China is not 1980s Japan and this is both good news and a big problem

Real estate crisis, demographic problems, trade tensions with the United States, concerning debt levels: multiple comparisons can be drawn between China today and 1980s Japan, sparking fears of a "Japanification" scenario for the Chinese economy. Such a scenario is characterised by a slowdown in economic activity caused by a drop in private consumption, the advent of a negative, deflation-fuelling price-wage loop and a decline in potential growth.

And yet, Japan never really recovered from its "lost decade": the country, which economists in the 1980s saw as the world's leading economic power, ultimately experienced nearly two decades of stagnating growth and prices.

China is not 1980s Japan, which both gives it an edge and poses a problem. It gives it an edge because it has more leeway in conducting its economic policies. It raises a problem because its level of development and wealth – and therefore resilience – is much lower, exposing it to ultimately harsher scenarios.

That said, China could learn from Japan in order to avoid making the same mistakes, starting with the adoption of clear and transparent communication on policies implemented to re-anchor expectations and restore confidence.

While these parallels may be compelling, if any lessons can be drawn, the nature of China's regime and tightening of ranks around the party and its leader Xi Jinping mean that China will never completely resemble either 1980s or modern-day Japan. Furthermore, the country is still far from overcoming the obstacles in its path in order to revive its growth trajectory.