China now looks more and more like Japan in the 1990s and 2000s. Private demand has tanked, interest rates are falling through the floor and the government is forced to run large, endless deficits to offset the malaise. On this headline basis there are very strong parallels with "Japanization".

On the one hand, the good news is that China doesn't have the private balance sheet overhang that Japan did. Households may not be spending today but they don't have any underlying need to build down leverage. Nor do most corporates. I.e., in theory at least, there's no reason domestic demand couldn't resurge tomorrow.

The bad news, though, is that things are nonetheless getting worse rather than better. In practice private demand and sentiment continue to weaken - and the malaise is now at risk of being "institutionalized" by the ongoing collapse of marriage and birth rates in the country. So even without the same private balance sheet overhang, the mainland could still easily wind up in the same place.

There's also the unfortunate and unusual fact that China is busy locking the economy up behind walls in a way that Japan never did, with very little hope of reopening. In this sense, it's not just "Japanization" we worry about ... it's "North Korea-ization".