As the threat of deflation stalks China’s economy, the China-watching herd has resurfaced an old question from the rotation: Is China turning Japanese? The well-known script, in the words of a media-anointed analyst: China’s economic growth has followed what’s sometimes called “the Japanese model.” In Japan and other Asian countries, this model has proved extraordinarily successful in the short term in generating eye-popping rates of growth – but it always eventually runs into the same fatal constraints: massive overinvestment and misallocated capital. And then a period of painful economic adjustment. In short: ... (full story)