Taking a Rational View of China's Economy

Based on recent disappointing data released by the Chinese government,it is no surprise that many people take a pessimistic view of China's economy. Some of them even blame the global commodities slump and financial market turmoil entirely on China's economic slowdown.

Actually,we can view the same data in a very different light.

China is in the midst of a modernization drive that aims to achieve a truly market-oriented economy. Market economies face three types of monetary ailments,and these are inflation,deflation and stagflation. In coping with inflation,tighter monetary or fiscal policies are effective as they can cool an overheated economy. Expansionary monetary and fiscal policies are powerful tools in countering deflation as they enable liquidity to be directed to the market. But stagflation is beyond the reach of these policies. Even in mature market economies,stagflation has been considered to be a severe problem with no easy way to address it. In fact,stagflation is a result of accumulated problems in many areas with risks that have emerged as a result of crises. After a crisis has pas