In the 50's they were THE economic threat ... electronics, cars and a few et cetera's.
Earthquakes and Godzillla
They stopped reproducing at record levels. They haven’t even been able to keep the population numbers level. No one wants to have kids there.
Their economy is not a competitive economy. When you have no competition, you eventually become complacent. The same thing will eventually happen to China, unless it abandons the Japanese model and embraces competition.
No one took Japan seriously until the 1970s and it wasn’t a threat until the 1980s.
Poor economic policies, a population crash, a real estate crash wrecked their economy for 15 years. The earthquake, tsunami, and power disruptions have made things much worse.
Partially a birth dearth starting in the 1970s, so the population’s work force and now total population are declining.
It’s also partially due to their previous attempts to get out of the economic slump in the 1990s by lots of building projects funded by debt. It didn’t boost their economy, but it did generate a debt to GDP ratio close to 2-1.