The Formation Of The Japanese Real Estate Bubble And Bust And Its Implications For China

Our forefather says that when learning from history, we can see the rise and fall. In order to coordinate the problems very well we met in the process of economic transformation in China, and escape from the bubble economy, especially at this moment of high real estate price and very high House Price to Income Ratio, when we also do not want any real estate bubbles, what we really need to do is to learn from other countries'did.When considering the depth, breadth, cultural background and the amount of data obtained, we choose Japan Bubble Economy as the object we do comparative study. There are three main reasons. Firstly, Japan has the advantage of late-development in industrialization just like China do, the aim Japan learns after is the west world, and this is very important when it look from the industry development. Secondly, on their way to industrialization, Japan also chooses the full set of industry structure, and their economy quantity is big enough. In the 1970s, Japan faces the pressure to make transitions; this is also China faces now. Thirdly, Japan is a market-oriented country, but the government make very important role during their process of economic transition. And the biggest feature of Japan's market economy is the combination of government leading and market mechanism, which is also called by government leading market economy. But the most important is that Japanese economy has experienced Bubble Economy during their highly speed development. And the aftermath of bubble causes Japan"lost 10 years", during which time economy stopped increasing.This article concentrated on the mechanism of Japan's Bubble Economy and divided in 4 sections. The first section starts from introduce the famous bubble events in the history and then define what is bubble and real estate bubble, and their difference and relation with other economic concepts. The second section main analyze the formation process of real estate bubble, this chapter divide the process into two stages, one is from postwar to 1979, and the other is 1979-1992. This two time period is dividing by two books, which are written by two very famous Japanese economists who have high accomplishments on bubble economy, Tsuru Shigeto and Noguchi Norio. The analyze method in these two books give me lots of ideas. During the analysis I conclude the logic relationship in the formation of the real estate bubble, which is Square Agreement–industry structure revision-bubble forming and collapse. In the third chapter, I analyses the cause of Japan real estate bubble based on its formation mechanism. And in the last chapter, I get some conclusions from analysis, and make it the lesson we should learn from it during the adjustment of industrial structure in Chinese economic development.