If there is any country where bureaucrats, bankers and economists might want to learn from Japan’s mistakes right now, it is China.
It would not be the first time. A decade ago, I wrote a book about the 1990s Japanese banking crisis that became a bestseller in China. At the time, it came as a great surprise (not least because I never sold the rights to anyone in mainland China). But, in retrospect, it has turned out to be symbolic.
Never mind the fact that China is experiencing a spectacular explosion in credit and property prices that echoes that of 1980s Japan just before the bubble burst. Like 1980s Japan, China is also trying to transform a bank-centred, state-controlled financial system into something more centred on free capital markets. And, while that shift is needed as its economy matures, this creates huge risks.