[Patrick Bolton, Haizhou Huang] Is China facing a deflationary trap?
Oct 22, 2024
About two years ago, in the aftermath of the COVID-19 pandemic, China’s economy hit a roadblock. As all sectors underwent deleveraging, economic growth slowed, household savings rates increased and businesses scaled back their investments and accumulated savings. Many now wonder whether consumers and companies are stuck in a self-reinforcing cycle of declining spending and falling prices, which would have the pernicious effect of increasing the real value of debt. For a long time, the gove