Today’s tensions between China and the US have many echoes of those between Japan and the US in the 1980s including, most clearly, over the exchange rate. The lesson for China is not, as some have suggested, that China should withstand US pressure on its currency so as to avoid a slide into a Japan-style lost decade. It is that China should adjust sooner rather than later. Waiting would cause the needed shift and the associated risks to be larger.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services