Mainland regulators learn from mistakes made in Japan

Beijing views Tokyo's handling of the liberalisation of capital flows and the yen more than 30 years ago as key factors that led to the creation and subsequent bust of the asset bubble in Japan in the early 1990s, according to Japanese government and other sources who are in direct contact with mainland regulators.

"They aren't a single bit interested in Japan's successes. Their biggest interest is in Japan's mistakes," said one China-based source directly in touch with mainland regulators. Mainland policymakers and analysts at government think tanks are well versed in the experiences of Japan and other countries, and the sources say two-way communication at both government and private-sector level continued even through a chill in diplomatic ties after a territorial spat in 2012.

But as economic growth slows and signs of deflation emerge, Beijing's interest in Japan has increased notably around policy details, according to the sources.

The mainland is carrying out three key financial reforms Japan undertook over the past decades - liberalising interest rates, internationalising its currency and opening up its capital account.

These reforms should help develop the economy, but mis-steps could have huge repercussions.

Mainland policymakers see the 1985 Plaza Accord between Japan and the Western powers, which effectively approved a stronger yen and the opening up of the capital account during the 1980s and 1990s, as pivotal events for Tokyo which ultimately led to Japan's "lost two decades", sources said.