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The Impact of Evergrande Group Bankruptcy: Predicting the Future of China’s Crisis


China’s Evergrande Group has filed for bankruptcy protection in the United States last week.
In addition to the chain bankruptcies of real estate companies in China, there is a high possibility that the construction industry and various related businesses will go bankrupt like a domino.

China has already fallen into deflation and is likely to become Japan.
For the first time, many foreign companies have withdrawn from China, which used to be the factory of the world.

What about the impact on Japan?

city with skyscrapers
Photo by Manuel Joseph on Pexels.com

It will affect our lives.
In fact, both China’s purchasing power and supply power will decline, and some manufacturers that depend on imports of parts from China may suffer great losses.

This is not just a problem between Japan and China. For example, South Korea, the world’s number one semiconductor manufacturer, is likely to be affected more than Japan.
Even so, semiconductor-related products, whose supply has been declining due to the Ukraine problem, may become even more difficult to obtain, and smartphones and household appliances may become more expensive.

Let’s see what we can do about it.

  1. Seeking diverse trading partners
    Given the potential impact on the supply chain due to the recession in China, it is important for Japan and neighboring countries to seek new trading partners and diversify supply sources. For example, it is important to strengthen trade ties with countries in the Middle East, Africa, etc. and not rely on industry.

2. Industrial Transformation and Technological Innovation
Japan and neighboring countries will review industries that are susceptible to China’s economic fluctuations and consider investing in new growth areas and technological innovation. In particular, it is important to focus on areas where future growth is expected, such as environmental technology and digital fields. To that end, we will promote differentiation from other countries.

3. International cooperation and stabilizing efforts
It is important for Japan and neighboring countries to strengthen international cooperation to stabilize the economy. Utilize international organizations and agreements to build a framework that responds to global economic fluctuations. In addition, while paying attention to geopolitical risks, we will advance efforts to maintain peace and stability in the region.
In particular, we should pay attention to the Taiwan issue.


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