Is China Japan all over again?

But US business interests - Wal-Mart, General Motors, Microsoft - are increasingly intertwined with China's. America's largest corporation, Wal-Mart, stocked its shelves with $18 billion of goods from China last year.

Companies that once led the charge on Capitol Hill to get tough on Japan are worried about lawmakers' increasingly charged views of China, evidenced most recently in the failed bid by a Chinese firm for the US oil company Unocal.

China also has a friend in US consumers. For the most part, its exports are taking jobs from other countries. And as loyalty to "Made in USA" has waned, low prices - a product of cheap Chinese labor - have become viewed as something of a right.

"The American consumer is not jingoistic," says Laurent Jacque, an economics professor at Tufts University's Fletcher School. Most Americans will choose the cheap import over the more expensive US-made product.

But that very cheapness is causing uneasiness. As high-quality Japanese goods gained ground in US markets, US embraced Japanese quality control and "just in time" purchasing. But in China's case, one thing remains a focus: cost.

"Many people look at China and say, there's no way we can catch up with those prices," says Oded Shenkar, professor at the Fisher School of Business at Ohio State University. He notes that China is unlikely to lose its low-cost advantage even as it moves up the technological ladder. "This generates negative sentiment."

The fact that many Chinese companies are state-owned - with access to cheap capital and labor - is also a sore point.

"One thing that caused so much tension was that the premise of all of our negotiations with Japan was that ... the Japanese economy was similar to ours," says Clyde Prestowitz, president of the Economic Strategy Institute and author of "Three Billion New Capitalists." "That was a false assumption. The same is true of China. They are not playing our game."

He notes that the consumption-driven economy of the US has no match in Asia, where things are structured to export. Still, the American economy has many strengths, and Americans have long had faith in their ability to innovate themselves out of problems.

But China is playing on an uneven field. It has done little to stem the tide of patent and copyright infringements that help produce cheaper knockoffs of competitors' goods - something the US is pushing China to have corrected. China has also been skillful at getting technology transferred that will help it develop.

Perhaps the biggest challenges underlying the US-China relationship, observers say, are the political ones - differences over Taiwan and support for regimes the US opposes. Japan is a military ally in Asia. China is seen as an emerging military rival.

"With Japan, we never felt there was any fear, just a sense of injustice," says Mr. Prestowitz. In the case of China, he says, "If you could strip away the politics, there wouldn't be too much concern about the relationship."

But as the US continues to be dependent on foreign financing of its deficit, and sees the limits of its influence as China "cozies up" to countries like Iran, Zimbabwe, and Venezuela, he says, "it's going to get tougher."

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