In many people’s eyes China has become a so-called “pacing threat” to the US, that is “a great-power rival against which a nation measures its strength, shapes its strategy and directs its resources across every domain of national power.” Strikingly, this is similar to the way that Japan was perceived in the 1980s and demonised accordingly in policy circles and popular culture. The 1993 film Rising Sun tapped into widely prevalent “Japan bashing” sentiment in the US. Given the parallels between perceptions of Japan then and China today, it’s worth recalling how things panned out with Japan. After Rising Sun was released, US journalist Jack Payton called out the film’s blatant xenophobia and noted that he, like most Americans, owned many Japanese-made goods. He posed two questions, the first; “If so many Americans like Japanese products, how come they’re starting to believe that the people who make these products are hands-down the most evil people in the world?” And second; “Once enough Americans have been sufficiently instructed about the vile ways of Japanese business, will they stop buying all those Hondas and Sonys and switch to Fords and Zeniths?” Payton didn’t think Americans would give up on good deals no matter what they thought of the Japanese. Much the same applies to China today, except that US reliance on China extends beyond manufactured goods to human capital. In June, Mark Zuckerberg announced the creation of Meta’s SuperIntelligence Lab, including the hiring of 11 top people in the field — all of whom were born outside the US, seven of them in China. Meta is not alone in hiring top researchers from China. A 2024 New York Times report, “In One Key AI Metric, China Pulls Ahead of the US: Talent”, included the claim that working with Chinese researchers was taken for granted inside leading US companies and universities. “It’s just a natural state of affairs”, said Professor Pieter Abbeel, from the University of California, Berkeley and founder of an AI start-up. These considerations make Chinese ascendancy seem inevitable in the way that Japan’s rise did back in the 1980s. However, as Payton accurately noted, by 1993 it was already clear that the Japanese “aren’t the unstoppable commercial robots we once thought they were. They can make mistakes just like the rest of us”. Indeed, within a few years talk of Japan’s economic domination had disappeared. What are the odds of the same thing happening with China? More than likely, it turns out. In the 1980s, the Japanese fell into the trap of over-investing in their successful industries and real estate. As one indicator, in the 1980s the land value of Tokyo’s Imperial Palace was supposedly worth more than California. China has done the same thing. Government policies have promoted over-investment in manufacturing capacity and real estate. The resulting output is a bargain for the rest of the world, which is why China is an export machine, but buying high and selling low is not sustainable. China is now in an extended manufacturing slump due to overcapacity and seemingly on the same deflationary low-growth trajectory in which Japan remained for decades after the mid-1990s. A population that is ageing at a faster pace than Japan’s will also slow down China. These negative trends are hitting at a time when China is still far behind the US in the value of goods and services produced each year by each person: US gross domestic product per capita is US$82,800 and China GDP per capita is US$24,600. Incidentally, Australia’s GDP per capita is US$70,340 and Japan’s is US$49,885. Assuming that managing a dramatically slowing economy doesn’t lead China to distract its population by puffing itself on the world stage as Russia has done, it may be that in very short order the rest of the world will think of it as benignly as Japan or, even better, like its cuddly panda bears. Winthrop Professor Ray da Silva Rosa is an expert in finance at The University of Western Australia’s Business School