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The New Challenges of Inflation and External Imbalances Facing China

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  • Yongding Yu

    (Institute of World Economics and Politics No. 5 Jianguomenneidajia St. 100732, Beijing China,)

Abstract

China is facing the threat of inflation, at the same time that the U.S. economy is in trouble. To maintain a sustainable growth rate, China must walk a tightrope. On one hand, China must tighten its monetary policy to bring inflation under control, which will slow down the growth rate of the Chinese economy. On the other hand, China also has to be ready to use expansionary fiscal policy to replace the weakened external demand to prevent its economy from falling into a "growth recession," where the growth rate is below 8 percent, due to the double whammies of monetary tightening and a significant slowdown of the U.S. economy. (c) 2008 The Earth Institute at Columbia University and the Massachusetts Institute of Technology.

Suggested Citation

  • Yongding Yu, 2008. "The New Challenges of Inflation and External Imbalances Facing China," Asian Economic Papers, MIT Press, vol. 7(2), pages 34-50, Spring/Su.
    • Handle: RePEc:tpr:asiaec:v:7:y:2008:i:2:p:34-50
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    Cited by:

    1. John Knight & Wei Wang, 2011. "China’s Macroeconomic Imbalances: Causes and Consequences," The World Economy, Wiley Blackwell, vol. 34(9), pages 1476-1506, September.
    2. John Knight & Wei Wang, 2011. "China’s Macroeconomic Imbalances: Causes and Consequences," The World Economy, Wiley Blackwell, vol. 34(9), pages 1476-1506, September.
    3. repec:zbw:bofitp:2011_015 is not listed on IDEAS
    4. Nguyen, Vu Hong Thai & Boateng, Agyenim, 2015. "Bank excess reserves in emerging economies: A critical review and research agenda," International Review of Financial Analysis, Elsevier, vol. 39(C), pages 158-166.

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