The article discusses links between Japan's economic recovery and China's economic boom. The deflationary pressures felt in America in recent years may have been largely benign, reflecting increased global competition; but Japan's dose of deflation has been the nastier sort, caused by a collapse in demand when its late-1980s bubble burst. Deflation and economic stagnation caused Japan's nominal GDP to shrink by 4% in the five years to 2002. During the same period America's GDP expanded by 26%. Now, at last, Japan's economy seems to be reviving. In the year to the second quarter of 2004, real GDP grew by 4.2%, almost as fast as in the United States, and nominal GDP rose by 1.4%. But will this upturn prove any more sustainable than the two previous recoveries in the past decade, both of which soon fizzled out? China's boom has played a big role in Japan's recovery. Last year Japan's exports to China rose by 68%, accounting for two-thirds of its total export growth and one-quarter of its real GDP growth. If the increase in capital spending by exporters is added in as well, then China accounted for somewhere between one-third and one-half of Japan's GDP growth. On present trends, China (including Hong Kong) will overtake America as Japan's biggest export market some time next year. But could a hard landing in China drag Japan down too? The gloomy view, offered by Andy Xie, Morgan Stanley's economist in Hong Kong, is that it would cut short Japan's revival. However, Peter Morgan, an economist at HSBC, argues that most of Japan's exports to China are associated with Japanese firms shifting their production to China to cut costs, so the trade figures exaggerate Japan's true exposure to Chinese demand.