Should China Simply Devalue?
- The slowdown in China is the single biggest factor in producing a world slowdown and market mayhem.
- Large capital flight out of China puts the Chinese central bank in a bind, with their policy options severely restricted as long as they defend the exchange rate.
- It’s perhaps better to bite the bullet and accompany a devaluation with decisive measures to cut excesses in capacity and bad debts, boosting confidence.
- Get this out of the way and world financial markets might regain its footing, despite the initial deflationary impact.
- Considering the speed of Chinese forex depletion, China might very well have little alternative anyway.
Should China Simply Devalue? | Seeking Alpha
Tags: China · currencies