China seems to be in the same position, economically speaking, that Japan was in the early 1970s. Japan relied heavily on exports to register extraordinary growth in the 1950s and 1960s. But its rapid growth was halted by the 1973 oil crisis, which also had a devastating effect on the world market. During the next decades, Japan's GDP grew 3.4 percent a year, barely 40 percent of the average rate it had achieved in the 20 years before the oil crisis. And when its real estate bubble burst in 1993, Japan's GDP began a long period of virtually zero growth, with its domestic price levels declining secularly.

Analysts often associate the "Japan syndrome" to the country's exports-led growth model and demographic changes. Dependence on exports made Japan vulnerable to the shocks suffered by the world market, because the savings accumulated through exports were the source of its real estate bubbles.

In terms of demographics, Japan's labor supply reached its peak in 1993, after which it started sliding toward an aging society; in fact, it now has the highest proportion of aged people. One of the dire consequences of Japan's aging society is the continuous decline in its domestic demand.