Sino-US trade war won't go the Japan way

The United States has been criticizing China for its "unfair" trade practices and currency "manipulation", allegations that are strikingly similar to the ones the US labeled against Japan in the 1980s and 1990s, leading to the US-Japan trade dispute. The US criticized Japan for its large current account surplus, which resulted in long, intense trade negotiations between the two countries, and a broad range of economic policies to reduce what the US considered was Japan's excessive savings.

In hindsight, the US managed to contain Japan's rising growth momentum. Which gives rise to an important question: Will China meet a fate similar to the one that befell Japan in the last century because of the US-China trade war? Our answer is a definite "no".

Japan and China have challenged US hegemony at very different stages of their economic development. Japan faced US pressure when it was close to its economic peak with a rising aging population and stagnant labor productivity. But China's per capita GDP is still small compared with the US' and its population is much younger.