Warning from history: Could Japan-style crash hit China?

TOKYO — Sizzling property prices, a groaning debt load, wealthy tourists and tycoons willing to slap down eye-popping sums for art: China is starting to look like Japan before its economic bubble burst in the early 90s.

The similarities are not lost on Beijing: President Xi Jinping has commissioned a study to help China avoid Japan's pitfalls, according to Bloomberg, as growth slows and ratings agencies sound the alarm over its debt.

Fears over China's groaning debt load were heightened after the IMF warned Tuesday the world's second largest economy was on a "dangerous" path, urging Beijing to take a more sustainable course and speed up structural reforms.

China was also downgraded this summer by Moody's with the credit rating agency citing the country's ballooning debt, sparking an angry response from Beijing.

Debt-fuelled investment in infrastructure and real estate has underpinned Chinese growth for years since the global financial crisis a decade ago decimated growth in Western markets that booming exporters relied on for growth.

Japan was the original Asian tiger, with growth surging at an average 9.0 percent annually between 1955 and 1973 in the long postwar boom, turning it into one of the world's great economic powers.

China has also basked in heady growth – replacing Japan as the world's number two economy in 2010 – and has not seen a single recession in decades.

Japan too is groaning under a huge national debt, the legacy of monetary and fiscal policies aimed at boosting growth.

Japan's debt load is now more than 200 percent of its Gross Domestic Product. China's debt is around 260 percent of GDP, up from around 140 percent before the 2008 financial crisis.

Eighties-era Japan kept interest rates low, creating excessive liquidity in its economy.

Frenzied buying saw land prices quadruple in the mid-tolate eighties, and the Nikkei stock index hit almost 40,000 in 1989 – double its current level.

But it all came to an end when the central bank abruptly tightened policy. Stock and land prices plunged, businesses stopped investing, consumers stopped spending and bad loans piled up.