For Western historians, the signal moment for China’s coming out in the modern age was Deng Xiaoping’s trip to America in early 1979, a visit memorable for a single image – of the diminutive, Mao-suited vice-premier donning an oversized cowboy hat at a Texas rodeo.

For historians with a wider lens, especially in Asia, Deng’s trip to Japan months earlier was an equally transformative event.

Deng went to Japan in late 1978 when the country was on the crest of an industrial wave that was threatening to upend the US-led global order, a phenomenon that echoes in today’s US-China rivalry.

Japanese cars were popular, and its televisions and electronics were flooding foreign stores. The country’s steel mills were putting overseas rivals out of business, leaving the beginnings of a rust belt across the American Midwest, a process China’s factories would accentuate two decades later.

Deng arrived in Japan a hardened figure, the survivor of multiple wars, revolutionary conflict and Maoist purges. But he seemed to sense – as he trekked through Japan’s state-of-the-art factories, and rode its famous trains – that he was witnessing a new industrial revolution.

In a film that captured a moment on the trip, Deng can be seen sitting in the window seat of the shinkansen (bullet train) as the countryside races by. The Chinese leader looks like a giddy child on an adventure. “It feels really fast,” he remarks.

Deng’s trip was the start of a golden era in Sino-Japanese relations, when the two old enemies put the past aside and embarked on an unprecedented period of cooperation. The time was characterised by Chinese humility and Japanese generosity.

“We must admit our deficiencies,” Deng told his hosts. “We are a backward country and we need to learn from Japan.”

At Nissan Zama automotive plant, which had just introduced robots on the production line south of Tokyo, Deng was told the factory produced 94 cars for every worker per year. That, he said, was 93 more than China’s then-premier car factory, First Automotive Works in Changchun. “Now,” he said, “I understand what modernisation is.”

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The Chinese valued Japan’s economic model in ways many Westerners were slow to grasp.

Chinese economists noted with admiration how Japan had accumulated the capital to build its heavy industries, refined its engineering skills, imported and copied foreign technology while building the capacity to develop its own world-class companies, products and brands.

One prominent Chinese scholar, Kong Fanjing, highlighted something else. Using communist jargon, he hailed Tokyo’s clever use of “US-Soviet hegemonic contradictions” to spur economic development. Put another way, he was giving Japan credit for exploiting cold war tensions in order to take shelter under the US security umbrella, so that the country could focus solely on economic growth.

Japan, Kong wrote, “had made foreign policy subordinate to domestic policy, and domestic policy subordinate to economics”. Deng took note. In the 1980s, like the Japanese, he restricted China’s military spending to preserve resources for the broader economy.

For the Japanese, Deng’s trip was a thrilling moment. Deng was the first Chinese leader to visit Japan in more than 2,000 years of contact between the two nations.

Deng flattered his hosts, played down the war, and bought some audiences to tears with his empathy for the countries’ shared cultural heritage. Business leaders crammed into events to see him. In a gesture rare for a Chinese leader today, Deng even held a no-holds-barred news conference.

A hush fell over the roughly 400 journalists when he was asked about the status of the disputed Diaoyu Islands. Deng brushed the question aside, putting on the record the reasoning that he had used in private. The issue, he said, should be left to later generations “who would be wiser” than current leaders.

Deng’s trip was the catalyst for the launch of Japan’s huge aid programme for China, which lasted for decades.

Totaling tens of billions of dollars by the time the loans stopped, Japanese money financed airports in Beijing and Shanghai, urban subway systems across the country, and a range of infrastructure and environmental projects.

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Freed from paying reparations when the two sides forged diplomatic ties in 1972, the Japanese had thought they were going an extra mile by providing infrastructure aid to China. The Chinese looked at the issue differently. They thought that they were the ones who had been generous by not insisting on reparations. Later, they became angry when the money was referred to as a de facto pay-off for the war.

By the mid-1980s, with Deng still active, such misunderstandings, as well as a failure to put the war behind them, would come back to haunt both countries.

Richard McGregor is a senior fellow for East Asia at the Lowy Institute in Sydney