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1. Japan's ruling Liberal Democratic Party may not reach a sole majority in the lower house general election to be held on Oct. 27, a new Nikkei poll shows, potentially setting the stage for political turmoil not seen since 2009, when the LDP lost control to the now-defunct Democratic Party. The LDP needs 233 of the lower house's 465 seats to reach a sole majority. As of Oct. 9, the day of the lower house's dissolution, the LDP alone had 256 seats. Of the 289 seats that will go to directly elected politicians from single-seat constituencies, the poll showed that the LDP is considered likely to win only about 30%. Of the 176 seats chosen through a proportional representation system that divides the country into 11 regions, the LDP is expected to win fewer than the 72 seats it won in 2021. (Source: asia.nikkei.com)
2. Barclays, via Financial Times:
The economic circumstances facing China have parallels with Japan’s experience after its asset bubble burst in the early 1990s. This created the term ‘Japanification’, which is typically defined as a combination of slow growth, low inflation, and a low policy rate, accompanied by deteriorating demographic trends.
To measure this phenomena, a Japanese economist, Takatoshi Ito, introduced a Japanification Index, which measured the sum of the inflation rate, nominal policy rate, and GDP gap. To apply to China’s economy, we have adjusted this index, replacing the GDP gap with working-age population growth, as the estimation methods of GDP gaps differ across nations and working-age population is by far the most fundamental determinant for long-term growth. Our amended index shows that China’s economy has become more ‘Japanised’ than Japan’s recently, albeit marginally.
This not a surprise to us. A demographic drag, the emergence and collapse of asset bubbles, debt overhang, zombie companies, deflationary pressures from excess capacity/high debt, and high youth unemployment, to name a few, are some of the notable similarities between the economies of China and Japan post their bubbles. (Source: ft.com)
3. China will extend 4 trillion yuan ($562 billion) in financing to property developers through banks by the end of the year, in its latest effort to prop up an ailing real estate sector that has dragged down overall growth, authorities said on Thursday. The country will expand a so-called white list of property development projects that banks have been using to guide lending decisions since January, officials from multiple agencies including the Ministry of Housing and Urban-Rural Development and the People's Bank of China told a media briefing in Beijing. China had approved 2.23 trillion yuan in fresh financing for such developments as of Wednesday, and it is expected to approve at least 4 trillion yuan worth of such loans by the end of 2024, said Ni Hong, the housing minister. (Source: asia.nikkei.com)
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