China Federation of Industry and Commerce. From 2015 to 2018, he was a member of the Chinese central bank’s monetary policy committee.
The fundamental difference is our stage of development. We are still a middle-income country; Japan was already a fully developed, high-income economy when its bubble burst. China still possesses massive headroom for growth.
And Chinese enterprises exhibit tremendous drive and capacity. Japan was highly innovative too, but it has struggled with commercialisation in recent years – translating that innovation into marketable products. That is exactly what China excels at.
We are a demographic behemoth. Japan is not small, but our population is more than 10 times larger. In a megamarket, innovation yields significantly higher returns and commercialising technology generates greater economies of scale.
