By DANIEL SNEIDER
KNIGHT RIDDER NEWSPAPERS
The current uproar over China is a Yogi Berra moment -- "like deja vu all over again."
Forced currency revaluation. Massive trade deficits. Outsiders gobbling up prime American properties. A state-run economy that claims to be playing by market rules. And a rising Asian superpower plotting to displant the United States.
We went through all of this with Japan in the 1980s. Japan, of course, is not China. But to almost the last detail, every legitimate concern and every word of overheated rhetoric about China today echoes what said about Japan. So it is worth looking back at how wrong we were about Japan before leaping off the cliff on China.
I arrived in Tokyo as a correspondent for the Christian Science Monitor in September 1985, just days before the Plaza Agreement -- an attempt to correct America's huge trade deficit with Japan and Germany through a dramatic revaluation of the yen and corresponding devaluation of the dollar.
It did little to redress the trade imbalance. But almost overnight it turned Japan's capital surplus -- amassed through high savings and exports -- into an Everest-sized mountain, when measured in dollars. Japan's stock and real estate markets went through the roof, fed by cheap credit. Japanese companies went on an asset-buying spree, grabbing up such all-American icons as Rockefeller Center, Pebble Beach and Columbia Pictures.
The U.S. media fed the frenzy. Stories described how tiny plots of land in Tokyo's fashionable Ginza shopping district were worth more than much of Manhattan. Magazine covers proclaimed the Japanese takeover of Hollywood. Bookstores were lined with tomes claiming to explain the secrets of Japanese business management.
Meanwhile, the United States was sliding into growing self-doubt, and recession. The auto industry was declared dead. Electronics was right behind it. As trade deficits climbed, Americans' anger mounted. Politicians and union leaders raised sledgehammers and smashed Japanese cars and televisions on Capitol Hill.
The tone of the rhetoric grew more sinister. Japan, one famous book pronounced, was not a democracy but a one-party state where dissent was stifled. The Japanese economy was a state-directed Asian mutation of capitalism. Japanese businessmen were samurai warriors, channeling militarism into the battle for market share.
Japan was bound to the United States by a security treaty but the alliance was hollow, some said. Sensational books predicted war with Japan, while some in the CIA talked of the two countries being on a collision course.
U.S. policy-makers split into hostile camps -- the "Chrysanthemum Club" and the "Japan Bashers," as the adversaries called each other. The former believed in the alliance and criticized anti-Japan rhetoric as distorting and misguided. The Bashers dismissed them as naive fools, even traitors. The divisions deeply split the media and even the U.S. Embassy staff -- kids of Bashers shunned the children of the Clubbers at school.
The bubble burst
When I left Tokyo, early in 1990, the idea that Japan was the coming superpower was entrenched. A few months later, the Japanese miracle was exposed as a bubble; it burst. More than a decade of stagnation followed. Bad debt choked the banking system. Japan became an economic has-been, its famous business model derided for bureaucratic sclerosis and a lack of entrepreneurial quickness.
Today Japan is experiencing a modest comeback, but it is unlikely to ever again challenge U.S. dominance. Instead, China has taken its place in the American psyche.
As with Japan, the dangers of economic competition from China are real. There is equal need to forcefully open markets, protect the rights of U.S. business and workers, and enforce global rules such as the protection of intellectual property.
But China is no more Superman than Japan. It must assimilate a half billion people living in rural poverty, reform a bankrupt state-run banking system and innovate technology rather than steal it. Its real estate market is a bubble of its own. And eventually China will be immersed in a turbulent transformation from Communist Party rule to democracy.
So the next time you hear that China is taking over the world, think about Japan and remember another piece of wisdom from that old New York Yankee catcher -- "It ain't over till it's over."
X Daniel Sneider is foreign affairs columnist for the San Jose Mercury News. Distributed by Knight Ridder/Tribune Information Services.