In March, meetings of the G-20, the Chinese National People’s Congress, and multiple think tanks all reflected a growing awareness of the risks to the global economy posed by deflation and intensifying financial instability. In mitigating these risks, the path that China takes will be particularly important. But avoiding a hard landing in China is a necessary but insufficient condition for global recovery. Contrary to the advice of many Chinese economists, the country’s policymakers have opted not to follow the conventional Western approach of using flexible exchange rates as the main shock absorber for volatile capital flows and thereby ... READ MORE
