China Is Risking Japan 1980s-Style Bubble, BNP Says

(Bloomberg) -- China is risking a Japan-style bubble unless the country’s regulators start to rein a record lending boom, BNP Paribas said. “We’re entering a phase where China could experience similar asset bubble that we saw in Japan in the 1980s,” said Erwin Sanft, head of China and Hong Kong equities research at BNP Paribas. “If China continues its loose fiscal and monetary policy that could be those problems.”China implemented a stimulus package, cut interest rates five times since September 2008 and encouraged $1.3 trillion of lending to boost domestic spending as the global recession curbed demand for the country’s exports. The credit expansion helped the Shanghai Composite Index rally 83 percent this year and home prices in 70 major cities climb at the fastest pace in 14 months in October.

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