Abstract:
Facing the deflation risk in China, we study the causes, including the descending period of economic cycle, high leverage ratio, dropping of asset prices, excess production capacity, the anticipation of depreciation on RMB, falling of international commodity prices. We also point out that to confront deflation risk, we should coordinate the relationship of management of demand and reform of supply, implement more positive fiscal policy and effective monetary policy, promote the constitutive innovation, and improve the international coordination of macro policies.
