Yuan has little to learn from the yen

Like Japan in the early-to-mid 1980s, China is also a roaring economy with a continuous large trade surplus and foreign exchange reserves, a buoyant property sector and a currency under increasing pressure from the US.

Back then, when the US ran a huge trade deficit with Japan, Washington forced the Asian power to drastically revalue its currency, the yen, as agreed upon in the Plaza Accord of 1985. The exchange rate value of the yen versus the dollar appreciated by 51 percent from 1985 to 1987 after the Plaza Accord was enacted.

Japan, however, experienced a prolonged bubble economy and entered a decade-long recession after the bubble burst in 1990. Till today, Japan's economy has not recovered completely from the recession.