China’s long-term bond yields have fallen below Japan’s for the first time, a momentous economic shift indicative of growing deflationary pressures.
As reported by the Financial Times, this economic trend is raising fears of “Japanification” in China, where authorities face mounting challenges to support yields, with parallels being drawn to Japan’s economic stagnation in the 1990s. These fiscal and monetary shifts are leaving their mark on both nations’ entertainment sectors, where responses to economic pressures are shaping strategies for growth and sustainability.
China’s entertainment industry is navigating an economic slowdown through robust growth in digital media and advertising. As the Financial Times notes, weakening economic data and deflationary risks have pushed domestic investors toward haven assets like government bonds, reflecting broader economic pessimism. Similarly, entertainment players are leaning on digital innovation to remain viable.
According to a PwC report, the Chinese media and entertainment market is expected to grow at an annual rate of 6.1% through 2027. Internet advertising and gaming are driving this growth, with mobile ad spending set to dominate the sector. While the film industry is recovering, with projections suggesting it could overtake the U.S. box office by 2025, regulatory constraints on foreign content remain a challenge.
Meanwhile, Beijing’s efforts to curb financial market pessimism are echoed in its entertainment strategies, which emphasize domestic production and patriotic narratives. Analysts from Goldman Sachs, as cited by the Financial Times, suggest that government interventions reflect an attempt to combat low growth and inflation expectations.
Japan’s entertainment industry reflects the country’s measured economic normalization. The Financial Times highlights rising long-term bond yields in Japan, a sign of renewed confidence as Tokyo moves away from decades of deflation. In the entertainment sector, Japan’s location incentive scheme, which offers reimbursement of up to 50% of qualifying expenditure in the country, with an upper limit of JPY1 billion ($6.66 million) on each disbursement, is now operational. And, a Japan-Italy co-production treaty came into effect a few months ago.
The entertainment sector in Japan is also benefiting from structural reforms under the government’s Grand Design and Action Plan for a New Form of Capitalism, aimed at improving labor conditions and fostering global competitiveness. The formulation of this strategy included inputs from Japanese auteur Kore-eda Hirokazu and “Godzilla Minus One” director Yamazaki Takashi.
Exports of anime and cinema continue to thrive, supported by initiatives like the K2P Film Fund, which is attracting global investment in Japanese cinema. As noted by JapanGov, these efforts underscore Japan’s commitment to sustaining its creative industries while addressing systemic challenges like fair compensation for creators.
The economic trends reported by the Financial Times find parallels in the entertainment sectors of both nations. In China, persistent deflationary risks are driving a reliance on digital platforms and government support, while Japan’s gradual economic recovery is mirrored in its steady structural reforms in the arts.
Both nations face unique challenges but share a reliance on strategic adaptation to secure growth. As the Financial Times aptly points out, unless consumption rises and investment patterns shift, China risks deeper deflation. There are green shoots at the China box office. Data from consultancy firm Artisan Gateway showed “Her Story” earning RMB125 million ($17.5 million) between Friday and Sunday. Including previews, it has a cumulative of $21.7 million, making it one of the strongest openings in the recently-depressed fall season in China.
In Japan, the integration of public-private initiatives could help to future-proof the entertainment sector, offering lessons in resilience amid economic transformation.
