Domestic investors piled into stocks, seeking higher returns than the paltry interest paid on savings accounts. The value of the Tokyo stocks soared from $2.6 trillion in late 1987 to $4.5 trillion at the market’s peak in late 1989.

When the orgy of speculative trading collapsed after the Bank of Japan tightened monetary policy, a decade-long slowdown ensued.

In China today, many of the same factors are also at work — low returns on bank savings, cheap capital, soaring stock prices and relentlessly surging property prices. In just two years, the value of shares traded in Shanghai and Shenzhen has skyrocketed to about $2.2 trillion from $393 billion.

So far, there are no obvious signs of a crisis. Exports keep growing and average incomes are rising. But under the edifice of robust growth lie serious strains.

“Right now, we’re in a sweet spot. Everything is as good as it can get,” says Michael Pettis, a professor at Peking University’s Guanghua School of Management and author of a book on financial crises in emerging economies. But he adds, “Nobody should assume it’s going to stay like this. No country in history went through such a rapid period of growth without periodic crises.”

China’s banks are actually in better shape today than they have been ever been — at least by official figures. They show nonperforming loans at about 7 percent of total lending in the first quarter of 2007, down from estimates of 40-50 percent a few years ago.

But some of the decline in bad loans reflects the surge in overall lending. And the figures exclude so-called “special mention loans” on the verge of going bad. Including those, plus bad loans already written off, the total amount of problem loans may be triple the figure for the narrower category of nonperforming loans, according to some estimates.