The predominant concern of Shinzo Abe, Japan’s prime minister, is with the decline of his country’s economy, relative to China’s. This explains “Abenomics”, which is aimed at economic revitalisation. Can it succeed? The answer is: yes – but only in part. It should be possible to end deflation. But a big upsurge in economic growth is unlikely.

Abenomics consists of “three arrows”. The first is a monetary policy aimed at eliminating deflation. The second is a flexible fiscal policy, aimed at supporting the Japanese economy in the short run and at fiscal stability in the long run. The third is structural reform, aimed at raising investment and trend growth.

Of the three arrows, the first is most likely to hit the target. In January the Bank of Japan adopted an explicit target of 2 per cent consumer price inflation. But it was only after the appointment of Haruhiko Kuroda, an outsider, as governor that a new approach was born. Under his leadership, the bank announced its ambitious programme of “quantitative and qualitative easing”, or QQE. The aim is to deliver the inflation target “at the earliest possible time, with a time horizon of about two years”. The central bank committed to doubling its holdings of Japanese government bonds over two years and more than doubling the average maturity of those holdings. Christina Romer of the University of California, Berkeley, former chair of the US Council of Economic Advisers, hailed this as a “regime shift”, comparable to America’s decision to go off the gold standard in April 1933.