“DANGEROUSLY” inexperienced policymakers are steering China to a Japan-style collapse that could derail the world economy, a leading investor in the region fears.

Uichiro Niwa, one of Japan’s most respected business leaders and an economic adviser to the Mayor of Beijing, said that he was “very concerned” that the Chinese bubble is about to collapse.

Speaking exclusively to The Times, Mr Niwa, one of Japan’s largest investors in China, with a portfolio of more than 200 business interests in the country, said: “I hope the Chinese Government knows how dangerous the situation is. The Chinese very shortly face an extremely severe time, and the more they enjoy, the more severe is the situation they face.”

Mr Niwa, who heads Itochu, a Japanese trading and venture capitalist firm, added that he was extremely concerned at the lack of experience in the Chinese administration. He said: “The problem is that the Chinese do not have good people to control the economy under capitalism. If things don’t calm down, there will be a very sharp setback, and a hard landing that will be felt across the world.”

Mr Niwa said China’s mix of capitalism and socialism would be extremely hard to model. He added: “Even Greenspan doesn’t have 100 per cent confidence over running the US economy and he is the expert. What chance do the Chinese have when there is no experience to show the way?”

Mr Niwa, who was investing in China long before diplomatic relations with Japan were resumed in 1972, forecast an imminent economic crunch. He said: “Perhaps China will find its growth rate down at the 7 to 8 per cent level, but at current rates, what will happen? The factories will not get the power they need, or even the water. Manufacturers will not be able to get enough educated people.

“When the shortages become apparent, human instinct will send everyone rushing to buy stocks of everything and prices could rise 130 per cent. Nobody will have any idea what is in the inventories and suddenly confidence will go and the market will collapse.”

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