Fears that Japan is heading for a debt blowup that would drag Taiwan down with it are overblown — the bigger economic problem sits in China.

• Japan's 10-year government bond yield has climbed above 3%, back to 1995 levels, a sign the country is finally leaving decades of falling prices behind and entering an era of rising prices.
• China is moving the other way, with its 10-year yield sinking below 1.7% — the same trap Japan fell into decades ago.
• Asian currencies have swung hard this year, with the yuan, yen, won, and Taiwan dollar all making big moves, and the yen briefly weak enough that US Treasury Secretary Bessent stepped in.
• A weak yen is deliberate policy, dating back to Abe's plan to boost exports and tourism, and it helped push the Nikkei above 70,000 — but it squeezes Japanese people at home.
• Talk of a yen "collapse" ignores history: the yen started at 360 to the dollar after the war and spent decades getting stronger, which is what actually hurt Japan's economy.

Outlook: Japan looks set to keep adjusting to higher prices and higher rates, while China's falling yields point to a deflation spiral that is the real thing to watch.