Reasons for Japan's Economic Recession in 1990s

1, Japan's economic and financial liberalization and internationalization accelerate:

1985 is a year of great significance in Japanese history. This year, there have been many major events in Japan that can affect Japanese history and change Japan's destiny.

In 1970s, Japan began the process of economic and financial liberalization and internationalization. In 1980s, this process accelerated rapidly. 1985, the Japanese government issued the announcement "The Present Situation and Prospects of Japanese Yen Financial Liberalization and Internationalization", which opened the prelude to Japan's overall economic and financial liberalization and internationalization.

2. Japan's political internationalization process is accelerating:

In the early 1980s, the Japanese government proposed that Japan should move from an "economic power" to a "political power", and Japan became the staunchest ally of the United States in the "Square Meeting" of 1985 and the "Louvre Meeting" of 1986.

3. Changes in Japan's economic growth model:

Since 1980, the international community has been calling on Japan to open its domestic market and change its export-oriented economic growth model. Japan's 1985 economic white paper points out that the export-oriented economic growth model is no longer sustainable, and Japan must expand domestic demand to ease its relations with the international community.

Extended data;

1, the lessons of Japan's bubble economy;

First, the adjustment of exchange rate can't stop the economic bubble. Second, especially in the stable period of CPI, we should be more careful about asset bubbles.

We should properly handle the relationship between immediate economic prosperity and long-term sustained and healthy economic development. At present, one of the reasons against raising interest rates in China is that overheating is not global, so raising interest rates may affect economic prosperity.

2. The background of Japanese bubble economy;

1On September 22nd, 985, the world's five major economic powers (the United States, Japan, Germany, Britain and France) reached a plaza agreement at new york Plaza Hotel. At that time, the exchange rate of the US dollar was too high, resulting in a large trade deficit. For this reason, the troubled United States and four other countries issued a statement announcing their participation in the exchange rate market.

Since then, the yen has appreciated rapidly. At that time, the exchange rate rose from 1 USD to around 240 yen, and rose to 120 yen a year later. Due to the drastic change of exchange rate, the assets composed of US Treasury bonds suffered book losses, so a large amount of funds entered the Japanese domestic market to avoid exchange rate risks.

At that time, in order to subsidize the export industries hit by the appreciation of the yen, the Japanese government began to implement the financial easing policy, resulting in excess circulating funds.

Reference source; Baidu Encyclopedia-Japan's Bubble Economy