He's referring to the fact that in the 70's and 80's everyone thought Japan was going to dominate but their economy wasn't (and still isn't) built on the most solid foundation. The Japanese were buying everything on debt, include Pebble Beach, but they didn't have much backing up those payments.
China has a ton of hidden debt that's masked by the government. No one knows how much is there. When added to their cultural and demographic problems I doubt we are seeing China's ascendancy.