The longer China's economy stalls, the lonelier Zhou Xiaochuan, governor of the People's Bank of China, is certain to get. There's simply no playbook for a central banker facing so many competing challenges: deflation, excessive debt, chaotic global financial markets and vested interests resisting reform. Zhou seems to have little choice but to make things up as he goes along.

But if Zhou is interested in consulting a cautionary tale, he might consider the decisions made by policy makers in Japan in 1998, when that country was on the precipice of deflation and bore an eerie resemblance to China's present situation. (Japan's deflationary slide was triggered by a massive debt buildup, a graying population and rigid industrial policies; if that sounds familiar to China watchers, it should.)

Unfortunately, Zhou seems committed to repeating the mistakes made by Masaru Hayami, the former governor of the Bank of Japan. On Monday, Zhou cut the PBOC's one-year lending rate by 25 basis points to 5.1 percent, his third cut in six months. That excited China's stock traders. But, as Hayami's experience shows, incremental moves of this sort aren't a long-term fix. If Zhou hopes to avoid deflation in China, he should pay particular attention to three of Hayami's missteps.