China bubble in “danger zone” warns Bank of Japan

Japan sounding the alarm on China’s economic bubble carries authority and amusement. After all, Japan is able to recognize a bubble’s limits thanks to its own Nikkei bubble popping in 1990. The amusing part is that China is confident it can avert crisis because it has been studying the same errors Japan made that led to Nikkei and its “lost decade.” China just might be right. This week, the city of Chongquing invested $240 billion in industries representing 150% of its GDP. Perhaps that’s something Japan didn’t try 22 years ago.