From FT Economics today, China is dangerously flirting with deflation:“PBoC admits defeat in war on deflation.”
“China’s central bank this week faced reality and revised down its inflation estimate to half the level targeted by Beijing, implying it is failing — as global peers have before — to combat the threat of deflation.
That is not only bad news for a country struggling to stimulate growth, it also threatens a ripple effect around the world: cheap made-in-China goods contained price rises around the world when that was a force for good.”
Maoists will know I am referring to the debate of the 1960 and 1970s over the path for China’s development. The two sides of the debate is pretty simple to describe. The Dengists raised the slogan: “Black cat or white cat; the cat that catches the mouse is a good cat.” Essentially, their pragmatic argument was that it did not matter which measures the state employed, so long as those measures sped the development of the productive forces. This attitude, of course, horrified the Maoists who rightly saw in it the formula for unbalanced growth, rising inequality and, eventually, full capitalist restoration. This debate shaped China history for most of the latter part of the 20th century and played a significant role in the Great Proletarian Cultural Revolution, which shook China and the world for more than a decade. In the end, Deng and the Dengists won, in large part simply by outliving Mao.