Currently, China faces a dilemma similar to Japan in the 1990s, both experiencing a burst of the real estate asset bubble, leading to a decline in corporate balance sheets. Companies shift from pursuing maximum profits to minimizing debt, and both individuals and businesses are desperately repaying loans. Overall social demand significantly decreases, triggering deflation. Japan experienced 30 years of economic stagnation as a result. China may undergo the following changes:


1. The economy falls into long-term stagnation;
2. The RMB appreciates
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