Implode-o-Meter News - Devaluation by China is the next great risk for a deflationary world

China is trapped. The Communist authorities have discovered, like the Japanese in the early 1990s and the US in the inter-war years, that they cannot deflate a credit bubble safely.
A year of tight money from the People's Bank and a $250bn crackdown on shadow banking have pushed the Chinese economy close to a debt-deflation crisis.
Wednesday's surprise cut in the Reserve Requirement Ratio (RRR) - the main policy tool - comes in the nick of time
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The gears are shifting across the Chinese policy spectrum. Shanghai Securities News reported that 14 Chinese provinces are preparing a $2.4 trillion blitz on infrastructure to combat the downturn, a reversion to the same policies of reflexive stimulus that President Xi Jinping forswore in his Third Plenum reforms.

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Devaluation by China is the next great risk for a deflationary world