Japan's Bubble Economy And Burst Mechanism

Recently, China continues growing rapidly, and many scholars worry about the outbreak of the bubble of the China’s economy.The Japanese economy of the1980s resembles the present conditions of the China’s economy, so, it has a very important meaning now to study a bubble of the Japanese economy.This report analyzes a cause of the bubble economy of Japan, using a figure, a graph and macro economy to compare the Japanese difference with China and show revelation for China to prevent a bubble.This report fuses in a Japanese viewpoint and a viewpoint except Japan and gives an important opinion.Japanese economy passed through four stages. It was called the period of the high growth of economy from1955to1970for the first stage,the second stage was called a stable period of growth from1971to1985, the third stage was called the formative period of the bubble from1986to1989, and last stage was called the collapse period of the bubble after1990.The Plaza Agreement triggered the bubble economy, financial liberalization and low interest of the Bank of Japan, became the cause that bubble economy occurred, the investment of the company deteriorated bubble economy.Japan’s bubble economy in this paper that the Enlightenment to China has about six aspects:First, stop economic growth to depend on export. Second, keep the stability of the monetary policy, and should not be excessive administrativeintervention and yield to international pressure. Third, concern about asset prices, strengthen the stock market and real estate market regulation. Fourth, find the way that it can invest a fund in safely. Fifth, establish social security and increase consumption. Learn failure of the bubble economy of Japan, and it is important for the Chinese government to maintain safe growth.