Unconventional wisdom: ChinaÆs deflation risk
The view that China is exporting inflation is wrong. On the contrary, China is facing a deflation risk.
The view that China has a tight labour market that would boost inflation is also wrong labour shortage is still a distant event. Domestic structural and policy backdrops in China argue that there is no momentum for inflation to spread. Chinese exports are not a threat to AmericaÆs inflation. Rather the real threat lies in the myopic mentality among some trade protectionist politicians, who would end up pushing up US inflation rate if they get their way.
The myopic view...
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