China could soon end up counting lost decades, periods of prolonged stagnation, as Japan has been doing since the early 1990s, shortly after the burst of the equity and property bubbles.

There was a time Japan was the envy of the world. That was back in the roaring 1980s, when its economy grew by leaps and bounds, driven by soaring exports and robust capital spending.

Meanwhile, the blowing of the equity and property bubbles created a sense of euphoria among the country's newly rich. Tokyo's Nikkei 225 rose from around 6,500 in 1980 to approximately 40,000 by 1989. Moreover, property values rose sevenfold over the same period.

As a result, a piece of property the size of a handkerchief in Tokyo cost a few thousand dollars.

As is usually the case for every bubble, the air that helped Japan's bubbles grow bigger and bigger was easy money provided by the nation's central bank. In the aftermath of The Plaza Accord in 1985, the Bank of Japan cut short-term interest rates from 5.5% in 1985 to 2.5% in 1987. As a result, equity and property values had no way to go but up. Investors began to believe that Japan was unstoppable, ready to overtake America as the world's largest economy.

That was the bright side of the bubble. But there was a dark side, too. Rising property values precipitated a prolonged decline in marriage rates that began in the 1970s. As a result, it was difficult for the younger generations to afford a home, live an independent life, get married and raise a family.

Japan didn't manage to catch up and bypass the U.S. Instead, its rapid ascent in the global economy ended abruptly when the equity and property bubbles burst in 1989. Then, the nation plunged into three decades of stagnation, mired in debt, without an end in sight.

That's about to happen to China. The parallels between the economic performance of the two countries are too similar to ignore.

Like Japan, China had its roaring times, extending for two decades, from the early 1990s to 2008. In this period, China's economy became the world's envy, growing at exponential rates, thanks to solid exports and a dose of incentives that released the ingenuity and creativity of the Chinese people.

Then there was spending on constructions of all sorts, from residential buildings to bridges, ports and highways. One part of that construction was necessary to help China modernize and catch up with developed economies. Another part of that construction was redundant. It wasted the nation's resources. Like the building of what has become known as "ghost towns." These are empty apartment complexes built to satisfy the speculative appetitive of a new class of landlords rather than provide homes for ordinary citizens.

Then there is the building of ports, bridges and highways worldwide, from Southeast Asia to Africa, financed by state-owned banks. They create businesses for state-owned construction companies while serving the country's nationalistic ambitions at home and abroad. But they don't advance the country's economic development.

China has been blowing property bubbles in all directions, both at home and abroad. They are financed by state-owned banks, which are essentially arms of the People's Bank of China (PBOC), implementing its easy-money policies.

As was the case in Japan, soaring property values have priced young people out of the housing market. They are causing a plunge in marriage rates, with far-reaching consequences for China's ability to compete effectively against Southeast Asian and Latin American nations.

China's property bubbles are turning from a tailwind to a headwind for its economy, posing difficult choices for its policymakers soon.

"Policymakers need to strike a delicate balance of regulation and stimulation heading into 2022, as an ongoing crackdown on tech and real estate could depress growth potential," says Dr. Guo Yu, lead Asia-Pacific analyst at Sibylline Ltd. "Further loss of growth momentum will likely prompt policymakers to rein in the de-leveraging drive and boost public/infrastructure investment in the coming months, leading to further monetary easing."

Japan's policymakers have been pursuing all these policies, inventing what is known as quantitative easing (QE), a modern monetary policy that helped drive every interest rate to near-zero levels. Also, it kept zombie banks loaded with nonperforming loans alive. But it couldn't save itself from the bubble burst and the three lost decades that followed.

China may find itself in the same spot, counting its lost decades, too.