Asia's increasing dependence on China

Such a shift of economic prowess in Asia is in line with China’s expanding GDP scale. In 1995, China’s GDP was about 6 trillion yuan ($9,700 billion). In 2012, it had exceeded 50 trillion yuan.

Japan, meanwhile, has been trapped in continual stagnation after the bursting of its housing bubbles. Lack of strong and effective reform measures, the country has failed to step out of the crisis and struggled with low-level economic growth for years.

The IMF conclusion well reflects the ups and downs of the two Asian growth engines in the past two decades. It also testifies to the challenge facing the United States and Japan as they join hands to contain China’s influence in Asia.

That said, such a comparison by the IMF, which aims to show how integrated the Asian economy is, seems misleading. China and Japan are at different development stages. For China, it is still in its economic height after its reform and opening up drive unleashed its growth potentials in the past three decades. It is like the Japan in the 1970s and early 1980s, when Japan’s rapid rise in the global economic and corporate arena shocked the western world.

Following the rapid appreciation of the yen and its misguided policies, Japan was hard hit by the housing bubble bust and trapped in prolonged economic meltdown. China now is also facing a number of daunting challenges, such as high home prices and pile-up of local government debt and whether it can properly handle those problems will to a large extent determine its growth track in the coming decades.

China, of course, would not necessarily repeat mistakes made by Japan in the post-revaluation years. But it is set to go through severe tests as it walks the tightrope of balancing growth and reform.